TaxTMI 
TaxTMI 
2017 (11) TMI 381
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....ny and during the course of assessment and in view of complexities in the books of accounts, the AO issued directions dated 05.11.2009 for special audit as per provisions of section 142(2A) of the Income tax Act, 1961. The appellant challenged the order u/s 142(2A ) before Hon'ble Delhi High Court. The Hon'ble High Court issued directions to the AO to pass a reasoned and speaking order for ordering special audit u/s 142(2A) which was rightfully obeyed by the AO and a fresh order dated 08.12.2009 was passed directing the appellant to furnish special audit report within 60 days from the receipt of the said order. Finally, special audit report was furnished by the appellant on 27.05.2010 to the AO. 3. Subsequently, the assessment was completed on the basis of special audit report vide order dated 07.10.2010 passed u/s 143(3) of the Act. The AO computed total income at Rs. 750,38,90,009/- as against returned income of Rs. 568,54,69,980/- by making various additions and disallowance to the extent of Rs. 181,84,20,029/-. The issue wise additions to the returned income are tabulated as under : S. No. Terms of reference Head of Addition / Disallowance Page No. Amoun....
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.... TOR-24 Disallowance u/s. 40(a)(ia) Foreign Payments 387 399 1,89,05,487.00 27 TOR-24 Disallowance u/s. 40(a)(ia) Domestic Payments 399 410 49,34,000.00 28 TOR-24 Disallowance u/s. 40(a)(ia) Domestic Payments 410 411 27,08,664.00 29 TOR-24 Disallowance u/s. 40(a)(ia) Domestic Payments 411 411 4,20,000.00 30 TOR-24 Withdrawal of TDS credit Rs. 11,07,190 411 418 *** 31 TOR-28 Reclassification of income from House property 418 430 7,87,31,326.00 32 TOR-28 Notional rental income 431 452 3,28,52,595.00 33 TOR-28 Reconciliation of TDS with rental income. 452 456 5,41,734.00 34 Withdrawal of TDS on rental income Rs. 41,764/- 35 TOR-28 Withdrawal of TDS credit Rs. 41,764 456 457 *** 36 TOR-28 Notional Rent where security deposit received 457 464 12,60,000.00 37 TOR-32 Sale price of shares 464 475 1,36,81,610.00 38 TOR-33 Interest on Income Tax Refund 476 479 23,48,....
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....ssessee for previous year, has to be not satisfied with (a) the correctness of the claim of the expenditure made by the assessee or (b) the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income under the Act, for such previous year, as mandated by section 14A of the Act. 2.6 That the learned CIT(A) has not appreciated that no such finding on satisfaction, as amended by law has been recorded by the Assessing Officer and as such provisions of section 14A of the Act cannot be invoked. 3. That learned CIT(A) has grossly erred in law and on the facts and in the circumstances of the appellant's case in confirming the net disallowance of Rs. 26,05,808/- (i.e. after allowing depreciation @ 15% on gross disallowance of Rs. 28,17,090/- which works out to Rs. 2,11,282/-) made by the Assessing Officer on account of capitalisation of cost of replacement of some parts of two DG sets ( such as fuel tank, batteries with lead and common base material etc.) charged as revenue expenditure. [ Page 237-239 of CIT(A)'s order]. 4. That learned CIT(A) has grossly erred in law and on the facts and in th....
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....not charged from group companies. 5. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 70500000/- made by the AO on a/c of capitalization of Revenue expenditure. 6. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 4592000/- made by the AO on a/c of disallowance on a/c of interest capitalization i.r.o. project-Star Tower Silokhera. 7. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 259200000/- made by the AO on a/c of disallowance on account of Capitalization of interest. 8. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 171233363/- made by the AO on a/c of disallowance of brokerage & commission. 9. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 339987217/- made by the AO on a/c of disallowance of revenue recognition as per POCM. 10. Whether the CIT(A) under the facts....
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.... of Rs. 18195513/- made by the AO on a/c of disallowance of pre-operative expenses. 21. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 17983814/- made by the AO on a/c of disallowance of expenses on project not commenced. 22. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 10432923/- made by the AO on a/c of disallowance of expenses for increase in authorized capital capitalized. 23. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 18905487/- made by the AO on a/c of disallowance of expenditure u/s 40(a)(ia) of the Act, 1961. 24. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 4934000/- made by the AO on a/c of disallowance of expenditure u/s 40(a)(ia) of the Act, 1961 for non deduction of TDS on Domestic payments on amount received from Shriram School land subsequently reimbursed to DLF Qutub Enclave Complex Edu. Charitable Trust. 25 Whether the ....
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....AO on a/c of disallowance of expenditure where bills were not in the name of assessee company. 34. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of Rs. 809837/- made by the AO on a/c of disallowance on a/c of depreciation claimed on DLF Centre Building Sansad Marg, New Delhi 35. The assessee craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 7. Before adjudicating various grounds raised by both the parties, we may take note of the fact that Tribunal vide its order dated 11.03.2016 for immediately preceding AY 2006-07 in ITA NO. 2677/Del/2011 and 3061/Del/2011 has decided the cross appeals filed by both the parties and most of the issues involved in appeal of the revenue have already been dealt with and adjudicated upon in the said order. Sh. R.S. Singhvi, counsel appearing on behalf of the assessee pointed out that substantial issues arising out of revenue's appeal are covered in favour of assessee and to buttress his contention he filed a brief chart demonstrating the issues involved and how they are covered by the order of Tribunal. 8. Now ....
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.... figure of Rs. 7,95,35,569/- are only allowable against sale of the lands for which shelter fees was paid. The letter of shelter fees clearly gives description of the land against which shelter fees was paid. During A.Y. 2007-08 the assessee company has sold/transferred three land at N-Block, G.K. - I measuring 2.045 acres, 5 acres and 2.50 acres measuring in all at 9.545 acres. The assessee company has claimed pro rata deduction of Rs. 3,51,20,018/- against the sale of land. However out of this deduction claimed the pro rata deduction is allowable only in respect of security expenses of Rs. 2,84,68,129/- and not in respect of shelter fees of Rs. 5,10,67,440/-. The shelter fees shall be allowable in the year in which concerned lands are sold/transferred by the assessee company. The assessee in its reply has just stated that it is treating the various lands located at Greater Kailash as a common pool of land and therefore shelter fees was also claimed as expenditure on sale of land even though the shelter fees was not pertaining to the land sold. The argument of the assessee is not acceptable since the lands located at Greater Kailash - I are clearly and separately identifi....
