TaxTMI 
TaxTMI 
2017 (11) TMI 1369
X X X X Extracts X X X X
X X X X Extracts X X X X
....03/2010. 3. The revenue has raised the following grounds of appeal in ITA No. 2703 /DEL/2010:- "1. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in deleting the addition of Rs. 70,00,000/- made by the AO u/s 68 of the IT Act? 2. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on fact in deleting the addition of Rs. 35,000/- made by the AO u/s 68 of the IT Act on account of commission paid to obtain accommodation entries ? 3. Whether on the facts and in the circumstances of the case, the CIT (A) has correctly relied on the decision of the Apex Court in the case of M/s Lovely Exports (P) Ltd. without appreciating that the facts of the case are different from those of M/s Lovely Exports (P) Ltd. 4. The order of the CIT (A) is perverse and not tenable in law and on facts." 4. Assessee has also filed cross objection in the appeal vide ITA No. 116/DEL/2013 raising following grounds of appeal for Assessment Year 2002-03:- "1. On the facts and circumstances of the case and in law, the appeal filed by the Department against the impugned order of Ld. CIT (A) should be dismissed and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and distributors‟ private limited and Rs. 25 Lacs received from Junoon capital services private limited as income of the assessee under section 68 of the Income Tax Act. The Ld. Assessing Officer over and above these Rs. 70 lakhs made an addition of Rs. 35,000/- on account of commission paid for obtaining these accommodation entries by the assessee. Consequently, the assessment under section 153A of the Income Tax Act, 1961 was passed on 26/12/2007 by the Ld. Deputy Commissioner of Income Tax, Central Circle, 23, New Delhi determining the total income of the assessee at Rs. 7057290/- against the income shown by the assessee in its return of income of Rs. 22290/-. 6. Assessee, aggrieved with the order of the Ld. Assessing Officer preferred appeal before the Commissioner of Income Tax (Appeals) -III, New Delhi contesting the addition made by the Ld. Assessing Officer on account of share capital, share application money of Rs. 70 lakhs and Rs. 35,000 on account of commission for obtaining accommodation entries. Before the Ld. CIT (A) assessee made a detailed submission who vide para No. 7 stated that assessee has established the identity of the shareholders by providing their....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted that search took place on „Vikas Surya Group‟ on 1/9/2005. He further submitted that in any case, the time-limit for issue of notice under section 143(2) for the Assessment Year 2002 - 03 expired on 30/9/2003. Therefore, as on the date of the search these assessment was not pending. He further submitted that if the assessment is not pending on the date of the search, then, addition in the hands of the assessee i.e. the person searched can be made only if incriminating documents are unearthed during the course of the search. He further submitted that in the present case, during the course of search no incriminating evidences were found. He further stated that persons whose statements are recorded are prior to the date of the search and are not during the course of the search. He took us through the assessment order to show that the whole addition has been made in the hands of the assessee on the basis of statement of 2 persons taken by the Additional Director of Investigation, New Delhi recorded under section 131 of the Income Tax Act, prior to the date of the search. He took us to the various paragraphs of the assessment order to show that there is no reference o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the accommodation entry providers. He further stated that Assessing Officer was having the incriminating evidence of the statement of these 2 persons even prior to the search. He further on the merits submitted that the assessee has failed to submit the identity, creditworthiness of the lenders as well as genuineness of the transaction as according to the inspector these companies do not exist at the place the addresses given by the assessee. With respect to the creditworthiness he submitted that the assessee has taken share application money from accommodation entry providers and therefore the creditworthiness of these companies cannot be established. He further stated that regarding the genuineness of the transaction as these are the accommodation entries they are not genuine. Further, the assessee has also failed to produce directors of these companies before the Ld. Assessing Officer. The onus of the assessee to prove these credits is not discharged. He therefore submitted that Ld. CIT (A) has deleted the addition incorrectly. 10. We have carefully considered the rival contention and also perused the orders of the lower authorities. We firstly go to the cross objection filed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court proceeded to observe: "....Thereafter he can make an assessment under sub-section (3) of section 143 of the Act. Another important change incorporated in sub-section (2) of section 143 of the Act is that the notice under this sub-section cannot be served on an assessee after the expiry of 12 months from the end of the month in which the return is furnished. Therefore, in a case where a return is filed and is processed under section 143(1)(a) of the Act and no notice under sub-section (2) of section 143 of the Act thereafter is served on the assessee within the stipulated period of 12 months, the assessment proceedings under section 143 come to an end and the matter becomes final. Thus, although technically no assessment is framed in such a case, yet the proceedings for assessment stand terminated." 