2016 (4) TMI 699

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....1 pertaining to A.Y. 2008-09 and ITA No. 291/Ahd/2012 is by another assessee preferred against the order of the ld. CIT(A)-III, Ahmedabad dated 16.11.2011 pertaining to A.Y. 2008-09 and the facts in issues are identical to the facts in issues with ITA No. 290/Ahd/2012. 2. All these appeals were heard together and are disposed of by this common order for the sake of convenience. We first take up ITA No. 64/Ahd/2012 assessee's appeal 3. The sum and substance of the sole grievance of the assessee relates to the disallowance of interest expenses of Rs. 48,74,798/-. 4. While scrutinizing the return of income, the A.O found that the assessee has shown net loss of Rs. 28,16,606/- as per financial services trading account. The A.O....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....activities was the finance activity in the name of Rajeev Enterprise. The funds utilized by the assessee were for introducing capital in the firm in which he is a partner and the funds have been utilized for the purchase of land. It was brought to the notice of the ld. CIT(A) that from the land business, the assessee has made a gross profit of Rs. 5.45 crores. Thus, it can be seen that the funds have been utilized for the purposes of business. It was further brought to the notice of the ld. CIT(A) that the Rajeev Enterprise has received interest amounting to Rs. 52,56,223/- and has paid interest of Rs. 56,41,978/-. Thus, there was only a difference of Rs. 3,85,755/- and not Rs. 24,30,996/- as held by the A.O. 7. After considering the fac....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the disallowance of interest is against the facts of the case since the transaction is purely on the grounds of commercial expediency. Per contra, the ld. D.R. strongly supported the findings of the ld. CIT(A) on this count. 10. We have given a thoughtful consideration to the orders of the authorities below. The issue before us is to decide whether by charging lesser rate of interest whether the assessee has diverted the borrowed funds. 11. Neither the A.O nor the First Appellate Authority have brought any cogent material on record which could demonstrate that M/s. RJD Impex Pvt. Ltd. has not used the money for its business. The detailed explanation filed by the assessee regarding land dealings has been rubbished by the First Appellat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tual matrix shows that the proprietary concern of the assessee M/s. Rajeev Enterprise has not used the funds for non-business purposes in fact the funds from Rajeev Enterprise have been diverted to other business activity of the assessee namely trading in land, share and futures and options and financing activities. Since no funds have been diverted from Rajeev Enterprise for nonbusiness purposes of the assessee and in fact the funds have been diverted for other business activity from where substantial income has been earned by the assessee. We, therefore, decline to interfere with the findings of the ld. CIT(A), ground no. 2 is accordingly allowed. 17. Facts relating to ground no. 1 of revenue's appeal show that during the course of the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... Ashaben Desai. It was explained that the assessee and his wife has purchased the land from Shri Hemendra Shah. It was brought to the notice to the ld. CIT(A) that Shri Hemendra Shah had obtained legal power of attorney from Shri Gandaji Thakor and Ors. 20. After considering the facts and submissions and the relevant documentary evidences, the ld. CIT(A) observed that "the land bearing survey number 648 was initially agreed to be sold to Shri Hemendra Shah. For this purpose power of attorney was given by Shri Gandabhai Makwana, the original owner of the land, in favour of Shri Abbasbhai Malik, a broker. According to Shri Gandabhai Makwana, the land was subsequently sold by Shri Abbasbhai Malik without his knowledge to Shri Hemendr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rchase of land 2687000 4 Investment in Post office MIS scheme 1095000 5 Purchase of Auto Rickshaw, Motor cycle 352500 6 Loans given to others 1750000   Total 18584500   5.1. On the basis of the statements recorded during the course of search in the case of Gandabhai Makwana and other family members, the AO came to the conclusion that the actual price of the land was Rs. 2.10 crores and therefore, the appellants must have paid Rs. 2.10 crores to Shri Hemendra Shah. On this presumption, he made the addition of the cash component of Rs. 1.45 crores (Rs.72.50 Lacs each) in the hands of the appellants. As can be seen from the above mentioned sequence of events, neither Gandabhai Makwan....