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TMI Blog2022 (10) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. Addition u/s 69A - addition made on account of seized material found during search - HELD THAT:- Therefore, as the amount has already been taxed in the settlement petition of the assessee group, making addition once again in the hence of this assessee will amount to double taxation of the same income. Therefore, ground number 5 7 of the appeal are dismissed. Addition of differential interest income - trust income offered in the return of income is less as per the form 26AS the same was shown - HELD THAT:- We find that with respect to the above addition was found during the course of assessment proceedings and the same was made only on the issue of 3 verification of form number 26AS. Therefore, for the same reasoning given by us that concluded assessment can only be tinkered with incriminating material found during the course of search. Same is absent with respect to this addition. Accordingly, ground number 3 of the appeal is dismissed. Claim of the interest expenditure and adjustment in value of the closing stock inventory - HELD THAT:- In the present case the return of income was filed on 26/11/2013 and search took place on 13/7/2016 and therefore the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned assessing officer. - ITA Nos. 2377 & 2379/Mum/2021 And ITA Nos. 1423, 1436 & 1424/Mum/2022 - - - Dated:- 27-10-2022 - Shri Prashant Maharishi, AM And Ms. Kavitha Rajagopal, JM For the Assessee : Sh. K Gopal, AR For the Revenue : Sh. Dharamveer Singh, CIT DR ORDER PER PRASHANT MAHARISHI, AM: 01. These are five appeals filed by the Deputy Commissioner of income tax central circle 6 (4), Mumbai (the learned AO) in case of one assessee Juventus estates Ltd, New Delhi for assessment year 2011 .0 12, 2012 13, 2013 14 2014 15 and 2017 18. 02. We first take up the appeal for assessment year 2011 12 filed by the learned assessing officer against the order passed by the Commissioner of income tax, appeals 54, Mumbai dated 20/10/2021 (which is a consolidated order for assessment year 2011 12, 12 13, 14 15, 15 16 and 2016 17). By this order, the learned CIT A passed an order in appeal filed by the assessee against the assessment order passed u/s 143 (3)/153A of the income tax act 1961 dated 31/12/2018 passed by the learned assessing officer. 03. Briefly stated the facts shows that assessee filed original return of income on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on 31/12/2018 determining total income of the assessee at a loss of ₹ 35,515/ . 06. The assessee challenged the same before the learned CIT A. The first contention of the assessee is that the learned assessing officer should not have disturbed the valuation of the inventory for the reason that there is no incriminating material found during the course of search with respect to the above addition/adjustment the learned assessing officer could not have incurred the assessment for impugned assessment year 2011 12 whereas the search was carried out on 13/7/2016 and therefore the impugned assessment year is concluded assessment year. This could have been adjusted only on the basis of the incriminating material found during the course of search. It was also stated that with respect to the above adjustment in the closing inventory made by the learned assessing officer there is no material available/found during the course of search. The learned CIT A following the decision of the Honourable Supreme Court in case of where the continental warehousing Corporation is Ltd 374 ITR 645 and the decision of the Honourable Supreme Court in case of Sinhgad technical education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he materials gathered in the course of the proceedings u/s 153A of the income tax act establish that the relief granted Under the finalized assessment/reassessment were contrary to the facts are not during the course of 153A proceedings. Therefore, he submitted that the Honourable Bombay High Court has categorically held that during the course of assessment proceedings u/s 153A any material found, the concluded assessment can also be disturbed on basis of that material/information. Therefore he submitted that it is a myth propagated that the material should only be unearthed during the course of search which is indirect contradiction to the decision of the Honourable Bombay High Court in that case. He further stated that the order of Honourable Bombay High Court in CIT versus Murli Agro Ltd [supra] has been followed in the decision of CIT versus Continental warehousing Corporation (supra). Therefore he submitted that the learned CIT A has grossly erred in holding that there is no material available/unearthed during the course of search based on which the adjustment in the closing inventory of the assessee could have been made. Therefore, according to him, information that comes i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g search, the concluded assessment cannot be enhanced. Therefore ground number 1 and 3, 4 of the appeal of learned assessing officer are dismissed. 010. As ground number 2 is on the merits of the 11 is of net interest expenditure of ₹ 45,092,176 as cost of inventory is merely an academic in view of our decision in holding that there is no incriminating material with respect to the above adjustment, therefore there is no requirement of going into the merits of the addition. Therefore, ground number 2 is dismissed. 011. Ground number 5 7 are with respect to the addition of ₹ 80,000 u/s 69A of the act wherein addition of ₹ 80,000 has been made on account of seized material found during search. We find that identical issue in ITA number 496/2022 for assessment year 2012 13 in case of India Bulls housing finance Ltd dated 22/6/2022 has been decided wherein it has been found that the above sum has been included in the income offered by the assessee group before the settlement commission. Paragraph Number 4 of that decision also notes that merely because the order of the settlement commission has been challenged before the Honourable High Court there is no reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2011 12, wherein it has been held that the above sum has been included in the settlement petition filed by the group before the settlement commission and has also been included in the disclosure. Therefore, same amount has already been taxed in the hence of group entities, it would amount to double addition, therefore, following the reasoning given by us for assessment year 2011 12 in the appeal of the learned AO, for the similar reasons ground number 6 8 of the appeal are dismissed. 