21. In the present case, the facts speaks for themselves. The Assessee filed its return on 21st October, 2008. The return was processed under Section 143(1) of the Act on 27th March, 2010. It has held by this Court in Indu Lata Rangwala v. Deputy Commissioner of Income Tax (supra) that the mere processing of a return under Section 143(1) of the Act and the sending of an inti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any ot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made in the hands of the assessee without unearthing any incriminating material during the course of the search carried on the assessee, such addition cannot be made. As no incriminating evidence could be brought to our notice. With respect to the above addition made by the Ld. Assessing Officer on account of share capital/share application money and on commission expenditure, we do not find any infirmity in the order of the Ld. CIT (A) and therefore the appeal filed by the revenue is dismissed. 14. In the result, for assessment year 2002 - 03 ITA number 2703/DEL/2010 filed by the revenue is dismissed and cross objection filed by the assessee in CO No. 116/DEL/2013 filed by the assessee is allowed. Accordingly appeals of the assessee as well as the cross objection of the revenue for assessment year 2002 - 03 are disposed off. Assessment year 2004 - 05 ITA No. 2121/Del/2012 (by AO) ITA number 2702/Del/2010 (by AO) CO No. 115/Del/2013 (by assessee) 15. ITA number 2702/Del/2010 is filed by the Assessing Officer against the order of the Ld. CIT (Appeals) - iii, New Delhi (hereinafter referred to as the Ld. CIT(A) dated 03/03/2010, wherein the he has deleted the addition of Rs. 1.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f income of the assessee was not picked up for the scrutiny. 19. On 01/09/2005 the search took place on „ Vikas Surya group‟ and above named assessee company which is part of that particular group therefore, notice under section 153A of the income tax act was issued upon the assessee on 15/06/2006 requiring it to furnish the true and correct return of total income for the aforementioned assessment year. In response to that notice the assessee filed its return of income on 9/2/2007 declaring income of Rs. 7 55290/-. Thereafter notices under section 142 (1) and 143 (2) were issued on is 20/4/2007. The impugned assessment year is assessment year 2004 - 05 for which the due date of filing of the return was 30/9/2004 and the last date for issue of notice under section 143 (2) was on 30/9/2005. As the date of search is 01/09/2005. The impugned assessment year was pending for assessment as on the date of the search and hence it is abated. 20. During the assessment proceedings it was noted by the Ld. Assessing Officer that assessee has obtained Rs. 1.84 crores from 16 companies. He noted that the Additional Director of Investigation, New Delhi has recorded the statement of 2 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ained by the assessee is in the form of accommodation entry and the assessee might have incurred an expenditure of commission at the rate of 0.5% of the total amount of the above entries and therefore this amount has been spent by the assessee. Hence, the addition was made. Consequently, the assessment order under section 153A of the Income Tax Act was passed on 26.12.2007 under section 153A of the Income Tax Act, 1961. 22. The assessee being aggrieved with the order of the Ld. Assessing Officer preferred an appeal before the Ld. CIT (A) who Vide order dated 3/3/2010 in appeal No. 477/07 - 08 decided the issue by deleting the addition of Rs. 1.84 crores in the hands of the assessee on account of the share application money of this is 16 companies as well as consequent deletion of the addition of Rs., 92,000/ on account of expenditure incurred on accommodation entries. The main reason for the deletion of the above addition by the Ld. CIT(A) was that that the assessee has submitted the copies of the share application forms, the minutes of the board resolution authorizing the companies to make the application for shares, copy of certificate of incorporation, copy of permanent account....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the income tax Act, pendency of the assessment is required to be seen at the time of initiation of the search under section 132 of the income tax act and not at the time of issue of notice under section 153A of the income tax act. He therefore submitted that as the search took place on 01/09/2005 by which date the last date by which the notice under section 143(2) should have been issued did not elapse and therefore the assessment for the Assessment Year 2004 - 05 is an abetted assessment and Ld. Assessing Officer gets an absolute power to make an assessment as if it is a regular assessment. He further referred to the decision of the Hon‟ble Delhi High Court in case of CIT versus Kabul Chawla (supra) wherein it has been held that Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.. He therefore submitted that the impugned assessment is abetted. 