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TMI Blog2022 (5) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee's appeal in ITA No. 2094/Kol/2017 for AY 2010-11. The Grounds of appeal raised by the assessee are as under: 1. For that in view of the facts and circumstances of the case the Ltd. CIT(A) was wholly wrong & unjustified in confirming the disallowance made by the A.O of the assessee's claim of deduction of Rs. 6,81,07,687/- u/s 801 A(4)(iii) of the Act based on the Audit Report u/s 801 A(4)(7) in respect of the Industrial Park " Salarpuria Touchstone " on the sole ground that the assessee company failed to furnish the CBDT Notification in support of such claim. The arbitrarily actions of both the A.O and the Ld. CIT(A) may kindly be reversed and the deduction u/s 80IA(4)(iii) may kindly be directed to be allowed in full. 2. For that in view of the facts and circumstances of the case the Ltd. CIT(A) was wholly wrong & unjustified in confirming the disallowance of the deduction of Rs. 6,81,07,687/- u/s 80IA(4)(iii) without considering the facts that since filing of the Application on 15.12.2006 under the I.P scheme. 2002 before the concerned Authority all the requisite papers & documents were periodically filed and all the formalities were observed to obtain the approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.10.2010 which was revised on 27.12.2010. The return was processed u/s 143(1) of the Act accepting the returned income. Thereafter the case of the assessee was selected under scrutiny and statutory notices were duly issued and served upon the assessee. During the assessment proceedings, the AO noticed that the assessee has claimed deduction u/s 80IA at Rs. 31,82,31,912/- as well as deduction u/s 80IB at Rs. 57,47,32,064/-. Accordingly, the AO called upon the assessee to produce the books of accounts, bills and vouchers with details as to the said claim of deduction u/s 80IA and 80IB of the Act besides audit reports in Form No. 10CCB. The AO called upon the assessee to furnish the copies of notification issued by CBDT in respect of its claims u/s 80IA & 80IB of the Act however the same could not be produced in respect of industrial park known as "Salarpuria Touchstone" whereas the notification was duly produced in respect of Salarpuria G.R. Tech Park, Phase-II. For the sake of ready reference the details of deductions u/s 80IA and 80IB of the Act during the year as given below: Deduction u/s 80IA Salarpuria G.R. Tech Park, Phase-II, Deduction u/s 80(IA) Rs. 25,01,24,22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uchstone and the Hon'ble Karnataka High Court was also pleased to give certain directions to competent authority in respect of above Industrial Park however again due to the failure of competent authority to follow the directions of Hon'ble Karnataka High Court, another writ petition was filed by the assessee before the Hon'ble Karnataka High Court seeking necessary directions to the competent authority which is pending for adjudication. Undisputedly till date the project has not been notified by the competent authority which was a pre-condition for grant of deduction u/s 80IA (4) of the Act. Under these circumstances, we are of the view that the deduction u/s 80IA(4) of the Act of Rs. 6,81,07,687/- in respect of Salarpuria Touchstone park cannot be allowed. However, in case the Hon'ble High Court decides the issue favorably and the project is notified in future by the competent authority , then the assessee may approach the AO for grant of relief/deduction 80IA(4) of the Act and the AO will be bound to amend the order accordingly. Subject to above observations, this issue is decided against the assessee. Accordingly, ground nos. 1 & 2 are dismissed with the above observations. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153A/ 143(3) and in view of the facts and in the circumstances such action of the Ld. CIT(A) is bad in law and in view of the facts and in the circumstances it may be held accordingly. 2. Without prejudice to Ground No. 1 above, the Ld. CIT(A) erred in not appreciating the fact that in absence of any incriminating material the order so passed u/s 153A/143(3) was bad in law and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No, 1 & 2 above, the Ld; CIT(A) erred in directing the AO to follow the adjudication of appeal in the original order u/s 143(3) when the issues in such order u/s 143(3) had merged with the order so passed u/s 153A/ 143(3) and in view of the facts and in the circumstances it may be held accordingly. 4. Without prejudice to Grounds No. 1, 2 & 3 above, the Ld. CIT(A) erred in not appreciating the fact and the law that since the order so passed u/s 143(3) was unabated, no addition could have been made in the order u/s 153A/ 143(3) and the Ld. CIT(A)'s vague direction to the AO is bad in law and in view of the facts and in the circumstances it may be held accordingly. 5. Without prejudice to Grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has assailed the assessment order on the ground of lack of jurisdiction of the AO to make additions in an unabated assessment on the date of search as there were no incriminating materials found and seized during the course of search. The Ld. CIT(A) dismissed the appeal of the assessee on this issue by rejecting the contentions of the assessee as regards the jurisdiction of the AO to make addition in an unabated assessment year by observing the holding as under: "It is seen that most of the additions made in this order are repeat of additions made in the order passed u/s 143(3). The AO has been directed to follow the adjudication in the appeal order passed as a result of original order u/s 143(3), therefore the AO has not made any fresh addition. Further on the issues on which AO has made fresh addition the assessee has been granted relief in this order. Therefore, in my view there is no need to adjudicate these grounds are hereby dismissed." 