TaxTMI 
TaxTMI 
2016 (4) TMI 1158
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion in respect of the above entries except stating that 100% reconciliation is not possible and the un-reconciled entries are pertaining to the notices not responded by the parties. 2. Whether on the facts and circumstances of the case and in law, the Ld CIT{A} erred in allowing the appeal of the assessee and directing the AO to treat the expenditure of Rs. 15.00 lakhs as revenue expenditure whereas the said expenditure has been actually incurred as consultancy charges paid to M/s Tower Capital & Securities P. Ltd. for raising equity as admitted by the assessee itself in the written statement before CIT{A} which clearly shows that it is directly related to the capital expansion of the assessee and hence required to be treated as capital expenditure. 3 Whether on the facts and circumstances of the case and in law, the Ld CIT{A} erred in treating the expenditure of Rs. 1,63,842/- as preliminary expenditure qualifying for deduction u/s.35D {2} {iii} whereas the said expenditure has actually been incurred as ROC payment in connection with the raising of equity capital and not incurred for registration of company . 4 Whether on the facts and circumstances of the case and in law, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts and circumstances of the case and in law, the Ld ClT(A} erred in allowing the appeal of the assessee and directing the AO to delete the addition of Rs. 39,75,OOO/- made u/s.69 of Income Tax Act 1961, being unaccounted cash payment made by the assessee for the acquisition of a commercial property, by failing to appreciate the elementary fact that the incriminating evidence can not be true to the extent it suits the assessee ( two payments by cheque) and untrue to the extent it incarcerates (bind) the assessee (cash payment of Rs. 39.75 lakhs for purchase of commercial property for which two payments are by cheque) 3. Grounds of cross-objection are reproduced below: ― 1. That on the facts and in the circumstances of the case of the cross-objector and in law, the ld. CIT(A) has erred in upholding the disallowance u/s 40(ia) of the Act of amounts aggregating to Rs. 9,11,683/- from EMI payments made to financier; 2. That on the facts and in the circumstances of the case of the cross-objector in law, ld. CIT(A) has erred in upholding the disallowance u/s 40(ia) of the Act of amounts aggregating to Rs. 426,138/- being amounts paid to various parties in the course of busine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actions there would be three parties involved viz. Consignor, consignee and agent and billings were done as per the agent's instructions but sometimes the payment was received and TDS was deducted either by consignee or by consigner and thus the assessee requested the AO to consider that overall sale reflected in the accounts which was more than twice than that as rejected in AIR and prayed that no disallowance was called for. The contention of the assessee was rejected by the AO and addition of Rs. 1,45,43,421/- was made and added to the total income of the assessee on account of mismatch information with books of account on the ground that the assessee failed to furnish confirmations from the parties from whom the assessee received the payments and contract receipts. Aggrieved by the decision of the AO, the assessee preferred an appeal before the ld. CIT(A) who vide para 4.7 of the appellate order held as under : 4.7 I have considered the submissions of the Appellant. The issue in question is of addition of Non-reconciled amount of Rs. 1,45,43,421/- of the AIR information to the total income of the appellant for the relevant year. The facts which are not in dispute are already ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 20% of the total sales of the assessee. Out of the said AIR entries the assessee had reconciled the entries amounting to Rs. 46,97,07,933/- meaning thereby that 97% of the AIR entries were reconciled by the assessee. The difference mismatch might be due to faulty return filed by the 3rd party. The ld. AR further submitted that in order to verify the un-reconciled items of AIR information, the AO has sent notice under section 133(6) to various parties on the addresses provided in the AIR information twice but all the notices were returned back undelivered to the department which proved that the AIR information could not be relied upon to make addition in the hands of the assessee. The ld. AR further submitted before us that the issue was covered in favour of the assessee by the decision of co-ordinate Bench in its own case in ITA No. 3057/Mum/2012(AY-2007-08) dated 24.5.2013. The ld.AR also relied upon the decision of the Tribunal in the case of Shri S Ganesh V/s ACIT in ITA No.527/Mum/2010 (AY 2006-07) dated 8.12.2010, wherein it has been held that in absence any record contrary to the fact, the revenue authorities could not make any addition on account of AIR information. We find....