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TMI Blog2022 (7) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the Assessing Officer to grant such credit of TDS, after proper verification. Addition being interest on fixed deposit as per AIR Information - Assessing Officer on the basis of AIR/ITS information, observed that assessee was in receipt of interest being credited by various banks - HELD THAT:- We note that in view of financial circumstances and suits pending before Hon'ble DRT for recovery of Rs. 500 crore by consortium of various banks, such interest could have credited by some bank having such FDR and appropriated such interest against dues of assessee hence there is no information with assessee. But, such credit of interest on mercantile system of accounting is receipt of assessee and its appropriation by bank is in the form of application of such receipt. It is therefore, we are of the view that such interest of Rs. 20,66,182/- being credited by various bank under the PAN of assessee for previous year is income of assessee. Therefore, the addition so made is upheld and confirmed. We note that assessee made a prayer before ld. CIT(A) that assessee has not claimed TDS deducted from such interest and Assessing Officer also not allowed the same, therefore TDS benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 50 of the I.T. Act. In the case of sale of land which were acquired in F.Y. 04-05 (land at Irrukundarai) and in F.Y. 05-06 (land at Andhiyur), these land were long term capital asset being acquired and kept for more than 36 months. The ld. CIT(A) noted that these lands were not depreciable assets. Therefore, the sale of these land for which separate consideration is received will result into long term capital (LTCG). As per provisions of section 70(3) of the Act, the net resultant long term capital gain on account of sale of these two land will be Rs. 53,15,401/- (5942874 -627473).It is therefore, in the place of addition of Rs. 29,46,45,500/- profit as worked out by A.O. it is to be with short term capital gain of Rs. 28,52,55,287/- and long term capital gain of Rs. 53,15,401/-. The total addition in the form of such gain of Rs. 29,05,70,688/- (28,52,55,287 + 53,15,401) were upheld and confirmed by ld. CIT(A). Therefore, ld. CIT(A) directed the A.O. to delete the balance addition of Rs. 40,74,812/- (29,46,45,500 - 29,05,70,688). From the above narrated facts, it is abundantly clear that ld. CIT(A) has passed speaking order on the issue under consideration, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g balances. It be so held now. 5. Ld. CIT(A) erred in law and on facts in confirming disallowance, of depreciation of Rs. 30,49,418/- for windmill sold during the year ignoring fact that block of windmill still remains and accordingly allow the depreciation. Ld. CIT(A) ought to have considered the submission of the assessee and delete the disallowance. It be so held now. 6. Ld. CIT(A) erred in law and in facts in confirming disallowance of Rs. 6,10,000/- of Preliminary expenses by considering same as capital in nature. Ld. CIT(A) ought to have considered the submission of the assessee and allow the same as revenue expenses or deferred revenue expenses. It be so held now. 7. Ld. CIT(A) erred in law and on facts in confirming addition of Rs. 29,05,70,688/- (Rs. 28,52,55,287/- for short term capital gain and Rs. 53,15,401/- for long term capital gain). Ld. CIT(A) ought to have considered the submission of the assessee and delete the addition made by AO. It be so held now. 8. Confirming levy of interest u/s. 234A, 234B and 234C is unjustified. Initiation of penalty u/s, 271(1)(c) of the Act is unjustified. 9. Initiation of penalty u/s. 271(1)(c) of the Act is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay affairs. 3. All the main 3 promoters/Directors, Shri Subhashchandra C Mehta, Shri Pradeep S. Mehta and Shri Dipak Mehta were taken into custody by CBI under various cases at different times from the year 2010 to 2012. It took long years to get the bail in all these cases filed by the CBI. 4. Immediately thereafter the Directorate of Enforcement (ED) initiated its proceedings, investigations under the Prevention of Money Laundering Act (PMLA) in the year 2014 and their investigations lasted till 2016 under which various proceedings were initiated, all the people were questioned and properties of the company sold by banks under Securitization Act were provisionally attached and all the Third Parties whosoever bought the properties were also came into litigation, creating total atmosphere of chaos and those parties starting harassing the promoters/directors. 5. All the Charge Sheets by the CBI as well as ED were filed in the Courts and the promoters/Directors alongwith others had to undergo again for the bail proceedings. 6. Alongwith the bankers and institutions other few big creditors also initiated civil and criminal cases like Punjab State Warehousing Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondone the delay and admit the appeal for hearing. 7. Ground No. 1 raised by the assessee relates to disallowance of Rs. 9,460/- under section 14A r.w.s. Rule 8D of the Rules. 8. Learned Counsel for the assessee, informs the Bench that assessee, does not wish to press ground No. 1, therefore, we dismiss ground No. 1, as not pressed. 