9911796707
TMI Blog2018 (9) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... - on account of Income from House Property which is taxable at Rs. 21,75,750/- as per provisions of section 28 of IT Act 1961 under the head Income from Business & Profession i.e. on gross basis without 30% standard deduction under section 24 of IT Act 1961 as Appellant is engaged in the business of letting out of commercial & industrial premises, the same may please be taxed under appropriate head of income. 3. The Ld. CIT(Appeals) has erred in confirming that the job work receipts amounting to Rs. 2,50,000/- earned by the appellant are subject to tax u/s 68 of IT Act 1961 as Appellant is a registered SSI Unit in Gurgaon, Haryana and engaged in the business of manufacturing & job Work of plastic moulding components & electrical assemblies since 1991, the same may be taxed under appropriate head of income. 4. The learned Assessing Officer erred by disallowing whole of the business expenditure claimed by the assessee without rejecting the books of accounts but the ld. CIT(Appeals) has erred in presuming that books of accounts had been rejected by the concerned assessing officer in his assessment order and on the basis of her presumption restricted the allowability of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Further Ld.AO observed that assessee claimed to have received receipts on account of job work, which was declared as income from business. On a show cause notice issued by Ld.AO, assessee submitted that entire income from job work was received in cash. It was submitted by assessee that job work receipt were booked by assessee in 2 months at Rs. 25,000/-and Rs. 20,000/-for remaining 10 months totaling to Rs. 2,50,000/-. Ld.AO considered job work receipts in cash as income from undisclosed sources, since none of the 12 parties revealed their identity to assessee for purposes of raising bills. Ld.AO also observed that assessee did not furnish any evidence to establish that job work activity was actually carried out. 5. Ld.AO further observed that assessee paid a sum of Rs. 3,46,693/- on account of interest paid on loans. He called for various details, and on examining the same, Ld.AO found that such payments were made on loans raised from either directors or sister concerns. Assessee was called upon to explain purpose of such advances. In response to notice, assessee submitted that advance given to Reema Gupta was towards purchase of land. Further assessed submitted that two sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andum of Association, one of the main activity of assessee was letting out of owned commercial premises. Ld.AR submitted that out of total area of 20,000 ft., more than 75% was let out to two parties along with machinery, since assessment year 1992-93 onwards to various parties. 12. On the contrary Ld.DR relying upon order of Ld.CIT (A) submitted that assessee is owner of entire property, which is being used by assessee itself, and therefore any income generated from such property used by assessee, would constitute "Income from House Property" and computation of such income has to be as per section 22. Ld.DR at this juncture submitted that principle of res judicata do not apply to taxing laws. 13. We have perused submissions advanced by both the sides in the light of the records placed before us. 14. Admittedly, assessee in preceding assessment years offered rental income under head 'Income from Business', which has been accepted by authorities below in scrutiny assessments. It is observed that assessee has placed in paper book before us, assessment orders/1st appellate orders of preceding assessment years. We have also perused lease agreement placed at page 80-99 of paper book, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d receipts of job work under the head "Income from Other Sources", on the ground that money has been received in cash, and that assessee received job work income of Rs. 25,000 for 2 months and Rs. 20,000 for rest of 10 months. Assessing officer observed that assessee booked job work income as single monthly entry in its cash book and invoked provisions of section 68 on conjectures. He submitted that section 68 would not be applicable, as assessee had furnished complete details of job work income earned along with bills/vouchers before the Ld.AO at the time of assessment proceedings. Ld.AR submitted that doing job work for 3rd parties was one of the core business activity of assessee, which cannot be considered as "Income from Other Sources". Further it was submitted that during preceding assessment years, job work income has been assessed as business income and all expenditure was incurred by assessee were allowed as business expenses in connection with business income. It was submitted that these expenses are not in the nature of capital expenses or personal expenses, but has been incurred by for carrying out assesse's business on regular basis. Ld.AR submitted that Ld.CIT(A) wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years have been annexed, showing income received by job work. Further it is observed that income received from job work has been declared by assessee as business income, which has been accepted in preceding years. Admittedly for the year under consideration, amount credited in books of accounts are income in hands of assessee, which has been declared by assessee under the head, "Income from Business". In fact, view formed by authorities below is based on presumption that assessee is the owner of the said amount credited in cash. Further authorities below rejected submissions of assessee, without making any enquiries in relation to nature of income received on the basis of preceding assessment years. We therefore are of considered opinion that the addition made by Ld.AO which is sustained by Ld. CIT (A) needs proper verification by Ld.AO. Merely on surmises and conjunctures no addition can be made u/s68 of the Act, when assessee himself is declaring the monies received in cash as its Business Income. 25. It is observed from Ld.AO's order that assessing officer has not rejected books of accounts, but has disallowed expenses since vouchers did not appear to be authentic. No furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had taken following loans from various parties to whom interest amounting to Rs. 3,46,693/- was paid. S. No. Name Opening Balance Fresh Advances Closing Balance 1. Reema Gupta 6,50,000/- 6,50,000/- 13,00,000/- 2. Venimadhav Commodities Pvt. Ltd. 6,50,000/- 2,02,000/- 2,00,000/- 3. Venimadhav Securities Pvt. Ltd. ---- 9,20,000/- 9,20,000/- It has been submitted by Ld.AR that interest on loans has been paid as per agreed terms. He submitted that loans were taken for purchase of fixed assets. Ld.AR submitted that allowability of interest on borrowed funds as revenue expenditure, is not based on utilisation of funds, and is an allowable expenditure. 30. On the contrary, Ld.DR placing reliance upon observations of Ld.CIT(A) submitted that all parties from whom loans were taken were related with assessee and none of the advances were utilised for purposes of business. It was submitted that assessee has not produced any evidence of any land having purchased, nor any shares being allotted. Ld.DR submitted that on one hand, assessee borrowed funds at a cost, and on the other hand, such funds were given away to sister concerns interest fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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