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....efore, no expenditure can be attributed/allocated to the land sold during the year. The expenditure incurred of Rs. 5,10,67,440/- can be claimed against the sale of land situated at E & W Block at GK-II as the appellant has paid shelter fees of Rs. 4.92 crores and Rs. 18,21,000/- for E & W Block in earlier years and during the year. In view of the above, the amount of Rs. 3,51,20,018/- claimed as IDC expenditure is not allowable against the sale of the land made during the year in A.Y. 2007-08. The expenditure of Rs. 5,10,67,440/- shall be allowable in the year in which E & W Block lands are sold /transferred by the appellant company. Therefore, the proportionate expenses towards IDC claimed to the extent of Rs. 2,01,07,405/- disallowed by the ASSESSING OFFICER, is not related to lands sold during the year. Hence, the same is confirmed. It is also claimed by the AR of the appellant this issue is covered in favour of the appellant by CIT(A) order for A.Y. 2006-07. It is seen that facts of the last year's case are completely different with that of this issue, therefore, the same is not covered with the last year's CIT(A) Order. As such the contention of the appellant's AR is rejected....
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....overed by the decision of Hon'ble Apex court in the case of CIT v. Excel Industries Ltd. [2013] 358 ITR 295(SC). It was further contended that issue of timing difference and revenue neutrality has already been considered by Hon'ble tribunal in AY 2006-07." 8.5 The ld. CIT DR relied upon the order of AO and CIT(A) and opposed the method adopted by the assessee. 9. We have heard the Ld. AR Sh. R.S. Singhvi and CIT-DR Ms. Renu Amitabh and also gone through the order of the Assessing Officer and CIT(A). The limited issue for consideration is whether Internal Development Charges (IDC) should be considered on the basis of the property sold or should be treated as part of ongoing business activities. The Assessing Officer has not disputed the genuineness and admissibility of these expenses, but restricted the same in proportion to properties sold during the year. The CIT(A) confirmed the disallowance made by the Assessing Officer. 10. The AR has contended that these are the developmental expenses in respect of various blocks in Greater Kailash, Part-II which were under development by the appellant. It was submitted that these expenses are for the development of whole area and not....
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....nvestments has been claimed as expenditure. The issue of section 14A has been settled by the order of the Hon'ble ITAT Special Bench in the case of ITO vs. Daga Capital Investments Pvt. Ltd. [2009] 312 ITR (AT) 1. As per the observations made in Volume X of the Special Audit Report the assessee has earned exempt income as profit from partnership firms in which M/s DLF Ltd. is a partner, however, no proportionate disallowance on the expenditure has been made for earning such exempt income. Upon examination of assessee's reply, it is seen that assessee's contention is that no interest bearing funds were utilized for making investment for earning exempt income. Since no deduction on account of interest was claimed, therefore, no disallowance can be made under section 14A of the Income Tax Act. In this regard assessee has tabulated certain data on page 22 and 33 of reply dated 2.7.2010. Certain legal citations as discussed in the reply have also been relied upon. The sum and substance of assessee's contention is that since no borrowed funds were utilized for making investment for earning exempt income, no disallowance under section 14A is warranted. However it needs to be noted that af....
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....allowance under section 14A is warranted even in a year in which no exempt income has been earned or received by the assessee. With these remarks, the addition of Rs. 27,22,75,000/- is made U/s.14A read with rule 8D (ii)." The working of disallowance u/s 14A read with Rule 8D is as under : Working of disallowance u/s 14A of the Income Tax Act, 1961 (Rule - 8D) Amount (Lacs/Rs.) 1 Expenditure directly relating to the exempted income - 2 Amount of expenditure by way of interest other than the amount of interest included in point No.1. (directly related to exempted income) (A x B/C) 2401.31 3 An amount equal to onehalf percent of (B) given below 321.44 Disallowance u/s 14A (1+2+3) 2722.75 A Amount of expenditure by way of interest other than the amount of interest included in point No. 1. 30,299.24 (directly related to exempted income) B Average of value of investment, income from which does not form part of total income. 64,287.62 ....
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....d 9, I have held that appellant has shown interest incurred on fixed period loan of Rs. 463.86 crore. Out of this an amount of Rs. 196.02 crore has been capitalized over the project. The appellant has also paid interest on over draft etc. to the tune of Rs. 35.15 crore. As such the total interest payment during the year comes to Rs. 302.99 crore. As against this, the appellant has shown interest receipts of Rs. 284.51 crore in the P&L account. If the interest paid on bank overdraft facilities of Rs. 34.49 crore is reduced then balance interest paid comes to Rs. 267.84 crore which is less than the interest receipt from subsidiary companies and banks. On the basis of above working it can be said that investment made by the appellant company was interest neutral. Therefore, on this basis the disallowance of interest for earning exempt income will be nominal or nil. At the same time the appellant has been sanctioned loan of Rs. 370 crore by ICICI Bank and has invested in the shares of M/s Edward Keventor (Successors) Pvt. Ltd. for acquiring shares of said company. The appellant had paid Rs. 26.76 crore as interest on the loan taken from ICICI Bank which has been specifically taken for ....
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....t and loss account. Therefore, some expenses has to be apportioned on the investment made on which exempt income is earned by the appellant. The appellant has invested Rs. 642.87 crore for earning exempt income, therefore, 0.5% of such investments are taken as expenses incurred on administration and management of such investments and earning exempt income. The disallowable expenses on this count comes to Rs. 3.21 crore. Besides, an amount of Rs. 1.45 crore has been worked out as interest relating to investment made in the shares of Edward Keventor (Successor) Pvt. Ltd. for earning exempt income as discussed above. Thus, the total disallowance of interest and expenditure relating to earning exempt income comes to Rs. 4.66 crore. In the assessment order ASSESSING OFFICER has disallowed Rs. 27,22,75,000/- u/s 14A of the IT Act on account of earning exempt income. This disallowance has been worked out by the ASSESSING OFFICER on the basis of section 14A read with Rule 8D of the IT Act. The Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co. vs. DCIT (2010) 194 Taxman 203 (BOM) has held that provisions of Rule 8D are applicable prospectively w.e.f A.Y. 2008-09 and ....
