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TMI Blog2021 (1) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the assessee. Since there is lapse on the part of the portfolio management person and no interest nor dividend income is received. A.O has estimated the income on such investments. We found that the assessee has not received any income as per the financial statement nor any dividend income on investments has accrued. Assessee has initiated legal proceedings against the loan creditor and yet to recover the amount. AO has not disputed the fact of filing of complaint and legal proceedings and also there is no real income accrued to the assessee. We are of view that no real income has accrued even though the assessee fallows the mercantile Accounting System. Accordingly, the estimation of interest income is not tenable and the notion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent : Shri Sunil Deshpande, DR ORDER PER PAVAN KUMAR GADALE - JM: The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals) -5, Mumbai passed u/s. 143(3) and 250 of the Income Tax Act, 1961. At the time of hearing, the Ld. AR of the assessee has not pressed the ground of appeal Nos.7 and 8, and the same is treated as withdrawn and dismissed. The effective grounds of appeal of the assessee are as under: 1. The Ld. CIT(A) having accepted that the appellant had initiated legal proceedings in the court and has filed a complaint with EOW against Mrs. Madhu jhunjunwala erred in law in upholding the order passed by the Dy. CIT (AO) making an addition of ₹ 88,08,743/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(2) and 142(1) of the Act were issued. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the details and the case was discussed. The A.O on perusal of the financial statements find that the assessee has disclosed the dividend income but there is no disallowance u/s 14A of the Act, there fore, the A.O made an addition under Sec14A r.w.s Rule 8D of ₹ 3,05,522/-. Further A.O. find that the assessee company has given an amount of ₹ 4 Crores to Mrs. Madhu Jhunjhunwala for investment purpose for a period of six months. As per the resolution, the money has to be invested in the equity shares at the discretion of Mrs. Madhu Jhunjhunwala and should yield minimum return of 20% of the investment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot given the suitable reply, the A.O assumed that it should be treated as speculation loss and made the disallowance. Further, the A.O has disallowed the loss on rights premium of ₹ 1, 55,000/- and assessed the total income of Rs. (-) 97,12,946/-and passed the order u/s 143(3) of the Act dated 20.12.2010. 3. Aggrieved by the order, the assessee has filed an appeal with the CIT(A), whereas the CIT(A) has confirmed the addition of accrued interest on investments made by the assessee and called for the remand report. In respect of addition u/s 68 of the Act unexplained cash credits of ₹ 5, 55,000/-. The assessee has obtained the unsecured loans from two persons Mr R. Ramnlal ₹ 50,000/- and Mr Manek Sukhadwall ₹ 5,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR supported with the account copy of loan creditor which was received towards share application money. Whereas in respect of addition on account of speculation loss, the Ld. AR submitted that the matter requires verification of facts that it is a business loss and not a speculation loss and prayed for allowing the appeal. Contra, Ld. DR supported the orders of the CIT(A). 4.2 We heard the rival submissions and perused the material on record. On the first disputed issue with respect to addition of accrued interest on the investments made by the assessee with portfolio management, where 20% assured income is guaranteed by the recipient of the amount. The Ld. AR contentions are that ₹ 4 crore are given for investment in equity sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of Godhra Electricity Co Ltd VS Cit (SC) 225 ITR 747 (SC) and CIT Vs Shoorji Vallabhdas Co 46 ITR 144 (SC).Accordingly, the estimation of interest income is not tenable and the notional income cannot be hypothetical basis for making an addition by the A.O, and we set aside the CIT(A) order on this particular ground of appeal and direct the A.O to delete the addition and allow the ground of appeal of the assessee. 5. Whereas on the second disputed issue with respect to addition u/s 68 of the Act, we find that the CIT(A) on this disputed issue has granted the partial relief based on the evidences filed in the course of the appellate proceedings and remand report. Whereas, in respect of ₹ 50,000/-addition sustained by the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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