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en incurred towards issue of shares to Reliance Capital Limited specifically. As a result, the restructuring of the assessee would run its business more profitably and economically. The ld. CIT(A) further held Glaxo Laboratories Ltd 181 ITR 59. The Hon'ble Bombay High Court under the similar circumstances further held tht the similar expenses incurred for raising the share capital of the assessee was held to be revenue in nature, because the Government of India would not have permitted the assessee to enter into a fresh collaboration agreement with the UK parent company, which was needed to run the business of the assessee more profitably and thus held that the facts of the assessee's case were squarely covered by the said decisions and directed to delete the addition of Rs. 15 lakhs. 8. We have carefully considered the rival submissions and perused the material placed before us. We find that the assessee had clearly stated in para 6 of the statement of facts filed with memorandum of appeal before the ld.CIT(A) that 32,21,222 equity shares were issued to Reliance Capital Ltd and also incurred legal and professional charges and due diligence charges for raising share capital for as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zed share capital and issue of shares capital, the details thereof were incorporated at page 11 of the assessment order. The AO relying on the decision as referred to in para 10.1 and 10.2 of the assessment order held that the expenditures pertained to increase in authorized capital and issue of share capital and same would not be eligible for deduction u/s 35 (2)(iii) of the Act. 10. The ld. CIT(A) deleted the addition holding that the said expenditure was covered under the provisions of section 35D of the Act. The ld. CIT(A) appeal accepted the arguments of the Ld.AR that these were allowable expenses as there were mentioned specifically in Sub-Clause (iii) of clause (c ) of subsection (2) of section 35D. Similarly, the expenditure on issue of shares were also covered by sub-clause (4) of the Act. 11. The ld. DR argued before us that Rs. 1,63,842/- were paid to Registrar of Company as fee for increase in authorized shares capital of the company and submitted that the same was not covered by the provisions of section 35(2)(iii) and (4) of the Act and therefore the order of the AO be upheld by setting aside the findings of the ld. CIT(A). 12. Per contra, the ld. AR drew our atte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the year or years in which the expenditure specified in sub-section (2) is incurred have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income for the first year in which the deduction under this section is claimed, the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. After perusing the provisions of section 35(2)(iii) of the Act as above, we find that the expenses incurred for increasing the size of the authorized capital specifically mentioned in the said section to be admissible expenses. We, therefore, find no infirmity in the order of the ld. CIT(A) and dismiss the ground raised by the revenue. This ground of revenue stands dismissed. 14. The issue raised in grounds of appeal No.4 to 8 is against the deletion of addition of Rs. 39,75,000/- by the ld. CIT(A) as made by the AO u/s 69 of the Act. 15. The brief facts of the case are that during the course of survey on 29.2.2008. The statement u/s 131 of the Act was recorded of Mr.Ashok Goyal, Managing Director of the Company. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l is allowed. 16. Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us. The ld. DR relied on the order of the AO and prayed that the order of the AO be upheld and that of lf. CIT(A) be set aside. On the contrary, the ld. AR reiterated the submissions as made before the ld. CIT(A) and relied on the order of the ld. CIT(A) and submitted that, the order of the ld. CIT(A) be upheld. 17. We have carefully considered the rival contentions and perused the material placed before us. The ld. DR submitted before us that the said letter was found from the business premises of the assessee company in which it was specifically mentioned that a sum of Rs. 39,75,000/- was paid to the builder in cash notwithstanding denied by Mr. Goyal two times in his statement recorded by the survey team u/s 131 of the Act and thus strongly supported the order of the AO. Per contra, the ld. AR submitted before us that the payment of Rs. 39,75,000/- was specifically denied during the course of survey by Managing Director Mr. Goyal and also submitted that the assessee was not allowed access of the said letter thereby causing miscarriage of principle of natural justice and the AO simply on....