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TMI Blog2022 (10) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... lso his submission that given an opportunity, assessee is in a position to substantiate with evidence to the satisfaction of the AO that such interest income which belongs to the sister concern of the assessee has in fact been offered by them to taxation. We deem it proper to restore this issue to the file of the AO with a direction go grant an opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The first issue raised by the assessee in grounds of appeal is accordingly allowed for statistical purpose. Expenditure incurred towards land development - HELD THAT:- Although the assessee has claimed such land development expenditure for the AY 2014-15, no such disallowance has been made in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income on 15.10.2016 declaring total income of Rs.7,74,650/-. A search and seizure operation u/s. 132 of the I.T.Act was conducted in the case of the assessee and its other associated companies on 09.11.2017. In response to notice u/s. 153A issued on 21.03.2018, the assessee filed its return of income on 11.07.2018 declaring total income of Rs.7,74,650/-. During the course of assessment proceedings, the AO noted that assessee is in the receipt of interest income and has offered an income of Rs.22,13,234/-. However, on verification of the 26AS statement, the AO noted that assessee has received interest income of Rs.22,08,234/- from Allahabad and Rs. 57,150 from Canara Bank totaling to Rs.22,65,384/-. In absence of any satisfactory reply give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is in appeal before the Tribunal. 6. So far as the first issue i.e addition of Rs.52,150/- is concerned, the ld. Counsel for the assessee submitted that the above interest income has been shown in the hands of the sister concern. He submitted that the bank had inadvertently reflected the interest in the hands of the assessee company, whereas subsequently, the same was corrected. He submitted that given an opportunity, the assessee is in a position to substantiate that the income of Rs.52,150/- made by the AO is in fact belongs to the sister concern of the assessee. He submitted that the assessee does not have any account with Canara bank. Therefore, he has no objection if the matter is set aside to the file of the AO for verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to substantiate its case and decide the issue as per fact and law. The first issue raised by the assessee in grounds of appeal is accordingly allowed for statistical purpose. 9. So far as the second issue is concerned, the same relates to the addition of Rs.1 crore made by the AO out of the expenditure incurred towards land development which has been sustained by the ld.CIT(A). 9.1 The ld. counsel for the assessee, at the outset, submitted that for the AY 2013-14, copy of which is placed at page 71 to 75 of the paper book, the assessee has claimed land development expenses to the extent of Rs.95,86,237/- and the AO disallowed 20% of such expenses which worked out to Rs. 19,17,251/-. In appeal, the ld.CIT(A) sustained the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be disallowed cannot be accepted since in future years, the assessee may claim any such expenditure without incurring it and may plead for disallowances of such expenses at a specific percentage. He accordingly submitted that the order of the ld.CIT(A) be upheld and the ground raised by the assessee on this issue should be dismissed. 11. We have heard the rival arguments made by both the sides, perused the orders of the AO and ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case made addition of Rs.1 crore to the total income of the assessee on the ground that the assessee could not substantiate with evidence to his satisfaction reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses on ad hoc basis. It is an undisputed fact that the assessee is in the real estate business and the expenses are on account of Land Development . It is also a fact that it is not the case of the Revenue that the expenses incurred by it under this head is bogus as is evident by the fact that AO has not disallowed the entire expenses but has only disallowed 20% of the expenses. Considering the totality of the aforesaid facts, we are of the view that the disallowance made by the AO at 20% is at a higher side. We are of the view that the interest of justice shall be met if the disallowance is restricted to 10% of the expenses. We, thus direct accordingly. Thus, the ground of appeal is partly allowed. 13. We further find although the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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