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....sallowance being 0.5% of Rs. 66.50 cr = 33.25 lakhs 19. Whereas, Ld. CIT DR relied on the order of the Assessing Officer and submitted that disallowance made by the Assessing Officer which is in accordance with Rule 8D should be sustained. However, both the parties have agreed that all the issues arising out of order of the ITAT have been addressed by the tribunal and issue is covered by the order of the ITAT in the immediately preceding year. 20. We have gone through orders of the Assessing Officer and CIT(A) and also perused the order of the ITAT. The tribunal has examined all the issues arising out of the order of the Assessing Officer and CIT(A) and various arguments raised by the parties. In our considered opinion, the issue is fully covered as per order of the ITAT relating to A.Y. 2006-07. It is further noticed that even though the tribunal worked out disallowance in A.Y. 2006-07 to the extent of Rs. 22,50,000/- but sustained disallowance to the extent of Rs. 1,87,35,000/- on the ground that appellant itself has agreed for such disallowance during assessment proceedings. However, the appellant has clarified that no such admission was made and in clarification of ....
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....ee to be extent to Rs. 28,17,090/- during the course of purchase of two DG Sets is disallowed. This expenditure is simultaneously held to be capital expenditure and depreciation for half year (date of purchase 17.02.2007) @ 15% p.a. is being allowed which comes to Rs. 2,11,282/-. Thus the addition on this account is of Rs. 26,05,808/-. 24. Finding and conclusion of CIT(A)'s order [Para 25.7 Page 238 of CIT(A) order] "25.7 I have considered the submission of the appellant, observation of the ASSESSING OFFICER and various judicial pronouncements available on this issue. It is noted from the perusal of bills filed by the appellant vide its submission dated 08.05.2012 that the expenditure of Rs. 28,17,090/- has been incurred for purchase of DG Sets from M/s Hi- Tech Engineers & Consultants. The appellant has claimed that the two DG sets have been repaired or overhauled and the same is not replacement of old DG Sets. It is also claimed by the appellant that these expenses have been incurred on changing batteries, Fuel Tank etc. However it is seen that from the description of the vouchers that M/s Hi-Tech Engineer & Consultants has supplied the DG Sets and same were installed....
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..../- claimed as repair and maintenance of generator set. The Assessing Officer has considered this claim as of capital nature on the ground that same is relating to purchase of generator sets. However, Assessing Officer has not made reference to any purchase bill or any other evidence to demonstrate that the claim is in the nature of purchase of new generator set. The CIT(A) confirmed the disallowance made by the AO. The appellant has argued that the claim is in respect of repair and maintenance of generator sets and made reference to the details submitted vide paper book page 69 to 72. The appellant also made reference to various case laws in support of claim of expenses as per details given in the synopsis. The CIT DR supported the orders of the AO & CIT(A). 28. After going through details of expenses and various judgments referred to by the Ld. AR and extracted in the synopsis, we are of the view that claim is in the nature of current repair as AO has not brought on record any evidence in support of allegation of purchase of new generator sets and also failed to make any comments in respect of details submitted by the appellant. There is thus, no justification for treating the ....
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.... by the assessee was put to use from 18.08.2006. The assessee in its reply dated 23.07.2010 as mentioned above has himself stated "From the above receipts, it is amply clear that the aircraft was in India from 16.08.2006 to 03.09.2006 and was in regular use from that date." This clearly establishes that the aircraft was in use from 18.08.2006. The other contention of the assessee is that since the delivery of the aircraft was taken on 3rd July in USA and since then it has been used for business purposes regularly. However to substantiate this point the assessee has not furnished any documentary evidence. Therefore the date of put to use of aircraft is taken as 16.08.2010. The assessee has claimed deduction of interest paid to GE capital Services Ltd on loan taken for purchase of aircraft. The interest deduction has been claimed from July 2006. As per section 36(1)(iii) "the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession : [Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalised in the boo....
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....and was put to use on this date. The contention of the appellant that delivery of the Air Craft was taken on 3rd July 2006 in USA and since then it was used for business purposes regularly is not based on any material evidence. Therefore, the date of put to use is to be taken as 18.08.2006. The appellant has claimed deduction of interest paid GE Capital Services Ltd. on loan taken for purchase of air craft. The deduction of interest on such loan has been claimed from July 2006. However, the provision of section 36(1)(iii) has been amended w.e.f 01.04.2004 and as per amended provision any interest paid in respect of capital borrowed for acquisition of an assets for any period from the date of acquisition of an asset, till the date on which such asset was put to use will not be allowable as deduction. In the case of appellant, the air craft was brought to India on 18.08.2006 and was put to use from that day, therefore, deduction of interest is allowable from the date on which air craft was put to use i.e. 18.08.2006. The appellant has claimed interest on loan for July and part of August at Rs. 85,85,599/-. Therefore, the interest component of Rs. 85,85,599/- is not an allowable expen....
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....he purpose of trial run and training of pilots. The appellant invited our attention to the relevant details placed at paper book page 102 to 179. The appellant also relied on decision of Supreme Court in the case of Core Health Care Ltd. 298 ITR 194 as per which interest on loan taken for acquisition of capital assets is an allowable deduction u/s. 36(1)(iii) of the Act. 36. The Ld. DR supported the order of Assessing Officer and CIT(A). 37. We have gone through facts of the case, contention of the parties and details placed in the paper book. In our considered opinion, the use of aircrafts for trial run and training of pilots is part of the business activities and as such there is merit in the contention of the appellant that air craft was used for the purpose of business. Further, principle laid down by Supreme Court in the case of Core Health Care Ltd.(supra) also support the claim of the appellant as the Assessing Officer himself has not disputed the fact that the air craft was used for the purpose of business as he accepted the claim of interest for the remaining period relevant to the year under consideration. In the light of above discussions, there is no justification....
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....ed DLF Services Ltd to collect rent from kiosks. The assessee had only filed a letter dated 12.12.2005 wherein it has been mentioned that DLF Services Ltd are authorised to keep money recovered from third parties using the kiosks to meet as a part of cost of promotional activities. The letter submitted by the assessee is a self servicing document. In the reply the assessee has mentioned that DLF Services were authorised to receive rent so as to meet out cost of maintenance but as per the letter filed it says that DLF Services were authorised to receive rent as a part of cost of promotional activities. It is surprising that no formal agreement was entered into with DLF Services in this regard. The assessee has also not filed any substantiating evidence to show that the rental income received against these kiosks have been included in the taxable income of DLF Services Ltd. In view of the same the rental income from these four tenants is to be included in the taxable income of the assessee as per the following details : NAME OF THE TENANT RENT / LICENSE FEE P.M. (RS.) AMOUNT (RS.) BELGIQUE CHOCOLATIERS 50,000/- 6,00,000/- SWASTIK FOOD SOLUTIONS 45,000/- 5,4....
