TaxTMI 
TaxTMI 
2015 (6) TMI 630
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....ls) has erred in confirming the addition of Rs. 2, 18,61 ,495/- made by the learned Assessing Officer by disallowing the loss 1 expenditure on account of Stamp Papers purchased for buying Stock of Lana by Companies amalgamated with the Appellant Company but which could not be utilized. 2.1 That the learned Commissioner of Income Tax ( Appeals) has grossly erred in law and on facts of the appellant's case in holding that the expenditure incurred by appellant were on capital account. 2.2 That the learned Commissioner of Income Tax ( Appeals) has grossly erred in law and on facts of the appellant's case in holding that the expenses 1 loss on surrender of stamp papers did not pertain to the year under consideration. 2.3 That the learned Commissioner of Income Tax (Appeals)'s order in confirming the disallowance of claim for surrender of stamp papers is based on surmises, conjectures and imaginative consideration and the same is prayed to be quashed. 2.4 That the order passed by learned Assessing Officer and confirmed by the learned Commissioner of Income Tax (Appeals) is bad in law." 2. The brief facts of the case as noted in the assessment order are that the asse....
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....essee in its accounts for the A. Y 2003-04 shown this amount as loans and advances and not the part of closing stock The erstwhile 19 companies as well as the assessee company has made investments in agricultural lands in past therefore it cannot be held at the stage of purchase of stamp paper that whether the 19 companies amalgamated in assessee company has purchased these stamp papers for purchasing agricultural land for Investment purposes or trading purposes. The onus of proving necessary facts in order to avail the deduction under section 37(1) of the I. Tax Act is on the assessee. If, therefore, the assessee fails to establish the facts necessary to support his claim for deduction u/s 37(1) of I. Tax Act, the claim for deduction of expenditure is not admissible as held by Hon'ble Supreme Court in the case of CIT Vs. Calcutta Agency Ltd. (1951) 19 ITR 191. Further, the burden to prove the loss is on the assessee who alleges and the loss cannot be said to be satisfactory proved unless all the particulars with regard to this are clearly shown - CIT Vs. Radha Krishna Ramnath AIR 1929No. 153, CIT Vs. Calcutta Agency Ltd. and Mannalal Ratan lal Vs. CIT (1965) 58 ITR 84 (Cal.)....
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....the year under consideration is disallowed and added back to it total income. I am satisfied that the assessee has furnished inaccurate particulars of its income and, has deliberately concealed its Income on this issue, therefore, penalty proceedings u/s 271 (1 )(e) have been initiated separately. (Addition of Rs. 2,18,61,495)" 3. Aggrieved, the assessee filed appeal before Ld. CIT(A) and reiterated its arguments. However, Ld. CIT(A) also did not agree with the contention of assessee and upheld the addition made by A.O. by holding as under: "I have examined the submission made by the appellant before me and also the reasoning given by the Assessing Officer in disallowing the claim of appellant of treating the stamp paper purchase as revenue expenditure. It is seen that these stamp papers were purchased during F. Y. 2000-0 I, relevant to A. Y. 2001-02 by nineteen different companies of Rs. 2,42,90,550/-. These different companies were amalgamated with Nilgiri Cultivation Pvt. Ltd., as a result of the order of the Hon'ble Delhi High Court effective from 1.4.1999. It is seen that 10'% of these stamp paper value i.e. Rs. 24,29,055/- has been written off in A. Y. 2003-0....
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....nt no.5 of this office letter dated 26.12.2008. In the absence of the copies of agreement, it cannot be accepted that the stamp papers were purchased for the purpose of purchase of land by the remaining 15 companies. Moreover the agreements filed by the appellant in respect of 4 companies are unregistered agreement, written on plain papers having no legal value. In view of the facts discussed above, the following fact emerges: 1. The appellant fails to establish that the stamp papers were actually purchased by the erstwhile 19 companies for acquiring land for the purpose of stock in trade; 2. The appellant himself has shown the expenditure under head 'loan and advance' and not under the head 'purchase/stock in trade' which shows that the expenditure incurred, if any, was not a revenue expenditure. 3. The appellant has not filed copies of agreement in respect of 15 companies entered into with proposed sellers. 4. The agreement filed in respect of four companies is unregistered documents on plain papers which have no legal validity. 5. The appellant itself has claimed 10% of the expenditure in A Y 2003-04 which shows that the expenditure was not revenue ex....
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....venue authorities, therefore, assessee itself had written off 10% of the cost of stamp papers in the year itself and had made claim with revenue authorities for refund of 90% of the cost of stamp papers. Therefore, the amount for 90% of claim was not written off in the year of purchase as assessee was hopeful of getting refund. Ld.A.R. further submitted that during the year under consideration, the assessee realized this fact that the amount is not recoverable and, therefore, it decided to write off the same. Ld.A.R. submitted that the case of the assessee was squarely covered by the order of Hon'ble Supreme Court in the case of Kerala State Industrial Development Corpn. Ltd. 2012 (TIOL) 83 SCIT, wherein it has been held that the commercial test and business exigency test, need to be applied for suggesting as to whether deduction u/s 36(1)(vii) is allowable or not. It was submitted that in that case, assessee had given advance to a joint venture company which was declared sick by BIFR and advance had become bad. Ld. A.R. submitted that Hon'ble Supreme Court had held that the said amount was allowable as deduction when it was written off in the books of account. Ld. A.R. fur....
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....covery of cost of stamp papers had become final in this year as the Collector Gurgaon had rejected the application of assessee vide order dated 08.02.2003 which falls in Assessment Year 2003-04. 7. We have heard rival parties and have gone through the material placed on record. This case was earlier heard on 12.03.2015. During the course of dictation it was felt that Ld. A.R. had not clarified certain objections raised by Ld. CIT(A) as contained in Sl. N.1-5 at page 03 of his order and therefore the case was refixed and was finally heard on 15.05.2015, where, Ld. A.R. filed an additional synopsis wherein he clarified the objections raised by Ld. CIT(A). From the facts of the case, following undisputed facts emerged:- i) The assessee is engaged in the business of development of real estate and 39 companies merged with the assessee company w.e.f. 01.04.1999 by the order of Hon'ble High Court. ii) Out of 39 companies, 19 companies had purchased stamp papers in the Assessment Year 2001-02 which could not be utilized for execution of sale deed, therefore, 10% of the cost of stamp papers were written off in the books of account in the Assessment Year 2002- 03. The assessee applied....
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....income of assessee in the same year or some earlier year. Whereas in the present case, the amount of claim of write off does not constitute writing off it as bad debt and rather it is a case of claim of expense which was incurred in the course of business of assessee and which had to be claimed in the year in which it was incurred as the assessee was following mercantile system of accounting. If the assessee had not claimed the same in the year of its incurrence as it was hopeful of recovering the same then such claim can be written off in the year in which assessee came to know that claim cannot be recovered. The order of collector rejecting the application for refund of amounts is dated 08.02.2003 which means that order was pronounced in the Assessment Year 2003-04, therefore, at best, the assessee could have claimed the same in Assessment Year 2003-04. The final accounts are prepared at least after three-four months from the date of closing. Therefore, there was sufficient time period available to assessee for writing off the claim in Assessment Year 2003-04. Therefore, the deduction claimed in the year under consideration cannot be said to have materialized in the present year ....