4.4. The Ld. A.R vehemently submitted before us that the Ld. CIT(A) has grossly erred by not deciding the legal/jurisdictional issue raised by the assessee qua the authority of AO to make additions in an unabated assessment year on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed before us , we note that search was conducted on 15.3.2016 on Salarpuria group of companies including the assessee and its directors. It is undisputed that the assessment was framed in the instant assessment year vide order dated 26.03.2013 and thus it had attained finality on date of search and would be an unabated assessment on the date of search in terms of provisions of section 153A of the Act. It is settled legal position that in order to make addition in an unabated assessment on the date of search, there has to be incriminating material found during search as laid down in various decisions as cited by the assessee's counsel supra. After carefully analyzing the facts of the acts and after the perusal of assessment order, we find that there is no reference at all by the AO to any such incriminating material found during search. The various additions were undisputedly made on the basis of observation of the AO during assessment proceedings for which were no incriminating materials found during search. The additions made inter alia include disallowance u/s 14A, disallowance of interest on service tax & TDS , disallowance of donation , membership and subscription and loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch addition in the impugned order and according the order so passed by the AO and affirmation of such order by Ld. CIT(A) is bad in law it may be held accordingly. 3. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in confirming the action of the AO in not granting deduction u/s 80IA(4)(iii) in respect of the project namely "Salarpuria Touchstone" and in view of the facts and in the circumstances it may be held accordingly. 4. Without prejudice to Ground No. 3 above, the disallowance so made by the AO in respect of deduction u/s 80IA(4)(iii) for the project "Salarpuria Touchstone" is bad in law especially in absence of incriminating material and in view of the facts and in the circumstances it may be held accordingly. 5. For that your petitioner craves the right to put additional grounds and / or to alter / amend / modify the present grounds at the time of hearing. 6.2. The issues raised in ground nos. 1 &2 are not pressed at the time of hearing and therefore the same are dismissed as not pressed. 6.3. The issue raised ground no. 3 & 4 is against the order of Ld. CIT(A) confirming the action of AO in not granting the deduction u/s 80IA(4)(iii) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced Rs. 8.14 Cr as advance to related parties which were duly reported in the audit Report for the year ended 31.03.2014. The assessee has also borrowed Rs. 147.09 Cr and the advances/share application money was paid out of loan funds. Besides no allotment of shares was made to the assessee no any refund was granted. According to the AO that part of the interest on the loan taken by the assessee which related to the investments in the related/group entities is not allowable as per the provisions of section 36(1)(iii) of the Act as interest was not incurred for the purpose of business wholly and exclusively but to earn dividend and long term capital gain on shares. Accordingly the AO calculated the proportionate interest at Rs. 10,05,218 to be disallowed u/s 14A r.w.r. 80D2(ii) and added the same to the income of the assessee. 8.3. The Ld. CIT(A) allowed the appeal of the assessee on the ground that there is no exempt income during the year by following the decision of Hon'ble Calcutta High Court in the case of REI Agro Ltd. in 144 ITD 141 (Cal) whereby the Hon'ble Court has affirmed the decision of Hon'ble Tribunal reported in 144 ITD 141 and also the decision of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from equity shares and securities. Therefore our decision would ,mutatis mutandis, apply to ground no. 2 also. Resultantly ground no. 2 in revenue appeal is dismissed. 8.9. The issue raised in ground no. 3 is against the deletion of addition of Rs. 2,36,454/- which was made by the AO on account of bad debts during the year. 8.10. The facts in brief are that the AO upon perusal of profit and loss account observed that the assessee has charged Rs. 2,31,881/- on account of sundry balances written off and Rs. 4,573/- on account of stock written off during the year which were not allowable as the assessee has failed to prove the claim with documentary evidences. 8.11. The Ld. CIT(A) allowed the appeal of the assessee on the basis of details/evidences filed by the assessee. The Ld. CIT(A) noted that the amount written off by the assessee were qua the rent which was not realized by the assessee and has been written off. Similar was position with regards to stocks which were not serviceable and were also written off during the year. 8.12. After hearing the rival parties and perusing the material on record, we note that sundry balances were written off by the assessee including unservic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of two projects namely Gold Summit and Laurel Heights belonging to Sattva Developers Pvt Ltd. were shown at lower price in comparison to the sale price with flats at the same floor and same date. The AO , finally after comparing various sale agreements, came to the conclusion that the assessee has sold the flats at a differential prices in its Melody project and accordingly a show cause notice was given to the assessee on the basis of