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....ng assessed to tax in the hands of M/s. DLF Services ltd. The main thrust of the submission of Ld Counsel was that there is no loss to the revenue as rent is ultimately taxed in the hands of sister concern and for this proposition he relied upon decision of Hon'ble Apex court in the case of Ashish Plastics Industries v. ACIT[2015] 373 ITR 45 (SC). Reference was also made to another decision of Hon'ble Supreme Court in the case of Excel Industries Ltd. 358 ITR 295 (SC). 41. The Ld CIT DR, on the other hand, relied upon the order of AO and CIT(A) and contended that since the assessee is the owner of Kiosks, the rental income is to be taxed in the hands of assessee only. 42. We have heard the rival submissions and perused the material on record. The ground is regarding addition of Rs. 12,60,000/- as rental income. The Assessing Officer observed that the assessee was owner of Kiosks installed at Malls which were leased to various parties at the lease rent of Rs. 18,00,000/- per annum. The Assessing Officer after accepting statutory deduction of 30% , considered the net rental income at Rs. 12,60,000/-. The CIT(A) confirmed the finding of the Assessing Officer. 43. The appellan....
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.... Tribunal has considered the appeal of the assessee and revenue for A.Y. 2006-07 and adjudicated various grounds which were in dispute. The Ld. AR placed on record, a chart at Paperbook Pg 1-4 giving details of grounds raised by revenue & appellant which are covered by consolidated order of the ITAT. In the light of above position, various grounds raised by revenue are disposed off as under. 50. Ground No. 1 is against deletion of disallowance u/s 40A(3) to the extent of Rs. 19,100/- being 20% of Rs. 95,504/-. The assessing officer has considered the addition on the ground that assessee has made cash payment in contravention to provisions of section 40A(3) of the Act. The CIT(A) deleted the addition by taking into account relevant facts and provisions of Rule 6DD(I) read with section 40A(3) of the Act. 51. The ld. CIT DR relied on the order of AO and on the other hand the ld. Counsel for the assessee supported the order of CIT(A). 52. After going through the order of the AO and CIT(A), no interference is called for and the order of the CIT(A) is confirmed and accordingly this ground of the revenue is dismissed. 53. Ground No. 2 is against deletion of disallowance of Rs.....
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....acquired through these land owning companies for which the requisite advance was given to these companies as an earnest money which is to be adjusted upon conveyancing of purchase of land. The assessee later on decided that the land owning process be assigned to an intermediary namely, DLF Commercial Projects Corporation (DCPC), since the number of land owning companies kept on growing with the increased requirement of land. The assessee therefore, decided that hitherto, DCPC should be responsible for purchase of development rights from the land owning companies and will in turn provided these rights of contiguous and the licensed land to the assessee, M/s. DLF Limited. The assessee therefore later on entered into an agreement with DLF Commercial Project, a partnership firm for purchase of development rights and accordingly cancelled MOU with the individual LOC's to whom advance was given by the assessee company. The amount of Rs. 743.72 crores received back from LOC's was given to DCPC. The assessee in its reply on this point has stated that the amount advance to DCPC, is out of refund of advance received from the various LOC's (Rs. 743.73 cr.) and the balance amount paid to DCPC ....
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....of various construction projects by way of advance from customers are also interest free funds available. These amounts are also utilized either for construction projects or for giving advance to subsidiaries. Thus, there is no direct nexus which can be established to hold that the loans for specific projects were utilized for such projects only. The own funds or other funds available to the assessee by way of interest free funds are mixed up with the borrowed funds and the utilization of such funds for uncompleted residential projects or for the commercial projects or for granting loan / advances to group concerns cannot be correlated. On the basis of above discussion, a proposition/formula can be laid down that if an assessee is having interest-free funds, in the form of capital, reserves and other funds without interest bearing related to business on one side and interest bearing borrowed funds on other side, the loans/advances given to group entities have come from both types of funds i.e. interest bearing funds and interest free funds in the same proportion. There are various issues on which disallowance of interest expenditure and capitalization thereof is called for....
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....d thereafter, these LOC's will transfer the development rights to the appellant company. It is mentioned in these MOUs that appellant shall pay to these land owning companies, such sum as interest free advance from time to time for purchase of land for appellant company. It is also seen that while giving advances there was no intention to charge interest on such advances as the same were given wholly and exclusively for business purposes of the appellant company. The money was advanced for purchase of land by the land owning companies and same was given in normal course of business. Simply because the transactions did not fructify, the same cannot be held as non business advance. Therefore, the interest cannot be charge/ disallowed for the money advanced in the normal course of business to the 27 land owning companies. Otherwise also from the details filed by the appellant, it is seen that appellant has paid total interest of Rs. 463.86 crore during the year. Out of this an interest to the extent of Rs. 196.02 crore has been capitalized over the projects. As a result, the total interest claimed in the profit & loss account on fixed termed loans comes to Rs. 267.84 crore. T....
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.... for purpose of reducing tax liability, invested amount with Trust without charging any interest which was only a device for evading tax - Thus, Assessing Officer estimated notional interest on money advanced by appellant to Trust and made certain addition as notional income from Trust - Commissioner (Appeals) deleted addition on ground that Assessing Officer was wrong in including notional interest as assessable income of appellant - Tribunal upheld order passed by Commissioner (Appeals) - Whether in a taxing statute, one has to look merely at what is said in relevant provision and there is no presumption as to a tax - Held, yes - Whether since revenue had not shown any provision of law to charge notional income, Tribunal was justified in deleting impugned addition made by Assessing Officer - Held, yes [In favour of appellant] Reliance is also placed on the judgment of Hon'ble Supreme Court in the case of S.A. Builders Ltd. Vs. CIT 288 ITR 1 (SC) wherein Hon'ble Court has held as under: "In order to decide whether interest on funds borrowed by the appellant to give an interest free loan to a sister concern (e.g., a subsidiary of the appellant) should be allowed a....