016. Accordingly, ITA number 1436/M/2022 filed by the learned assessing officer for assessment year 2012 13 is dismissed. 017. ITA number 2377/M/2021 is filed by the assessing officer for assessment year 2013 14 wherein ground number 1 47 with respect to the claim of the interest expenditure and adjustment in value of the closing stock inventory. This ground is identical to the appeals of the learned assessing officer for assessment year 2011 12 and 2012 13 wherein we have held that in the concluded assessment, adjustment/addition can only be made on the basis of incriminating material found during the course of search. In the present case the return of income was filed on 26/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und during the course of search, the learned assessing officer has made the addition which has been deleted by the learned CIT A4 the reason that in the settlement petition filed before the settlement commission the above amount has been owned by the group and therefore, same could not have been added once again in the hence of this assessee. This is also covered in the cases of the group concerns on identical facts and circumstances. We have also in this order for assessment year 2011 12 and 2012 13 has decided this issue upholding the order of the learned CIT A respect to the deletion of the above addition. Therefore, we do not find any reason to deviate from the same. Accordingly ground number 5 7 of the appeal are dismissed. 023. Accordingly ITA number 1424/M/2022 filed by the learned assessing officer for assessment year 2014 15 is dismissed. 024. ITA number 2379/M/2021 is filed by the learned assessing officer for assessment year 2017 18 against the order passed by the learned CIT A 54, Mumbai (the learned CIT A) dated 20/9/2021 wherein the learned AO is aggrieved that the interest income comprised of interest received from fixed deposit which is rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d AO disagreed with the same and disallowed the above sum as business expenditure but allowed the same Under the head income from other sources to the extent of interest income on taxed u/s 56 of the income tax act amounting to ₹ 11,525,992/ resulting the income from other sources resulted into a loss of ₹ 37,280,030/ which was adjusted against the business income of ₹ 15,557,311 and consequently the loss of ₹ 21,722,719/ arising out of loss Under the head income from other sources was not allowed to be carried forward. Consequent assessment order was passed on 30/12/2018. 027. Assessee preferred appeal before the learned CIT A held that the appellant has explained that the assessee company is following the percentage completion method of accounting and in the assessment year 2011 12 the interest expenditure was included in work in progress as per accounting standard issued by the Institute of chartered accountants of India. During the year the assessee company has paid interest on loan taken for its real estate project and as per the accounting standard the appellant company has charged interest on loan to profit and loss account as the developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 25 of the balance-sheet to show that assessee has no other income except interest on fixed deposits. He therefore submitted that there is no business activity carried on by the assessee, therefore there cannot be any business income classified being interest received from fixed deposit receipts. He further referred to the fact that for assessment year 2011 12 onwards also assessee did not have any business activity for last 5 years. He further referred to note number 12 and not number 13 and 2 show that as on 31st of March 2017 the assessee does not have any investment. Note number 12 also shows that except the borrowing cost capitalized in the inventory there is no other adjustment. He further referred to the cash flow statement and submitted that there is no business activity carried burden by the assessee and therefore there cannot be any claim of business being carried out by the assessee. Accordingly the order of the learned CIT A holding that interest on fixed deposit receipt should be considered as business income and consequently allowing the claim of the assessee of deduction of interest of ₹ 488 lakhs is incorrect. 030. The learned authorized representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not considered by any of the lower authorities as emanating from the assessment order or appellate order. In view of this we set-aside appeal of the learned assessing officer back to the file of the learned assessing officer for the purpose of determination whether the interest income earned by the assessee on fixed deposit receipt is a business income on income from other sources. The assessee is also directed to justify the same that interest on fixed deposit receipt should be considered as business income and consequently the deduction of interest expenditure is also required to be examined by the learned assessing officer. Accordingly ground number 1 4 of the appeal of the AO is restored back to the file of the learned assessing officer. 033. As ground number 5 is consequential in nature, same is also restored to the file of the learned assessing officer. 034. In the result appeal filed by the learned assessing officer for assessment year 2017 18 is allowed for statistical purposes. 035. In the result appeal of the learned assessing officer for assessment year 2011 12 to 2014-15 are dismissed and for assessment year 2017 18 is allowed for statistical purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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