information's gathered by the AO from aforesaid documents and sample customer application related to Sattva Gold as to why the on -money should not be calculated and added to the income of the assessee. The show cause was replied by the assessee by filing written submissions objecting to be addition on account of on-money as there were no incriminating material found during search relating to the assessee's project and whatever was documents seized by the search team were belonging to other group companies and there can be no addition on the basis of extrapolation ,conjectures and surmises. The contentions of the assessee did not find favour with the AO and he calculated the amount of on-money at Rs. 72,93,646/- by working out average sale pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of properties in this company. There is no admission of any customers u/s 133(6) or u/s 131 to corroborate the hypothesis. In view of the above, the addition made for on-money receipt cannot be sustained and therefore ground no. 11 and 12 is allowed." 8.16. The Ld. D.R vehemently submitted before the Bench that the Ld. CIT(A) has wrongly deleted the addition as made by the AO on the basis of evidences gathered during the course of search and also on the basis of statements recorded of various employees during the search which proved that the assessee has been receiving on-money on sale of flats. The Ld. D.R. argued that the AO has analyzed the information in the form of seized documents, statements recorded during the search and sample application form of Shri William Joseph Subash as well as incentive payments to the employees who effected sales in the market and came to the conclusion that the assessee has received on-money. The Ld. D.R. stated that it is apparent from the sale agreement entered into by the assessee in respect of Melody project that they were glaring variations in the sale deeds and therefore the AO has rightly made the addition on the basis of calculati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase of flats. Thus the requisite enquiries which the AO was supposed to conduct have not been made. The Ld. A.R specifically referred to the materials as referred to by the AO in the assessment order which formed the basis of addition on account of on-money. The Ld. A.R. referred to page nos. 8 to 24 which comprised of statements of various employees whereas page no. 25 was a sample application form duly filled in respect of Sattva Gold Project which did not belong to the assessee and its income belonged to Salarpuria Developers Pvt. Ltd. which is the group company. The ld AR stated that on further on a perusal of said form it can be seen that there were minor alterations which same could not be presumed as incriminating materials in any manner more so in the hands of the assessee and therefore cannot be held to be incriminating material in any manner. Similarly on page no. 6, the AO referred to the sales incentive paid to various dealers/brokers but again no particular material/document has been brought on record which testified the fact of assessee having received on-money in respect of Melody project. The Ld. A.R. submitted that the AO only referred to cash found in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the AO has made addition of Rs. 72,93,646/- on account of on-money received by the assessee on sale of flats. We note that various statements recorded of employees and also of the managing director. The fact of the case, on-money having been received was admitted and accepted however this was a general statement and no specific corroborative material has found during the course of search. We also note that the managing director of the assessee company made a surrender of Rs. 55 crores in various group companies which was duly offered to tax by filing a settlement petition which has been accepted by the settlement commission. Needless to say that the said surrender was made having regards and having considered the material found during the course of search. The AO while making the addition on account of on-money has referred to general statement made by the employees and managing director and also a sample application form of Sattva Gold Project which was extracted by AO on page 25 of assessment order which was overwriting and having cuttings on the amounts received by the assessee but it is also undisputed that the said project did not belong to the assessee and belong to Salarpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no addition can be made on the basis of doubt unless there is material to prove the receipt of on-money by the assessee. Similarly the addition made on the basis of statement without any corroborative material cannot be sustained as has been held in the case of Best Infrastructure India Pvt. Ltd.(supra), Shri Saurabh Mittal(supra)and SRM Securities Ltd.(supra). Considering the facts of the cases, in the light of the decisions as mentioned and discussed earlier, we are inclined to uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue. 8.19. The assessee has filed cross objection supporting the order of Ld. CIT(A) on various issues on which the Ld. CIT(A) has allowed the appeal. Since we have dismissed the appeal of the revenue therefore the cross objection filed by the assessee becomes infructuous and is accordingly dismissed. 9. Now we shall adjudicate the Revenue's appeal in IT(SS)A No. 66/Kol/2019 for 2015-16 and assessee's cross objection in C.O No. 44/Kol/2019 for AY 2015- 16. 9.1. The issue raised in the various grounds of appeal by the revenue are similar as decided by us in IT(SS)A No. 65/Kol/2019 for AY 2014-15. Accordingly our finding in IT(SS)A No. 65/K ..... X X X X Extracts X X X X X X X X Extracts X X X X
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