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....ty in the order of the CIT(A) and the ground of the revenue is dismissed as same is covered in favour of appellant vide order of ITAT for A.Y. 2006-07. 60. Ground No. 4 is against deletion of addition of Rs. 7,53,00,000/- on account of notional interest on debentures. The AO has made notional addition on the ground that assessee has not charged interest on investment in debentures of various group companies. The reasoning given by the AO is same as in Ground No. 3 of the revenue above. The CIT(A) has deleted the disallowance by observing that it was due to express condition for premature withdrawal that no interest was paid by the companies while redeeming the debentures. Further, the CIT(A) also held that mixed fund theory adopted by AO is not applicable to the facts of the case as the interest receipts of the assessee is much higher than interest payments. 61. The ld. CIT DR relied upon the findings of AO. On the other hand, the ld. Counsel for the assessee submitted that there is no concept of notional income under the provisions of Income Tax Act, 1961. It was further argued that non charging of interest was in accordance with terms of issue Debentures which was mutually ....
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.... interest can be capitalized only when activities that are necessary to prepare the Asset for its intended use or sale are in progress. However, the fact of the matter remains that the income of an assessee is required to be computed and assessed in accordance with provisions of the Income Tax Act, 1961. Under the Income Tax Act there is no such requirement that interest cost in respect of a project where construction activities could not commence should be claimed as revenue. It is seen that in respect of advances given to land owning companies for acquiring land the assessee has himself capitalized the interest cost. Therefore, there is no reason why a different treatment should be given in respect of the loan of Rs. 370 crores availed from ICICI Bank for the project- Keventer Lane. Since no activity on the project has started the interest cost of Rs. 26.76 crores is required to be capitalized and the same shall only be allowable under the matching concept when proportionate revenue from the project is offered for taxation. It is further noted that the amount of Rs. 26.76 crores is included in the total interest expenditure of Rs. 267.84 crores claimed in the P&L Account....
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....n fixed period lane where only part of revenue recognized However, all such disallowance are comprised within the overall figure of Rs. 267.84 crores claimed in the P&L Account. As discussed above in the case of mixed use funds the disallowance of gross interest is required to carried out after carrying out proportionate netting against the interest income earned and credited in the P&L Account. Such an exercise in respect of all the above issues has been collectively carried out later in page Nos 106 to 111 and the quantum of disallowance has been worked out separately for each issue. In respect of this issue the disallowance works out to Rs. 7,05,00,000/-. Observation and finding of CIT(A):[ Para 7.6 at Page 75 to 77 of CIT(A)'s Order] 7.6 I have considered the submission of the appellant and observations of the ASSESSING OFFICER as well as observation of the Special Auditors. It is seen that appellant had purchased shares of Edward Keventor (Successors) Pvt. Ltd. during the F.Y. 2005-06 for Rs. 438.92 crores. Out of this an amount of Rs. 370 crore was sanctioned by the ICICI Bank as loan to finance the acquisition of Edward Keventor (Successors) Pvt. L....
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....of Rs. 35.15 crore. Thus, the total interest claimed in the profit & loss account is at Rs. 302.99 crores. As against this the appellant has shown receipt of interest from bank deposits, customers and subsidiary and associates to the extent of Rs. 284.51 crore. If the interest payment on over drafts is taken out from the total interest claimed in the profit and loss account, then the total interest claimed in profit and loss account is Rs. 267.84 crore which is less than the interest receipts offered by the appellant from bank deposits and interest received from subsidiary and associates of Rs. 284.51 crores. As such the interest received is much more than the interest claimed in the profit and loss account by the appellant. Therefore, it cannot be said that appellant has used interest bearing funds for making investments in Edward Keventor project. The formula devised by the ASSESSING OFFICER of mixed funds to work out proportionate notional disallowance of interest is not based on any scientific method. When interest payment claimed by the appellant is less than the interest income offered in the profit and loss account, there was no justification to work out any formula based on....
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....ainst deletion of disallowance of Rs. 25,92,00,000/- on account of capitalization of interest. The AO has given same reasoning as in Ground no. 3 to 6 above. 70. The ld.CIT DR relied upon the order of AO whereas the ld. Counsel for the assessee stated that this issue is identical to that involved in Ground no. 3 of the revenue's appeal and argument made in that ground are relevant for this as well. This ground is also identical to ground No. 3 adjudicated above and considering the parity of reasoning, the order of the CIT(A) is confirmed and this ground of revenue is rejected. 71. Ground No. 8 is against deletion of disallowance of Rs. 17,12,33,363/- on account of brokerage and commission. The AO has considered the disallowance on the ground of matching principle. The AO has further observed that since the assessee is following POCM method of recognition of revenue from real estate projects, the brokerage and commission should also be recognised on the same basis. The CIT(A) has deleted the disallowance by following the order of ITAT for AY 1983-84 in which this issue has been decided in favour of assessee. 72. The ld. CIT DR relied upon the order of AO. On the other hand,....
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....revenue except merely increasing academic work load of shifting expenses from one year to another is very significant. In this connection, reference to decision of Supreme Court in the case of Excel Industries Ltd. Vs. CIT 358 ITR 295 is relevant as per which if any claim has no adverse revenue implication and dispute is merely year specific, no useful purpose would be served by perpetuating such controversy. It is noticed that even under POCM method ultimately the claim is to be on the basis of actual expenses and merely because in a particular year under the POCM method, adjustments are made in respect of budgeted cost with reference to actual revenue, no adverse inference could be drawn. Taking into consideration, the system of accounting being followed by appellant and recognition of revenue on the basis of the said system, the proposed addition by the AO on hypothetical basis is of no relevance unless such adjustments are not in conformity with POCM method. The CIT(A) has appreciated the facts and correctly considered the claim of expenses under POCM method. In our opinion, there is no distortion of claim of income or expenses and accordingly order of the CIT(A) is confirmed a....
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....s covered in favour of the assessee vide order of ITAT for A.Y. 2006-07. In view of the above position, no interference is called for in the order of CIT(A) and accordingly this ground of revenue is dismissed. 82. Ground No. 12 is against deletion of addition of Rs. 24,064/- on account of interest free security deposit received during the year. The AO has relied upon the observation of Special Auditor and finding recorded in assessment order for AY 2006-07. The CIT(A) deleted the addition by observing that as per agreement to sell the deposit so collected are refundable to customers/resident associations as soon as they are formed. Further the assessee is maintained a separate account for such deposits and as such the same are not assessable as income of the assessee. 83. The ld. CIT DR relied upon the order of AO. On the other hand, the ld. Counsel for the assessee submitted that issue is covered in favour of assessee by the order of tribunal in immediately preceding AY 2006-07 wherein the addition has been deleted by the tribunal. 84. We have heard the rival submission and considered the order of the ITAT for A.Y. 2006-07. Whereas the Ld. AR relied on the order of ITAT, ....
