TaxTMI 
TaxTMI 
2012 (12) TMI 656
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....d observed during assessment proceedings for Assessment Year 2005-06 that the construction on these plots were not actually completed in the period relevant to the Assessment Year 2005-06 as claimed by the assessee and debited Rs. 21,80,880/- as such expenses but quite earlier, this fact is evident from an application dated 27.12.2001 by Shri P.D. Lakhani on behalf of M/s. Lakhani Shoes Company Ltd. furnished to the Joint Commissioner, Municipal Corporation, Faridabad. Therefore, it showed that the expenses on improvement of the properties were incurred during Financial Year 2001-02 relevant to Assessment Year 2002-03, and copy of sale deed furnished by the assessee during the course of assessment proceedings for Assessment Year 2005-06 also evident that the construction was completed earlier to the Assessment Year 2005-06. On this basis after recording reasons for reopening the case, and obtaining approval from worthy CIT, Alwar vide letter No. 3406 dated 23.03.2009, notice under section 148 was issued on 24.03.2009 which was duly served upon the assessee on 26.03.2009. 3.1. Thereafter the Assessing Officer held that the cost of improvement to three plots via plot No. 47....
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....e department so as to comply with the requirements of section 69 of the Act. "He has not understood and not taken into account the advances to the building contractor. The year-wise details of which are enclosed as aforesaid in the paper books which would go to prove that the investments towards the construction of building had been made over the various years and are duly reflected in the books of account. The statement of account of building contractor as filed by the assessee is duly collaborated by the statement of account filed by Shri K.C. Grover. Thus there was no condition precedent to invoke the provisions of section 69 of the Act. In this connection your kind attention is invited to the decision of the ITAT Mumbai 'J' Bench in case of Rupee Finance and Management (P) Ltd. vs. ACIT (2009) 120 ITD 539 in which it was held that since the assessee had recorded all the investments in the books of account and no amount was paid in excess of what was recorded in the books, no addition was sustainable under section 69 of the Act because as per the provisions of the said section, only if the value of investment is not recorded in the books. Then it would be deemed to be the income....
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.... that the construction was completed in Assessment Year 2005-06 and therefore, the addition made in the year under consideration was not justified. While taking this view, the Tribunal has also taken into consideration the aspect of investment made in earlier year at page 6 of the order of the Tribunal in ITA No. 916/JP/2010 dated 13.4.2011. The figure of Rs. 21,80,880/- has been mentioned by the Tribunal which is challenged by the department now here before the Tribunal for the year under consideration. 8. After considering the orders of the Assessing Officer, Ld. CIT (A) and submissions, we find that issue is squarely covered by the order of the Tribunal. In fact, the Assessing Officer has made an addition of Rs. 34,39,207/- which includes the cost of improvement of Rs. 81,80,880/-. This entire addition was deleted by the Tribunal by giving its finding in para 3.7 onwards at pages 11 to 15 of its order supra. It is further seen that the figure of amount invested as improvement cost has been mentioned by the Tribunal at page 13 of its order which relates to assessment year 2002-03 to 05-06. The Tribunal has held that all these investments have been made through books of account....
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.... firm were with Shri J.P. Jain consultant of the firm who expired during the year. The supplementary partnership deed dated 31.03.2003 has been traced out which clearly provides that partners have mutually decided not to provide interest on capital for accounting year ended on 31.03.2003 and onwards. The deduction in case of firm had not been claimed during the year. The assessee further contended that the order of ITAT No. 916/JP/2010 dated 13.04.2011 of the Jaipur Bench wherein the ITAT for the Assessment Year 2005-06 have already decided this issue in our favour and have rejected the department view. Since the issue for this year is also same and the Assessing Officer has reopened the case based on Assessment Year 2005-06 which has now decided by the ITAT in favour of the assessee, in view of the above contention and order of the ITAT, the Ld. CIT (A) was requested to cancel the order passed under section 148 and delete the addition. Copy of the order of ITAT Jaipur Bench is enclosed for ready reference. 12. After considering the submissions, the Ld. CIT (A) found that issue squarely covered by the order of Tribunal for assessment year 2005-06. Accordingly, the Ld. CIT (A) de....
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....de for assessment year 2005-06. The Assessing Officer for A.Y. 2005-06 made addition in the hands of the assessee company @ 12% of interest on capital invested by the company in the firm M/s. Mascot Foot Care. An addition of Rs. 16,52,094/- was made. Matter reached upto the stage of Tribunal and the Tribunal after considering the submissions and following the decision of Hon'ble Bombay High Court in case of Nagri Mills Company Ltd., 33 ITR 681, held that addition made by the Assessing Officer by charging notional interest is not justified. The Tribunal has taken into consideration the provisions of section 28(v). The finding of the Tribunal has been recorded in para 5.5 at pages 16 to 18 which are as under :- " 5.5 We have heard both the parties. The assessee vide letter dated 13th Sept. 2009 filed before the AO that the assessee has filed following documents with the AO. 1. The balance sheet and Profit & Loss A/c of M/s. Mascot Footcare. 2. Partner's capital account for the year 2003-04 to 2004-05 of M/s. Mascot Footcare 3. Supplementary partnership deed dated 1-4-2004. The assessee has filed the copy of the assessment order of M/s. Mascoot Footcare for the assessme....
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....rm as well as in the case of the company is the same. If the interest is to be added in the hands of the assessee company then the same is to be allowed u/s 40(b) of the Act and the resultant revenue effect will be nil. The Hon'ble Bombay High Court in the case of CIT Vs. Nagri Mills Co. Ltd (1958), 33, ITR 681. ''We have often wondered why the Income tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different ; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department ; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the ....