AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2695
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....n both appeals of revenue is identical and facts are also identical. Hence, we will take the facts from AY 2006-07 and decide the issue. For this, revenue has raised following ground no. 1: "1. On the facts and circumstances of the case ld. CIT(A) erred in deleting the addition of Rs. 27,59,634/- for AY 2006-07 and Rs. 2,40,000/- for AY 2007-08 on account of short credit in rental income by admitting evidence not furnished before the assessing officer during the course of assessment proceedings and without giving the assessing officer opportunity to examine the same in violation of rule 46A(3) of the I. T. Rules. 1.1. On the facts and circumstances of the case Ld. CIT(A) erred in deleting the addition of Rs. 27,59,634/- for AY 2006-07 and Rs. 2,40,000/- for AY 2007-08 on account of short credit in rental income as the details furnished by the assessee during the course of assessment proceedings revealed that there indeed was shortfall in credit of rental income." 3. Briefly stated facts are that the AO noticed from annexure 2A of assessee's reply dated 18.11.2011 that it had received rental income from M/s. Naresh Kumar & Co. at Rs. 22.20 lacs but when it was cross verified ....
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....ication, hence,in the interest of justice, we restore this issue back to the file of AO only with a direction to examine the veracity of the documents. In case the reconciliation is correct the addition will not be made. Similarly, the assessee has received rental income from Naresh Kumar & Co. P. Ltd. at Rs. 48.60 lacs including interest on loan at Rs. 7.20 lacs thereby the total receipts from sister concern at Rs. 55.80 lacs but the auditor of the assessee filed Notes on Accounts at 11B(5) wherein he has recorded the rental transaction during the year at Rs. 82,09,013/-. But the Schedule 8 of Annual Report clearly shows the breakup of income wherein rent received in total was Rs. 70.80 lacs which includes the rent received from Naresh Kumar & Co. Pvt. Ltd. at Rs. 55.80 lacs. We find that the total debit transactions shown in the ledger account of Naresh Kumar & Co. Pvt. Ltd. was Rs. 27,67,094/-, which was wrongly bifurcated by the auditor into rent at Rs. 23,50,621/- and coordination activities at Rs. 4,16,473/-. Similar debit transactions of the ledger account have been reflected by the auditor as rental receipts. From these documents the assessee has clearly reconciled the disc....
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....ccordingly, CIT(A) directed the AO to allow the claim of interest while computing the assessee's business income. Aggrieved, now revenue is in appeal before us that the same was not confronted to the AO by the CIT(A) while allowing relief. 8. We have heard rival submissions and gone through facts and circumstances of the case. We find that the claim of the assessee before CIT(A) was that this interest was paid on account of acquisition of flat at 9/1, Middleton Street on 31.03.2003 from Tata Iron & Steel Co. Ltd. As per the claim of the assessee, this property was acquired by taking a loan of Rs. 1 cr. from Standard Chartered Bank and claimed the interest relating to premises as allowable u/s. 36(1)(iii) of the Act since interest paid on asset which is being used as business asset is allowable as deduction. We find that the assessee is unable to bring the documents before the AO during the course of assessment proceedings but he subsequently produced these documents before CIT(A) for the first time and CIT(A) has also not referred these documents to the AO for verification. In terms of the above, we are of the view that the interest is paid for acquisition of business asset and th....
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.... in appeals before us. 11. We have heard rival submissions and gone through facts and circumstances of the case. We find that admittedly, the AO has noted the fact that unlike in earlier years the assessee has not earned any income from coordination activity or handling of coal etc. it means that the AO has admitted in earlier years there was business activity of handling of coal etc. by the assessee. From the accounts of the assessee also it is revealed that it is in continuing business and assessee has earned income from service charges and coordination charges and coal handling charges. Even the assessee has filed accounts for the year ending 31.03.2005, which also reveals that the assessee company is engaged in the business activity of coordination activity of coal handling. Even this flat No. 4 at 9/1, Middleton Street was used by Director of the assessee company and this particular flat is kept as business asset by the assessee company in its accounts. Now before us, during the course of hearing, Ld. Sr. DR could not controvert the above fact that the assessee company is not engaged in the business in earlier years. 12. Another aspect of this issue argued by Ld Counsel for ....
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....he existing system in this regard requires the calculation of depreciation in respect of each capital asset separately and not in respect of block of assets. This requires elaborate book-keeping and the process of checking by the Assessing Officer is time consuming. The greater differentiation in rates, according to the date of purchase, the type of asset, the intensity of use, etc., the more disaggregated has to be the record- keeping. Moreover, the practice of granting the terminal allowance as persection 32(1)(iii) or taxing the balancing charge as per section 41(2) of the Income-tax Act necessitate the keeping of records of depreciation already availed of by each asset eligible for depreciation. In order to simplify the existing cumbersome provisions, the Amending Act has introduced a system of allowing depreciation on block of assets. This will mean the calculation lump sum amount of depreciation for the entire block of depreciable assets in each of the four classes of assets, namely, buildings, machinery, plant and furniture." 31. It becomes manifest from the reading of the aforesaid Circular that the Legislature felt that keeping the details with regard to each and every ....
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....ee before the assessing officer. 4.4. On the facts and circumstances of the case Ld. CIT(A) erred in deleting the addition of Rs. 7,60,00,000/- u/s. 2(22)(e) by wrongly relying on the decision of jurisdictional High Court though the same is squarely applicable to the facts of the case being interest free loan and this comes under the purview of gratuitous loan." 14. Briefly stated facts are that during the course of assessment proceedings the AO noticed that the assessee has a regular loan transaction with M/s. Naresh Kumar & Co. Pvt. Ltd. and this loan of Rs. 7.60 cr. is interest free loan outstanding. The AO also noticed that Shri Naresh Kumar is holding 50% share in the assessee company and 65% share in Naresh Kumar & Co. Pvt. Ltd. According to him, this comes within the purview of deemed dividend u/s. 2(22)(e) of the Act. The AO brought out the following four facts in assessment order, which reads as under: i) Sri Naresh Kumar was owning 50% of total shares of the assessee company and 65% of total shares of M/s. Naresh Kumar & Co. P. Ltd. he was also one of the directors in both the companies. ii) Loan was not forwarded by M/s. Naresh Kumar & Co. P. Ltd. in the ordina....
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....ven otherwise, in view of plethora of decisions relied upon by the assessee and more particularly the decision of Delhi High Court in the case of Ankitech Pvt. Ltd., Bombay High Court in the case of Universal Medicare Pvt. Ltd., Mumbai Special Bench decision in the case of Bhaumik Colour Pvt. Ltd. and Rajasthan High Court in the case of Hotel Hiltop, deemed dividend cannot be added in the hands of the assessee-company, since the assessee-company is not a shareholder in M/s. Naresh Kumar & Co. Pvt. Ltd. In view of all the above, I delete the addition of Rs. 7,60,00,000/- made by the A.O. This ground of appeal is allowed." Aggrieved, now revenue is in appeal before us. 16. At the outset, Ld. CIT, DR stated that there is a violation of Rule 46A(3) of the I. T. Rules, 1962 for the reason that for the first time the shareholding pattern is given by the assessee before CIT(A). Ld. CIT, DR referred to the following para from the order of CIT(A): "It was further submitted that the shareholding pattern of the assessee on 28.03.2007 was as under: Name of the shareholder No. of shares held % 1. Sri Naresh Kumar 1 0.1 2. Smt. Sunita Kumar 19811 99.8 3. Sri Arjun Kumar 1 ....