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....ditor and AO are factually incorrect. Further the assesse is maintained a separate account for such deposits in which there is regular movement and as such the same are not assessable as income of the assessee. 89. The ld. CIT DR relied upon the order of AO. On the other hand, the ld. Counsel for the assessee submitted that issue is covered in favour of assessee by the order of tribunal in immediately preceding AY 2006-07 wherein the addition has been deleted by the tribunal. 90. We have heard the rival submission and considered the order of the ITAT for A.Y. 2006-07. Whereas the Ld. AR relied on the order of ITAT, the ld.CIT DR has relied on order of the AO, However, the ld.CIT DR was fair enough to accept that this issue is covered in favour of the assessee vide order of ITAT for A.Y. 2006-07. In view of the above position, no interference is called for in the order of CIT(A) and accordingly this ground of revenue is dismissed. 91. Ground no. 15 is against deletion of disallowance of Rs. 20,70,28,248/- on account of non allocation of overhead expenses to sister concerns. The AO has relied upon observation of Special Auditor and has held that assessee has incurred certain....
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....omotion, printing and stationary, communication expenses, legal & professional expenses, recruitment & training expenses and sanitation expenses. M/s Galaxy Mercantiles Limited disowned the debit note and refused to pay such expenses to the appellant company. Therefore, the debit note raised in the name of M/s Galaxy Mercantiles Limited was reversed by the appellant company and expenses mentioned in the debit note were claimed by the appellant company as these expenses were incurred for the bonafide business requirement of the appellant company, though these expenses also facilitate the business requirement of M/s Galaxy Mercantiles Limited. It is matter of fact that these expenses were incurred for a set up established by the appellant for its own requirement. It so happen that M/s Galaxy Mercantiles Limited also took advantage of the set up established by the appellant. This does not mean that expenses incurred on the above set up were not incurred wholly and exclusively for the business purposes of the appellant company. Therefore, reversal of the debit note raised in the name of M/s Galaxy Mercantiles Limited does not affect allowbility of these expenditure in the hands of the ....
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.... on the ground that the appellant has not been able to recover the same from the other party. Even if these expenses were incurred on behalf of M/s. Galaxy Mercantile Ltd., non recovery of same shall be in the nature of business loss. In view of the above position, there is no infirmity in the order of the CIT(A). However, as and when any recovery is made by the appellant in respect of these expenses, the same should be considered as its income in terms of provisions of section 41(1) of the Act. Subjected to these observation, the order of the CIT(A) is confirmed. 97. Ground no. 17 is against deletion of disallowance of Rs. 61,90,518/- on account of non allocation of common expenses to sister concerns. The AO has relied upon observation of Special Auditor and has held that assessee has incurred miscellaneous expenses such as printing and stationary, business promotion, staff welfare, repair and maintenance etc on behalf of its sister concerns which have not been allocated and same have been claimed by the assessee. The CIT(A) has deleted the disallowance by holding that the expenses incurred were exclusively for the purpose of business of assessee company and same are not subjec....
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....e disallowance by rendering following observation : "23.10 I have considered the submission of the appellant, observation of the ASSESSING OFFICER, and various judicial pronouncements relied upon by the appellant. It is seen that the appellant is engaged in the business of developing real estate like development of plots, multi storey buildings, commercial complexes etc. During the year, the appellant has incurred certain expenditure on market study, feasibility report and viability report on possibility of developing SEZ projects at various locations like Gurgaon, Ambala, Ludhiana, Amritsar, Dankuni, Jaipur and Bhuvneshwar etc. On these studies, the appellant has incurred an expenditure of Rs. 1,81,95,513/-. In the assessment proceedings these expenses have been treated as pre-operative expenses by the ASSESSING OFFICER. It is claimed by the appellant that conducting feasibility and viability study for developing SEZ was not a new line of business but it was expansion/extension of the same line of business. Development of SEZ is very akin development of commercial projects which falls within the objectives of the MOA of the appellant company. Any expenditure incurred for ....
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....nding of CIT(A) is extracted hereunder : "23.11 I have considered the submission of the appellant, observation of the ASSESSING OFFICER, and various judicial pronouncements relied upon by the appellant. It is seen that the appellant is engaged in the business of developing real estate like development of plots, multi storey buildings, commercial complexes etc. During the year, the appellant has incurred certain expenditure on Soil Investigation, Environment impact assessment, examination of title expenses, lay out expenses, designing, site planning, interior design services, site identity, consultation expenses etc. for developing commercial projects at various locations like Noida, Karnataka etc. On these studies as well as other services, the appellant has incurred an expenditure of Rs. 1,79,83,814/-. In the assessment proceedings these expenses have been treated as capital expenditure by the ASSESSING OFFICER. It is claimed by the appellant that expenses incurred on soil investigation, planning, identification of sites, inspection of titles and other expenses on feasibility and viability of the commercial projects were not a new line of business but it was same line of ....
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....ance of Rs. 1,04,32,923/- on account of expenses incurred in connection of issue of bonus shares and conversion of debenture into equity. The AO has treated these expenses as of capital in nature. The CIT(A) deleted the disallowance on the basis of decision of Apex Court in the case of CIT vs. General Insurance Corp. 156 Taxman 96 (SC) and decisions of various high courts. The finding of CIT(A) is as under : "26.16 I have considered the submission of the appellant, observation of the ASSESSING OFFICER and various judicial pronouncements available on this issue. It is seen that appellant has incurred Rs. 1,78, 94,000/- on fees paid to ROC for increase in authorized share capital of the appellant company which was as under:- (i) For issue of bonus shares Rs. 1,04,32,923.00 (ii) For issue of equity shares Rs. 74,61,077.00 Total Rs. 1,78,94,000.00 Out of Rs. 1,78,94,000/-, a sum of Rs. 74,61,077/- was related to issue of fresh share capital, therefore, the same was treated as capital expenditure by the appellant company and disallowed in the computation of income. The remaining amount of Rs. 1,04,32,923/- was claimed as revenue expend....
