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TMI Blog2022 (7) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... ls) who had rightly sustained the disallowance made by the A.O. Thus, the Ground of appeal No.1 raised by the assessee is dismissed Estimation of assessee s income from business as that of civil contractor a/w. a consequential disallowance of interest on loans raised from bank u/s.43B(e) - HELD THAT:- CIT(Appeals) had rightly concluded that now when the A.O had not placed on record any material which would substantiate his conviction that the assessee had generated contract receipts of Rs.1,15,73,522/-, therefore, there was no justification on his part in estimating the income of the assessee at Rs.6,93,488/- i.e. @8% of the said impugned receipts. At this stage, we may herein observe that the Department had accepted the aforesaid view of the CIT(Appeals) and had not carried the matter any further in appeal before us. Sustainability of the impugned disallowance of bank interest u/s.43B(e) - we are unable to find favour with the same. In our considered view, now when the assessee had disclosed his income u/s.44AD of the Act, therefore, no disallowance of the aforesaid amount was called for in his hands. As the disallowance u/s.43B presupposes raising of a claim for dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan. The bank guarantee invoked by the bank Rs.12,75,000/- has not been considered by the learned CIT(A) while deciding the case. It was also ignored by the learned CIT(A), that the return of income were filed u/s.44AD of the Income Tax Act. Where all expenses within section 29 to 43C are deemed to already allowed. Prayed to delete the addition made u/s.43-B towards accrued interest of Rs.23,21,099/- ( actual interest is only 1046099/- as per bank account and balance Rs.12,75,000 is bank guarantee invoked amount. 3. That bank interest of Rs.25914/- received on FDR were already claimed against the interest account and TDS has been claimed in the return of income. Prayed to delete the addition made on account of FDR interest of Rs.25,914/-. 2. Succinctly stated, the assessee who is engaged in the business of a civil contractor had e-filed his return of income for the assessment year 2009-10 on 23.11.2009 declaring an income of Rs.3,45,800/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. Assessment was thereafter framed by the A.O vide his order passed u/s.143(3) of the Act, dated 26.12.2011 determining the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Rs.210 Advertisement Expenses 2. Rs.13501/- Bank commission Charges a/c. 3. Rs.135796/- Bank interest a/c. vehicle loan-SBI 4. Rs.6899/- Insurance a/c. 5. Rs.5500/- Office expenses a/c. 6. Rs.30000 Salary a/c. 7. Rs.13200/- Security expenses a/c. 8. Rs.14044/- Telephone a/c. 9. Rs.8007/- Traveling expenses a/c. 10. Rs.45,000/- Arbitration and court fees Total Rs.2,72,157/- Observing, that now when the assessee had disclosed his income u/s.44AD of the Act, therefore, it was to be presumed that all the expenses mentioned in Sec. 29 to 43C of the Act were to be deemed to have been already given full effect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings it was observed by the A.O that the assessee had incurred interest expenditure on the secured loans raised from Bank of India, as under: Description of bank a.y.09-10 a.y.08-09 Increment (Interest) BOI c/c a/c 30340003 Rs.1,12,77,208/- Rs.94,53,284/- Rs.18,23,924/- BOI T/L A/c. No.70230038 Rs.48,60,849/- Rs.45,28,830/- Rs.3,32,019/- BOI T/L A/c No.9470626100000001 Rs.37,69,519/- Rs.36,04,363/- Rs.1,65,156/- Total Rs.23,21,009/- Observing, that neither the assessee had acquired any depreciable asset nor there was any change in his stock during the year under consideration i.e. 31.03.2008 to 01.04.2009, the A.O was of the view that the aforesaid facts would result to incongruous results qua the cost that was claimed by the assessee to have been incurred towards construction i.e Rs.1,08,969/- ( 3.8% of his gross receipts), as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be disallowed under Section 43B(e) of the Act. 11. After having given a thoughtful consideration to the aforesaid observations of the A.O, we are unable to comprehend the basis for making the aforesaid addition/disallowance by the A.O. In our considered view, the very presumption of the A.O that as the increase in the interest liability of the assessee was neither accompanied with any corresponding acquisition of depreciable assets or change in closing stock during the year under consideration, therefore, it was to be presumed that the assessee had executed undisclosed contract works is absolutely misconceived and baseless. It is the claim of the assessee that the fact that the bank had invoked a bank guarantee of Rs.12.75 lacs had been absolutely lost sight of by both the lower authorities. Be that as it may, the CIT(Appeals) had rightly concluded that now when the A.O had not placed on record any material which would substantiate his conviction that the assessee had generated contract receipts of Rs.1,15,73,522/-, therefore, there was no justification on his part in estimating the income of the assessee at Rs.6,93,488/- i.e. @8% of the said impugned receipts. At this ..... 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