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TMI Blog2019 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from other sources - forfeiture of earnest money received during the negotiation of a capital assets - Insertion of new subsection (IX) in Section 56(2) w.e.f. 01.04.2015 is prospective - sale proceeds forfeited to be deducted from the cost acquisition of the property in question u/s 51 - HELD THAT:- Since in A.Y. 10-11 there was no provision under the Act for treating the forfeiture of earnest money received during the negotiation of a capital assets as income from other sources, the CIT(A) has rightly deleted the addition. The issue in controversy is also covered by decision rendered by Co-ordinate bench of Tribunal in case of Vijay Singh [2014 (12) TMI 599 - ITAT DELHI]. - Decided against the revenue. - ITA No.2799/Del./2015 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see as the exemption u/s 10(34) of the Act proceeded to invoke provisions contained u/s 14A read with Rule 8D of the Act and proceeded to make disallowance of ₹ 23,28,214/- and made addition thereof to the total income of the assessee. AO also made addition of ₹ 2,76,17,625/- on account of capital gain qua the property sold bearing no. 56 Golf Links, New Delhi by decling the contention raised by the assessee that forfeited amount against a property has to be taxed as a capital gain. 3. Assessed carried the matter before the Ld. CIT(A) by way of filing the appeal who has deleted the addition by allowing the appeal filed by the assessee. 4. We have heard the ld. DR for the revenue and gone through the order passed by the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come (COI) which explains assessee had added back audit fee of ₹ 20,00,000/-, municipal fee of ₹ 62,707/- and donation of ₹ 14,72,900/- and nothing else was there to be treated as expenditure. 8. Hon ble Delhi High Court in judgment cited as MAXOPP INVESTMENT LTD. held that in case the assessing officer is not satisfied with the correctness of the claim of the assessee he shall have to reject the claim and record the reason for doing so by turning following findings :- Section 14A even prior to the introduction of subsections (2) and (3) would require the Assessing Officer to first reject the claim of the assessee with regard to the extent of such expenditure and such rejection must be for disclosed cogent reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim and state the reasons for doing so. Having done so, the Assessing Officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment. 9. So, in this case AO without recording his dissatisfaction / reasons as to his satisfaction about the correctness of the claim of the assessee mechanically proceeded to invoke the provisions contained u/s 14A with Rule 8D which is not permissible under law. Moreover the Ld. CIT(A) has deleted the addition on the basis of facts that expenditures debited to P L Account by the assessee have been suo moto added back by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Income Tax decided the identical issue by treating the earnest money received and forfeited by the assessee in respect of any negotiation for transfer of capital assets to be deducted from the cost of assets. Since in A.Y. 10-11 there was no provision under the Act for treating the forfeiture of earnest money received during the negotiation of a capital assets as income from other sources, the Ld. CIT(A) has rightly deleted the addition. The issue in controversy is also covered by decision rendered by Co-ordinate bench of Tribunal in case of Vijay Singh (supra). Consequently ground no. 3 is determined against the revnue. 14. In view of what has been discussed above, so, finding no illegality or perversity in the impugned order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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