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....e of CIT vs. ITC Hotels Ltd. 190 Taxmann 430 has decided that expenses relating to convertible debentures is a revenue expenditure. In view of the above, the expenditure incurred of Rs. 1,04,32,923/- with respect to issuance of bonus shares and conversion of debentures into equity shares is held to be revenue expenditure and not a capital expenditure. Therefore, the addition made by the ASSESSING OFFICER on this issue is deleted." 110. The ld. CIT DR relied upon order of AO. On the other hand, the ld. Counsel for the assessee relied upon the finding of CIT(A) and also made reference to decision of Hon'ble Supreme Court in the case of CIT vs. General Insurance Corp it has been held that expenses in connection with issue of bonus shares are allowable revenue expenses. Reliance was also placed on decision of Hon'ble Rajasthan High Court in the case of CIT Vs. Secure Meters Ltd. 221 CTR 405 in support of contention that expenses on conversion of debentures into equity are admissible as revenue in nature. 111. We have gone through the facts of the case and perused the decision cited by AR and referred to by CIT(A). In our considered opinion, the claim of the appellant is supported....
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....nder : ............ As per Article 12 the Fees for technical services is defined as payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel). The consultancy services rendered by Paul Hastings are covered within definition of Technical Services as per Article 12 and therefore are taxable in the India since the services are received for use in India as admitted by the assessee himself in its reply the relevant text of assessee's reply in this regard is quoted as under. "With regard to the show cause query, it is respectfully submitted that in the case of legal fees paid to Paul, Hastings, Janofsky & Walker LLP for assisting in the contemplated joint venture agreement with Hilton International, the said services though utilized in India have not been performed in India. Therefore the assessee was liable to deduct TDS on payment to Paul Hastings which it had failed to do so. Regarding the other payment of Rs. 43,02,192/- made to Control Risks Group (S) Pte. Ltd. The assessee has stated that Control Risk group has merely....
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....ipient and, therefore, tax of payments is deducted U/S 195(1). The assessee, who has not obtained the determination of the Income by the Assessing Officer U/S 195(2) and, therefore, the contention of the assessee that no part of the payment has resulted in any taxable Income in the hands of non-residence recipient is not sustainable, therefore, disallowance of Rs. 1,89,05,487/- is made U/S 40(a)(i) of the Act for non deduction of TDS on these payments. Correspondingly this amount is being added with Income of the Assessee." 113. The CIT(A) deleted the disallowance on the ground that the payments made by the assessee are not liable to tax deduction u/s 40(a)(i) of the Act. The relevant observation of CIT(A) is as under : [Para 28.24 at Page 261 to 268 of CIT(A)'s Order] "28.24 I have considered the submission of the appellant, observation of the ASSESSING OFFICER, and various judicial pronouncements relied upon by the appellant in this regard. During the year appellant had made payment without deduction of withholding tax thereon to two Non Residents namely M/s. Paul, Hastings, Janofsky & Walker LLP and Controlled Risk Groups (S) Pte. Ltd of Rs. 1,46,03,295/- an....
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.... person has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities, in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or (b) if the persons' stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the relevant taxable year. 2. The term, "professional services" includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants." The reading of the Article 15 shows that services rendered by a resident of USA shall be taxable in India only if such non resident has a fixed place of business in India and such person stay in India exceeding 90 days or more than 90 days in the relevant taxable year. In the assessment order the ASSESSING OFFICER has not brought any information which can establish that M/s Paul Hastings, Janofsky and Walker LLP has a permanent place of business and has state more than 90 or more days with the relevant taxable year in In....
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....skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein; or (c) consist of the development transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. For the purposes of (b) and (c) above, the person acquiring the service shall be deemed to include an agent, nominee, or transferee of such person." It is observed that definition of "fees for technical services" as per clause (b) of section 4 of Article 12 states that technical services are of such nature which enables the person acquiring such services to apply the technology contained therein, themselves. In the present case, the non-resident company has conducted an assessment and thereafter issued a report after assessing the personal and corporate risk for appellant company. The non-resident has in no way "made available" to the appellant any skill/knowledge in a way which enables the appellant company to carry out such risk assessments in the future itself. Thus, the non-resident has not made available any knowledge or technolo....
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....f make available clause in order to make a payment fall within the definition of fee for technical services. It was argued that the M/s. Control Risks Group (S) Pte Ltd neither have any PE in India nor the service was made available to the assessee. The ld. Counsel submitted that the case is covered by the decision of Delhi bench of ITAT in the case of Romer Labs Singapore Pte. Ltd. v. ADIT [2013] 22 ITR 224. 117. We have heard the rival submission and gone through the order of AO and CIT(A). We find that payment of legal and professional charges to a firm is covered under Article 15 of Indo-US DTAA. There is also no dispute to the factual position that the service provider does not have any PE in India or any of its personnel stayed for more than 90 days in India during the relevant AY. In the light of these factual findings, we are of the opinion that payment of Rs. Rs. 1,46,03,295/- made to M/s. Paul, Hastings, Janofsky & Walker LLP (USA) falls outside the purview of section 195 as the conditions specified in Article 15 are not satisfied and as such there is no question of any disallowance u/s 40(a)(i) of the Act. 118. In respect of second issue of payment of Rs. 43,02,192....
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....ent was received by the appellant company and shown the same as liability payable to the Trust. Such rent receipts were passed on to DLF Qutub Enclave Complex Educational Charitable Trust in entirety. The ASSESSING OFFICER has held that such payments are covered u/s 40(a)(ia) of the IT Act as no TDS was deducted on such payments. It is observed from the facts discussed above that the income received from Shriram School was pertaining to DLF Qutub Enclave Complex Educational Charitable Trust and same was transferred by the appellant in its entirety. It is also seen that appellant has neither credited this rent as income nor claimed any expenditure on account payment made to DLF Qutub Enclave Complex Educational Charitable Trust. Since no expenditure on account of this payment of Rs. 49,34,000/- has been claimed, therefore, provisions of section 40(a)(ia) are not applicable. Hence, the disallowance of Rs. 49,34,000/- made by the Assessing Officer is deleted. 120. The ld. CIT DR relied upon order of AO. On the other hand the ld counsel for the assessee reiterated the submissions made before CIT(A) and argued that the impugned entry is merely a pass through entry as DLF Qutub Enclav....
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....d. Counsel for the assessee supported the order of CIT(A). 124. We have gone through the order of the CIT(A) and noticed that the relief was allowed by CIT(A) after taking into consideration certificate issued by ITO, TDS Ward-49(4), New Delhi and as such there is no default on the part of the assessee in not deducting TDS on such payment. The order of the CIT(A) is based on proper appreciation of facts and there is thus no justification for any interference and this ground of revenue is dismissed. 125. Ground no. 26 is against deletion of disallowance of Rs. 4,20,000/- u/s 40(a)(ia) of the act. The AO has considered the disallowance merely on the ground that assessee did not deposit TDS on or before 31/05/2007. The CIT(A) deleted the disallowance on the ground that TDS was duly deposited on 07/06/07 i.e. before the due date of filing of return of income u/s 139(1) of the Act and as such the claim is allowable as per proviso to section 40(a)(ia). 126. The ld CIT DR relied upon order of AO. On the other hand ld. Counsel for the assessee supported the finding of CIT(A) and relied upon decision of Hon'ble Delhi High Court in the case of CIT vs. Rajinder Kumar [2014] 362 ITR 2....
