2015 (6) TMI 941

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....- u/s 40A(3) of the I.T. Act 1961. 3. The learned CIT(A) erred in confirming disallowance of an amount of Rs. 30500/- out of donations, not claimed by the assessee and wrongly adding the same to the assessee's income. 4. The learned CIT(A) erred in confirming the estimate of Net Profit @ 8% from the sale of development rights when all the details were submitted to the CIT(A)." 2. At the outset learned counsel, Dr. P. Daniel submitted that ground no. 1 is not pressed and accordingly, the same is dismissed as not pressed. 3. In Ground no. 2 the assessee has challenged the disallowance of Rs. 29,965/- made u/s 40A(3). The Assessing Officer noted that assessee has made cash payment exceeding Rs. 20,000/- for sums aggregating Rs. 3,16,666/-,....

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....below. Accordingly, he submitted that the payment is made to the Government Department and therefore, no disallowance u/s 40A(3) should be made as per Rule 6DD. Regarding telephone charges, the submitted that the same pertained to telephone bill of Director and has not been claimed as expenditure by the assessee, therefore, no disallowance is called for. Regarding purchase of steel from Panvel office, he submitted that the same was on account of imprest account and in support, vouchers were submitted before the authorities below that there was no cash purchase but transfer from one office to other. Regarding other payments, he submitted the provisions of 40A(3) are attracted and therefore, disallowance can be confirmed. 5. After hearing bo....

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....t rights to another person for Rs. 70 lakhs. On the said project, the assessee had incurred cost/expenses of Rs. 68 lakhs and therefore, the assessee had only gained Rs. 2 lakhs from the said project. The assessing officer held that the expenditure of Rs. 68 lakhs is not fully supported by evidences and therefore, the profit disclosed by the assessee cannot be accepted, accordingly, he estimated the profit @ 8% of the sale proceeds of Rs. 70 lakhs. 8. After hearing both the parties and on perusal of finding given in the impugned orders, it is noted that assessee has disclosed receipt of Rs. 70 lakhs against sale of development rights to M/s. Shelter Builder and Developer. The assessee has acquired the said project after making the payment ....

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....bills for payments attached are pertaining to year 1994-95 and 1995-96, which mainly consisted of amount paid to the list of the member of the Trimurti Cooperative Housing Society and CIDCO and that the said payment was not made by the assessee company itself. If the assessee has sold the rights to different developer for Rs. 70 lakhs and has also incurred expenditure in the form of payment for acquiring the right earlier, then such a cost or expenditure has to be allowed from the sale proceeds. There is no allegation that the payment made by the assessee in the earlier years have been claimed by the assessee. These costs are always taken to work-in-progress. The assessee had spent money to made the payments to the members of co-operative h....