25. We have carefully considered the rival contention and also per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te limited versus CIT 2015 - TIOL - 314 -. S. C - IT & 367 ITR 306 (2014) (DEL) ii. CIT versus M, A. F Academy private limited 361 ITR 258 (2014) (Delhi) iii. Rick Lunsford trade and investment limited versus CIT 2016 - TIOL - 207 -SC - IT and 385 ITR 399 (2016) (Kolkata) iv. CIT versus Nipun builders and developers private limited (2013) 350 ITR 407 (Delhi) v. CIT versus Nova promoters and Finlay‟s private limited (2012) 342 ITR 169 (Delhi) vi. CIT versus ultramodern exports private limited (2013) 40 Taxmann.com 458 (Delhi) vii. CIT versus Frostair private limited (2012) 26 Taxmann.com 11 (Delhi) viii. CIT versus N R portfolio private limited (2013) 263 CTR 456 (Delhi) ix. CIT versus Empire built Tech private limited (2014) 366 ITR 110 (Delhi) x. CIT versus focus exports private limited (2014) 51 Taxmann.com 46 (Delhi) In the end, he submitted that the order of the Ld. CIT (A) is erroneous. 27. The Ld. authorized representative submitted that during the course of assessment proceedings, the assessee has submitted the complete details to show that the amount has been received from the company‟s for allotment of shares to them in the appella....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Before the Assessing Officer the assessee has submitted the preliminary details such as share application forms, minutes of the board resolution authorizing the companies to make the application for the shares, copy of the certificate of incorporation copy of the permanent account number and the assessment details of those companies who were regularly doing the business and filing their tax returns on regular basis. In view of this, it is correct that assessee has submitted the primary details to the Ld. Assessing Officer to discharge its initial onus under section 68 of the act. However, the issue here is that Ld. Assessing Officer after examination of the preliminary details submitted by the assessee issued summons to several companies which are either not served or were not complied with. The Assessing Officer further deputed the inspector who also found that these companies did not exist at the given addresses. However, the report of the inspector was on the basis of the local enquiries. What are those local enquiries conducted by the inspector and what is his report and how these companies are existing and being assessed by the income tax Department, is not known. The Ld. As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rators and without examining the fact whether this entry operator is related to all these companies or not, has deleted the addition. It should have been the concern of the Ld. CIT (A) to verify the genuineness of the transaction of these companies for issue of share capital. Furthermore, the Ld. CIT (A) has merely brushed aside the statement recorded of these entry operators stating that they are general in nature. Without examining whether there is any connection between these companies from whom the assessee has obtained share capital and those entry operators he has deleted the addition. In view of this we are of the opinion that the Ld. Assessing Officer has made the addition without making adequate enquiries and not giving assessee an opportunity to rebut all evidences including the statement of entry operators. The Ld. CIT(A) has deleted the addition without examining the connection of those entry operators with these companies and merely relied upon the written submission made by the assessee. We have also perused the various decisions cited by the Ld. departmental representative before us. However, in none of the cases the facts are like in the case before us that statemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeal in ITA No. 2121/Del/2012 for the Assessment Year: 2004-05:- "1. On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in deleting the disallowance of Rs. 14,38,008/- made by the Assessing Officer on account of payments made to various suppliers/contractors as the ^assessee had failed to prove the genuineness of these expenses. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,84,00,000/- made by the Assessing Officer u/s 68 of the Income tax Act, 1961 on account of bogus share application money received by the assessee. 3 On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in deleting the addition of Rs. 92,000/- made by the Assessing Officer u/s 68 of the Income tax Act, 1961 on account of commission paid by the assessee for obtaining accommodation entries in the garb of share application money. 4 On the facts and in the circumstances of the case, the CIT(A) has erred in not appreciating the fact that the appeal of the department on the same issue is still pending before the ITAT. 5 The order of CIT (A) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actor or suppliers, description of the goods supplied and nature of services rendered along with the rates and measurement etc. According to him, it goes to show that the transaction with these parties have been made in the normal course of the business of the assessee. Further, the assessee has also made payments through account payee cheques to these parties after deducting income tax at source by cheques, therefore it cannot be stated that these parties are not available because on perusal of the tax deduction at source records most of these parties are assessed to tax separately from year to year. Furthermore these parties are the contractors and have done some work for the assessee. Therefore, they need not have the TIN number. Hence, the Ld. Assessing Officer, according to the Ld. CIT(A) was erroneous in making these addition/disallowances, hence he deleted the same. Therefore, revenue aggrieved with the order of the Ld. CIT(A) preferred appeal before us. 35. Ld. departmental representative vehemently relied on the order of the Ld. Assessing Officer, whereas the Ld. Authorized Representative relied upon the order of the Ld. CIT(A) and reiterated the same submission, which we....