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....t. In the light of above position, finding of the CIT(A) is reversed and this ground of revenue is accepted. 131. Ground No. 28 is against deletion of addition of Rs. 7,87,31,326/- on account of reclassification of income declared under head income from house property to income from business and profession. The AO has relied upon observation of Special Audit while holding that rental income from property held as work in progress is assessable under head business income instead of income from house property. The CIT(A) has deleted the addition by relying upon order of Tribunal in assessee's own case for AY 1996-97. 132. The ld. CIT DR relied upon order of AO. On the other hand, ld. Counsel for the assessee argued that this issue is covered in the favour of assessee by the order of tribunal for immediately preceding AY 2006-07 in which the court has held that rental income from property is to be assessed under head income from house property. 133. We have heard the rival submission and considered the order of the ITAT for A.Y. 2006-07. Whereas the Ld. AR relied on the order of ITAT, the ld.CIT DR has relied on order of the AO. However, the ld. CIT DR was fair enough to accep....
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....f the income on account of increase in rent has been booked and offered for taxation in the F.Y. 2007-08 relevant to A.Y. 2008-09. It is noted that, that all incomes have been recorded by the appellant either in this year or has been offered in the subsequent year. In view of the above, the addition of Rs. 5,41,734/- made by the Assessing Officer is deleted as no rental income has escaped from the taxation. The increased rental income has been offered in subsequent years. The addition made by the ASSESSING OFFICER is revenue neutral, therefore, no cognizance of the same is taken." 138. The ld. CIT DR relied upon order of AO. On the other hand, ld. Counsel for the assessee argued that this issue is covered in the favour of assessee by the order of tribunal for immediately preceding AY 2006-07 wherein the tribunal has deleted the addition by holding that no addition can be considered merely on the basis of TDS certificates especially in the case of income from house property. It was also argued that the addition is revenue neutral in nature as the excess has been offered for taxation in subsequent year. 139. We have heard the rival submission and considered the order of the ITA....
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....ustification in sale price of Diwaker Estates of Rs. 10/- per share as against NAV of Rs. 6359.53. per share is not sound acceptable just because it has purchased something 3 years back at Rs. 10/- against NAV of Rs. 5959.74, it does not mean that it is under compulsion to sell the same also at Rs. 10/- when the NAV per share is Rs. 6359.53, more so when the persons from whom the shares were purchased is different from the person to whom the shares were sold. The company has not given any other business need for sale at Rs. 10/-. Therefore for the purpose of taking the fair market value of shares of Diwakar Estates Ltd, it should be taken at Rs. 6359.53 per share. In the case of Monishka Builders and Developers P Ltd, the company has stated that it was the original subscriber to the shares of the company. This company was formed on 25.08.05 and the shares were sold on 30.11.06. After the company was formed the net worth of the company has increased due to the profits and the net worth of the company as on 31.03.2006 was Rs. 185.56 which had fallen to Rs. 184.47 per share as on 31.03.2007. These shares were sold during the financial year 2006-07 and therefore the NAV of Rs.....
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....cannot be replaced by the Fair Market Value. In the appellate proceedings it was submitted by the AR of the appellant that value of the sale of the shares was substituted by the ASSESSING OFFICER without appreciating the facts and correct position of law. The value of the shares of Diwakar Estates Pvt. Ltd. and Monishka Builders and Developers Pvt. Ltd. was determined on the basis of Net Asset Value Method (NAV) which is not applicable in the case of appellant. The sale considered of the shares was received by cheque and the price of the sale of Rs. 10/- per share was mutually agreed between seller and purchaser. It is seen that actual transaction has taken place between appellant and DLF Home Developers Ltd. They are sister concerns but in the eyes of law they are distinct entity. The ASSESSING OFFICER has not brought any information on record that shares were sold at a price other than actual price of Rs. 10/- per share. The transaction is not in doubt and same has been confirmed by both the parties. The ASSESSING OFFICER has not brought any positive evidence which could suggest that transaction of sale of shares had actually taken place at a price higher than a....
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.... against the actual sale price of Rs. 10/- per share of Diwakar Estates Pvt. Ltd. and Monishka Builders and Developers Pvt. Ltd. was not correct, therefore addition on account of long term capital gain estimated at Rs. 1,36,81,610/- is deleted." 144. The ld. CIT DR relied upon order of AO. On the other hand, the ld. Counsel for the assessee supported the order of CIT(A). The ld. Counsel further argued that the AO has not disputed the genuineness of sales consideration and the addition is merely on notional and hypothetical basis. 145. We have considered the facts of the case and gone through the order of AO and CIT(A). The only issue in dispute is whether the capital gain is to be worked out on the basis of full value of consideration received or accrued as a result of transfer of capital asset or it is open to substituted NAV as against actual sale consideration. For the purpose of computation of capital gain, provisions of sec. 45 make reference to full value of consideration and it is not open to consider any notional or hypothetical value unless there is a case of understatement and non disclosure of full value of consideration. The principle laid down by Supreme Court in....
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....these expenses also pertains to the appellant's business purposes. The reimbursement made to the employees and group companies for the expenses incurred by them on behalf of the appellant is also pertains to the appellant as these expenses were incurred wholly and exclusively for the business purposes of the appellant. Considering the facts it is established that these expenses were pertaining to appellant company and services or utilization thereof were for the purposes of the business of appellant company. Hence, the same are allowable. This issue has been decided by learned CIT(A)-XVIII, New Delhi, vide his order dated 25.03.2011 in appeal No.35/2010-11, in favour of the appellant company in the immediately preceding assessment year relevant to assessment year 2006-07 (page Nos.243-254 of the said order). Therefore, the disallowance of Rs. 65,08,264/- is deleted." 147 The ld. CIT DR relied upon finding of AO. On the other hand, the ld. Counsel for the assessee submitted that this issue is covered in favour of assessee by the order of Tribunal for immediately preceding AY 2006-07 wherein the disallowance made on identical ground was deleted by Tribunal. 148. Both the partie....