2016 (4) TMI 650 - AT - Income Tax

Appeal dismissed for low tax effect, partial addition for land sale, interest disallowance upheld

The Revenue's appeal for the A.Y. 2011-12 was dismissed due to a low tax effect. The addition of an advance received for the sale of agricultural land was ... Addition u/s 69A - sum was deposited after a period of two months from the date of agreement of sale - Held that:- There is no requirement under the law that under the Act assessee has to deposit the entire sale consideration into his bank account immediately. The assessee may retain some amount for his personal or business needs and can subsequently make the deposit as per his convenience. Therefore, the reason on which the Ld. CIT(A) has made the disallowance is, in our opinion, not sustainable. The Hon’ble jurisdictional High Court in the case of D.Yasodamma vs. CIT reported in (1966 (9) TMI 28 - ANDHRA PRADESH High Court ) was seized of a similar issue and has held that the amount withdrawn by the assessee therein two months back must be considered to be available with her for deposit subsequently. Thus, the contention of the assessee is sustainable - Decided in favour of assessee Disallowance of interest on the loans taken by the assessee from three persons - Held that:- The assessee has claimed the interest portion as against the income from other sources and has never claimed under section 24 of the Act. Since the assessee has also not filed any evidence whatsoever in support of its claim before the authorities below or before this Tribunal, we do not see any reason to interfere with the order of the Ld. CIT(A). Issues involved:1. Dismissal of Revenue's appeal due to low tax effect.2. Addition of advance received for sale of agricultural land.3. Disallowance of interest on loans for property alteration.Issue 1: Dismissal of Revenue's appealThe Revenue's appeal for the A.Y. 2011-12 was dismissed due to a low tax effect of only &8377; 4.67 lakhs, in accordance with CBDT Circular No.21/2015 dated 10th December, 2015.Issue 2: Addition of advance received for sale of agricultural landThe assessee received an advance of &8377; 21 lakhs for the sale of agricultural land. The A.O. questioned the source of this amount, leading to an investigation. The purchaser, Mr. Surendra Yadav, confirmed the advance but failed to provide concrete evidence of the source of funds. The A.O. added the amount to the assessee's income under section 69A. The Ld. CIT(A) partially sustained the addition, disallowing &8377; 5,88,000 deposited after two months from the agreement date. The Tribunal found the disallowance unjustified, stating the assessee's right to retain funds for business purposes before depositing them.Issue 3: Disallowance of interest on loans for property alterationThe A.O. and Ld. CIT(A) disallowed &8377; 2.34 lakhs interest on loans for property alteration due to lack of evidence. The assessee claimed the loans were for property modification but failed to provide supporting evidence. The Tribunal upheld the disallowance as the claim was not substantiated and no evidence was presented.In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was partly allowed regarding the addition of advance for the sale of agricultural land. However, the disallowance of interest on loans for property alteration was upheld.