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ven otherwise on the merits of the case, the Ld. Assessing Officer has made the disallowance stating that spiral aluminum and glass was not found at the given address and therefore this disallowance has been made. In the present case, the Ld. CIT (A) has categorically recorded that assessee has not made any purchases from this party, which is apparent from the show cause notice issued by the Ld. Assessing Officer that it has been issued erroneously. Furthermore, the Ld. CIT (A) has recorded that all payments have been made by the cheque and on which tax is deducted. With respect to the bills all the bills are having the name, address and telephone numbers of the persons from whom the work has been carried out by the assessee. The details of the bill are also exhaustive with measurement and the rates of amount paid. It is also not denied that these parties are regularly assessed to income tax and are in the business for which the payments have been made by the assessee to them. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) in deleting the above disallowance. In the result ground No. 1 of the appeal of the revenue is dismissed. 38. The ground No. 2 of the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ors as the assessee had failed to prove the genuineness of these expenses. 2. The order of the ld CIT(A) is erroneous and is not tenable on facts and in law." 43. Briefly stated the facts of the case are that search and seizure operation was carried out on 19/01/2009 on the premises of the assessee and pursuant to that notice under section 153A of the income tax act was issued on 27/11/2009 in response to which the assessee filed its return of income on 18/12/2009 Rs. 4 899140/-. During the course of assessment proceedings it was noted by the Ld. Assessing Officer that assessee has paid a sum of Rs. 7416612/- to 8 contractors where the vouchers did not have the requisite information like TIN number and bill number etc therefore he disallowed the above sum. Consequently he passed an order under section 153A, read with section 143(3) of the Income Tax Act, 1961 on 31/12/2010 for Rs. 8315752/- against the assessed income under section 153A of the Income Tax Act per order dated 26/12/2007 of Rs. 899140/-. Against this the assessee preferred an appeal before the Ld. CIT (A) who vide order dated 24/2/2012 deleted the addition holding that impugned assessment is completed assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt year 2004-05; there also the Ld. CIT(A) has deleted the disallowance. 45. We have carefully considered the rival contention and also perused the orders of the lower authorities. The impugned assessment year before us is assessment year 2005 - 06 for which the assessee filed its return of income on 27/10/2005 and which was assessed under section 143 (1) of the Income Tax Act. Further with respect to the 2nd search carried on the assessee on 19/1/2009, the assessment under section 153A was framed. Original assessment under section 153A was passed on 26/12/2007 in consequence to the search carried out on Surya Vikas group on 1/9/2005. Therefore, the present assessment year is a completed assessment year in the present case. Admittedly, in the assessment order or before us the Ld. Departmental Representative could not point out any incriminating material with respect to the disallowance made by the Ld. Assessing Officer of these expenses. Therefore, respectfully following the decision of the Hon‟ble Delhi High Court in case of CIT versus Kabul Chawla (supra), no addition can be made in the hands of the assessee for these and impugned assessment year in absence of any incrimin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld have been made on the basis of the incriminating documents found during the search otherwise not. He vehemently submitted that there is no incriminating material found during the course of the search carried out by the income tax Department on 19/01/2009 as well as on 01/09/2005. 50. We have carefully considered the rival contentions and also perused the orders of the lower authorities. We have already decided the identical issue in the case of the assessee in ITA No. 2122/Del/2012 for assessment year 2005-06 wherein we have deleted the addition on merit as well as held that in absence of any incriminating material the disallowance cannot be made in the hands of the assessee as this assessment year is also a completed assessment. Therefore, for the similar reasons, we confirm the order of the Ld. CIT (A) and direct the Ld. Assessing Officer to delete the disallowance of Rs. 3986752/-. Consequently, ground No. 1 of the appeal of the revenue is dismissed. 51. In the result appeal of the revenue in ITA No. 2123/Del/2012 for assessment year 2006-07 is dismissed. Assessment year 2007 - 08 ITA No. 2706/Del/2013 (by revenue) CO No. 96/Del/2014 (by assessee) 52. This appeal is fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come of Rs. 26593900/- on 18/12/2009. 