Tribunal upholds profit estimate for construction, disallows interest on loans. Revenue and assessee appeals dismissed.

The Tribunal upheld the CIT(A)'s decision to estimate the profit at 9% for the construction and sale of apartments, dismissing the Revenue's appeal. Additionally, the Tribunal ruled in favor of the assessee regarding the disallowance of interest paid on loans borrowed for house property and business, stating that no separate addition can be made once income is estimated. Both the Revenue and the assessee's appeals were dismissed, along with the Cross Objection filed by the assessee, in a decision pronounced on March 7, 2018.

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Issues involved:
1. Estimation of profit in the business of construction and sale of apartments.
2. Disallowance of interest paid on loans borrowed for house property and business.

Estimation of profit:
The appeal involved cross appeals by the Revenue and the assessee against the order of the Commissioner of Income Tax for the Assessment Year 2011-12. The Assessing Officer rejected the books of account of the assessee due to lack of supportive evidence for claimed expenditures, estimating the income at 12.5%. The CIT(A) later scaled down the estimation to 9% based on a previous case involving the same assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing the reasonableness of the estimation based on past cases and circumstances. The Revenue's appeal on this ground was dismissed.

Disallowance of interest:
The Assessing Officer disallowed interest claimed by the assessee under section 40(a)(ia) of the Act, as TDS was not deducted on payments to India Bulls. The CIT(A) directed the Assessing Officer to delete the addition, stating that section 194A did not apply as the interest was on a housing loan. The Tribunal agreed with the CIT(A), noting that no expenditure was claimed in the profit & loss account, thus the disallowance was unwarranted. Additionally, the Tribunal cited precedent to support that once income is estimated, no separate addition can be made for interest paid. The Revenue's appeal on this ground was also dismissed.

Conclusion:
The Tribunal dismissed the appeals filed by both the Revenue and the assessee, along with the Cross Objection filed by the assessee. The decision was pronounced on March 7, 2018.

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