9. Ground No. 2 relates to addition of rental income of Rs. 2,80,000/- received from M/s. Virtual BPO services. 10. Succinct facts qua ground no. 2 are that Assessing Officer during the assessment proceeding observed from AIR/ITS date information that assessee has received rent income from M/s. Virtual BPO Services to the tune of Rs. 2,80,000/-. On being asked, the assessee submitted before the Assessing Officer that assessee-company did not received rental income, in fact the bank is directly getting the rental income, as approved. However, Assessing Officer rejected the contention of the assessee and made addition of Rs. 2,80,000/-. 11. On appeal, Ld. CIT(A) confirmed the action of Assessing Officer. Aggrieved, the assessee is in further appeal before us. 12. Before us, Ld. Counsel pleads that assessee's property situated at 412, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of Rs. 20,66,182/- was made by the Assessing Officer on account of interest on fixed deposits as per information of AIR/ITS. The Assessing Officer on the basis of AIR/ITS information, observed that assessee was in receipt of interest being credited by various banks (as discussed at para 4.2 of the assessment order).On being asked, the assessee submitted before Assessing Officer that such interest was credited on various FDRs with such bank for L/C margin and on account of all such bank had filed suit against assessee for recovery of heavy amount might have credited the interest but has not informed assessee. The assessee, therefore, failed to reconcile such interest before Assessing Officer, therefore Assessing Officer made addition of Rs. 20,66,182/-. 19. On appeal, Ld. CIT(A) confirmed the action of Assessing Officer. The Ld. Counsel for the assessee submitted that assessee does not have any information before him, therefore assessee has not recorded such interest in books of accounts, hence addition should not be made. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer. 20. We have heard both the parties a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 28,90,67,060/- which is much more than WDV of Rs. 38,11,773/-. Infect after reducing complete WDV of Rs. 38,11,773/-, there will be surplus of Rs. 28,52,55,287/- (28,90,67,060 - 38,11,773) which is required to be considered as short term capital gain as per section 50 of the Act. Therefore, assessing officer disallowed the deduction of Rs. 30,49,418/-. 24. On appeal, ld. CIT(A) confirmed the action of the assessing officer. The ld. Counsel argued before us that there were two blocks of windmill and one block of such windmill having WDV Nil, was sold. However, another block was not sold on which depreciation@ 80%, was claimed, (see depreciation as per tax audit). It was further contended that A.O. disallowed claim of depreciation but not reduced the WDV from the working of short term capital gain. However, ld. DR supported the findings of the assessing officer. 25. We have heard both the parties. We note that ld. CIT(A) observed that as far as reduction of sale, consideration of windmill from WDV of such block, the same is as per the provisions of Act. The assessee has kept two blocks of windmill, one with NIL WDV while another with WDV having eligible rate of dep. at 80%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminary expenses, and assessee has been claiming such deferred revenue expenses since long. Therefore, we note that assessee is entitled to claim these expenses, hence we direct the assessing officer to allow preliminary expenses, of Rs. 6,10,000/-. Thus, ground no. 6 raised by the assessee is allowed. 31. Ground No. 7 consists addition of Rs. 28,52,55,287/- for short term capital gain (STCG) and Rs. 53,15,401/- for long term capital gain (LTCG) totaling to Rs. 29,05,70,688/-. 32. Brief facts qua the issue are that assessing officer in the impugned assessment order, in view of information through AIR/ITS, considered the transaction of sale of windmills and land related to such windmill. The A.O. considered the details as provided by assessee in respect of sale of land as well as windmill installed on such land. The A.O. also observed that the WDV of all such windmill was NIL hence after giving credit of cost of land on which depreciation was not claimed by assessee, the A.O. computed profit on sale of land at Rs. 29,46,45,500/- and made addition. 33. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68,22,900 less: Indexed cost of acquisition 751500 x 582/497 8,80,026 Long term capital gain 59,42,874 (Rs.) (ii) Sale consideration of land at Irrukundarai 1,40,040 less: Indexed cost of acquisition 633000 x 582/480 7,67,512 Long term capital loss 6,27,473 As per provisions of section 70(3) of the Act, the net resultant long term capital gain on account of sale of these two land will be Rs. 53,15,401/- (5942874 -627473).It is therefore, in the place of addition of Rs. 29,46,45,500/- profit as worked out by A.O. it is to be with short term capital gain of Rs. 28,52,55,287/- and long term capital gain of Rs. 53,15,401/-. The total addition in the form of such gain of Rs. 29,05,70,688/- (28,52,55,287 + 53,15,401) were upheld and confirmed by ld. CIT(A). Therefore, ld. CIT(A) directed the A.O. to delete the balance addition of Rs. 40,74,812/- (29,46,45,500 - 29,05,70,688). From the above narrated facts, it is abundantly clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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