56. During the course of assessment proceedings, the Ld. Assessing Officer has noted that assessee is using its funds for advancing loans to the sister concerns and further it has received a dividend of Rs. 2133682/- which is an exempt income and assessee has not disallowed any sum under section 14A of the Income Tax Act. Therefore, assessee was asked to give the details of the disallowance with respect to the interest expenditure which has been utilized for the purpose of making any investment in those exempt income earning investments. Assessee submitted calculation of interest attributable to investment in mutual funds and share application money amounting to Rs. 3086234/- which was disallowed by the Ld. Assessing Officer under section 14A of the income tax act. Further, Rs. 3900954/- was also disallowed out of the expenses paid to various parties such as petty contractors for the reason that the TIN not quoted in the bills supplied by those contractors as assessee has failed to prove the genuineness of those expenditure. Further, the assessee has claimed an expenses of Rs. 1020912/- towards lease agreement charges incurred. During the year....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under the computation of income under the head profits and gains of business. 58. Ld. authorized representative submitted that disallowance on account of the petty contract expenses incurred by the assessee are also contested by revenue in earlier years. He reiterated the same arguments that were raised in earlier years with respect to the genuineness of the payment made by the assessee to these contractors. He further submitted that all the addition made by the Ld. Assessing Officer in the present case are not emanating out of the any documentary evidence which is incriminating evidence found during the course of search. He further submitted that assessment year 2007 - 08 is not an abetted assessment, but a completed assessment. He therefore submitted that looking at the provisions of section 153A of the income tax act additions can be made to the returned income of the assessee on the basis of incriminating evidences. 59. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The fact of filing of the return and pendency of the assessment shows that for assessment year 2007- 08, assessee filed its return of income on 31/10/2007....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... addition as the payments have been made by the assessee supported by the bills of those parties with the rates of the work done, name and address of the parties and the rates for which the work done has been mentioned. Further, the payments have been made by the assessee by account payee cheque by deducting tax at source, wherever applicable. It was further the fact that these parties are assessed to income tax regularly and are supplying material to the assessee. The Ld. Assessing Officer has made this disallowance based on some Inquiry carried on by him in some other party which could not be found at the given address. It is stated that assessee has not purchased any goods from that party. In view of this we do not find any infirmity in the order of the Ld. CIT (A) in deleting the addition by holding that the appellant company has discharged its onus by providing copy of the bills raised by the contractor containing full address, nature of services rendered or goods supplied on payment has been made by account payee cheque and tax deduction at source has been deducted as per the provision of the law. He further held that the Assessing Officer is not conducted any enquiry to disb....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of this, interest disallowance under rule 8D (2) (i) is required to be upheld. With respect to the other investment where the interest expenditure of Rs. 1 943289/-. There is no nexus of the sum borrowed with the amount of some invested in the mutual funds. The some of the interest amount is with respect to investment made by the assessee in sister Concern Company from which no dividend has been received. Even otherwise, looking to the balance sheet of the company assessee has share capital of rupees 278 lakhs and reserves and surplus of 1346 Lacs which makes the total shareholder‟s funds of rupees 1624 Lacs. The amount of investment made by the assessee is for 0 Lacs as on 31/3/2006 and only Rs. 7 lakhs as on 31/3/2007. Therefore it is apparent that the investment made by the assessee in exempt income generating investments is far less than interest-free funds available with the assessee. The Hon‟ble Supreme Court recently in case of Godrej & Boyce Manufacturing Co. Ltd versus DCIT (394 ITR 449 (SC )) has held that:- "38. In the present case, we do not find any mention of the reasons which had prevailed upon the Assessing Officer, while dealing with the Assessment Y....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in what are the buyer is going to use the space sold on the other hand, in the case of shopping mall the promoter has to convince demonstrate - the buyer were invariably investor looking for a good return on their investment in the form of rent and depreciation that there exist good business opportunities in the mall. The said insurance in turn is based on the fact that various established brands will be having their outlets and there will be almost all types of goods and services available under one roof and thereby maximum footfalls. . Therefore, to show Makepeace property more attractive and marketable the appellant has tried to lease out the certain spaces. During the year and incurred a sum of Rs. 1 020912 for the execution of 2 lazy these agreements for a period of 12 years, 9 years and claimed the same as business expenditure. These are the 50% charges of the stamp duty paid by the assessee for the purpose of lease from the SM departmental store private limited and for the purpose of JDS Apparels private limited. On these bases assessee claimed this expenditure as business expenditure. The main plank of the claim of the assessee was that these expenditure have been incurred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....derstand the business concept of development of a real estate in projects like shopping mall etc and has considered it is a mere activity of printing of the properties. 66. The Ld. departmental representative relied upon the orders of the lower authorities. 67. You carefully considered the rival contention and also perused the orders of the lower authorities. It is an undisputed fact that the assessee is a developer of real estate and has constructed all in Rohini, New Delhi. It has given the property only is to 1. Departmental store namely VSM departmental stores and also to another brand „Ritu Wears" on a long-term lease and assessee is explained its rational that for the purpose of the sale of the large chunk of the property searches shopping mall it is necessary that there increases a substantial footfall and population of the merchants. It is a matter of common knowledge that Developers, particularly in the Delhi-National Capital Region, advertise retail spaces or shops in malls as great investment. Many also provide assurances of guaranteed income of 10-12 per cent over a period. Dynamics of this segment is different from that of residential properties. The success of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenses of the assessee and e. Further it has been laid out and expended wholly and exclusively for the purposes of the such business. Therefore according to us this expenditure of the assessee satisfies all the test laid down for its deduction under section 37 (1) of the income tax act. Hon‟ble Supreme Court has on occasion to consider that what the expenditure is for the purposes of the business in CIT versus Malayalam plantations Ltd 53 ITR 140 wherein the Hon‟ble Supreme Court has held that for the purpose of the businesses vider in scope, then the expression for the purposes of earning profit. Its range is vide. It may take in not only the day to day running of the business but also the rationalization of its administration and modernization of its machinery, it may include measures for the preservation of the business and for the protection of its assets and property for export creation. It may also comprehend payment of statutory dues and taxes imposed on a precondition to commerce or for carrying on of the business. It may comprehend many other acts incidental to the carrying on of a business. Therefore, such expenditure incurred by the assessee cannot be lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l/2013 (By revenue) CO No 97/Del/2014 (By ssessee) 71. This appeal is filed by the revenue against the order of the Ld. CIT (A) wherein the interest disallowance of Rs. 1688299/- made by the Ld. Assessing Officer under section 14 A of the income tax act is deleted. Further The Ld. Assessing Officer also made the addition on account of the contract expenses of Rs. 14900/- which is also deleted by the order of the Ld. CIT appeal. Therefore, revenue is in appeal before us raising following grounds of appeal in ITA number 2708/del/2013 for assessment year 2008 - 09. 72. The parties before us submitted that the issue covered in the appeal of the revenue is identical to the issue in appeal of the assessee for assessment year 2007 - 8. The further submitted that their arguments also remain the same. 73. As we already deleted the disallowance under section 14 A of the income tax act to the extent that Ld. Assessing Officer has not able to prove the nexus of the sum so used for the purpose of earning of the exempt income while deciding the appeal of the assessee for assessment year 2007 - 08. In the present case also, the Ld. Assessing Officer has failed to establish nexus of the borrow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dered the rival contention and also perused the orders of the lower authorities. We have dealt with this issue in CO No. 96/del/2014 for assessment year 2007 - 08 and after detailed discussion. We have given our reasons for allowing the cross objections of the assessee with respect to the expenditure claimed wherein. Therefore, for the same reasons we direct the Ld. Assessing Officer to allow the claim of the assessee with respect to the deduction of expenditure under the head income from business. Therefore, reversing the findings of the lower authority. We allow ground No. 1 and 2 of the cross objection of the assessee. 79. In the result cross objection filed by the assessee is allowed. 80. In the result appeal filed by the revenue in ITA number 2708/del/2013 for assessment year 2008 - 09 is dismissed and cross objection filed by the assessee in above appeal in CO No. 97/del/2014, is allowed. A Y 2009 - 10 ITA No 2712/Del/2013 (By revenue) Co No. 98/del/2014 (By Assessee) 81. this appeal is filed by the revenue in ITA No. 2712/del/2013 against the order of the Ld. CIT appeal dated passed against the order passed by the Ld. Assessing Officer under section 143 (3) read with s....