AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1505
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....isaged manner without considering facts of the case and documents submitted by the appellant and without any cogent evidence. 3. On facts & in law, the CIT (A) has grossly erred in holding the addition of Rs. 1,29,91,587/- by the LD. AO on account of disallowance of 4/5lh of the expenditure of Rs. 1,62,39,484/- being account incurred in respect of Bus Queue Shelters (BQS), by treating the same as "Deferred-Revenue in nature" vide Para No. 4 of the assessment order in an envisaged manner without considering facts of the case and documents submitted by the appellant and without any cogent evidence. 4. On facts & in law, the CIT (A) has grossly erred in holding the addition of Rs. 27,297/- by the LD AO on account of disallowance of expenditure in respect of charges for late filing of Service tax return vide Para No. 5 of the assessment order in an envisaged manner without considering facts of the case and documents submitted by the appellant and without any cogent evidence. 5. On facts & in law, the CIT (A) has grossly erred in holding the addition of Rs. 1,47,647/- by the LD AO on account of disallowance of expenditure in respect of Bihar Project Expenses v....
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....ssing Officer arbitrarily and without any justification. 13. The appellant craves leave to add, amend, alter, delete, rescind, forego or withdraw any or all the grounds of appeal at anytime before or during the course of hearing." 3. At the outset, learned counsel has not pressed ground no.9 relating to disallowance made u/s.14A read with Rule 8D. Accordingly, the same is dismissed as not pressed. We will take up rest of the grounds as raised by the assessee before us. 4. The brief facts of the case are that assessee is engaged in the business of advertising in electronic media with various regional new channels and also provides whole range of services including Ad campaign, design, creative and strategy incubation and development, advertisement in print and electronic media. In so far as the addition of Rs. 1,20,56,085/- on account of sale of shares, the Assessing Officer from the perusal of the annual account and report of auditors noted that transaction of sales of shares for Rs. 1,20,56,085/- and profit of Rs. 28,88,976/- earned thereon are not properly reflected in the affairs and in the profits of the company. The relevant extract of the auditors reads as unde....
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....he head wise break up as placed in the paper book were as under: Sr. No. Particulars of sales account Amount (Rs.) 1 BILL Outward 1 10,63,00,203.07 2 Bill outward-10% 51,56,001.20 3 Bill outward 10% [Other than Channel) 1,05,56,423.04 4 Bill Outward 12% 1,65,23,566.77 5 Bill Outward (12%) Other Than Channel 2,34,66,498.33 6 Bill Outward 1.8% 2 8,13,47,797.12 7 Bill Outward BBY 1,63,52,171.94 8 Bill Outward Bby 1.8 7,49,98,083.51 9 Production Sale 16,500.00 10 Profit on Sale of Shares 28,88,975.07 11 Sales CST 2% (Against Form-C) 7,14,480.00 12 Sales of Shares - Deliveries 91,67,109.93 13 S ales Other 20,06,12,563.00 14 Sales-VAT 12.5% 73, 45,424.00 15 Sales-VAT 4% 17,49,548.00 Total 75,71,95,344.98 Thus, he submitted that sum of Rs. 1,20,56,085/- stands duly credited in the P&L account in the following manner: Sr. No. Head Amount (Rs.) i) Profit on Sale of Shares 28,88,975.07 ii) Sales of Shares - Deliveries 91,67,109.93 Total 1,20,56,085 7.1 He further submitted that even ....
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....04.2008 sale summary for the period 01.04.2008 to 31.03.2009) 4 Copy of ledger account of sales of shares-Deliveries in the books of M/s Rashtriya Advertising Agency for the period 1.4.2008 to 31.3.2009 5 Copy of ledger account of profit on sale of shares in the books of M/s Rashtriya Advertising Agency for the period 1.4.2008 to 31.3.2008 6 Group summary in the books of appellant company 7 Copy of order of mediation in case of appellant and Anuranjan Pandey 8 Copy of agreement dated 12.5.2008 between Anu Shares and Securities (P) Ltd. and Mr. Dinesh Gupta 9 Copy of ledger account of AG Shares & Securities Ltd. in the books of appellant company in the books of M/s Rashtriya Advertising Agency for the period 5.9.2007 to 31.3.2009 10 Copy of ledger account of AG Shares & Securities Ltd. in the books of appellant company for 1.4.2010 to 3.13.2013 Thus, the addition of this amount in wake of aforesaid documents can be upheld and same is directed to be deleted. 10. Coming to the disallowance of Rs. 1,29,91,587/- being 4/5thof the expenditure of Rs. 1,62,39,484/- claimed by the assessee being amount incurred in respect of Bus Queue Shelters....
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....cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. It has been held repeatedly by this Court that entries in the books of account are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act [See - Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 fSC); Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT (1997) 227 ITR 172/93 Taxman 502 (SC); Sutlej Cotton Mills Ltd. v. CIT f 19791 116 ITR 1 (SC) and United Commercial Bank v. CIT [1999] 240 ITR 355/106 Taxman 601 (SC). 20. At the most, an inference can be drawn that by showing this expenditure in a spread over manner in the books of account, the assessee had initially intended to make such an option. However, it abandoned the same before reaching the crucial stage, inasmuch as, in the income tax return filed by the assessee, it chose to claim the entire expenditure in the year in which it was spent/paid by invoking the provisions of Section 36(1)(iii) of the Act. Once a return in that manner was filed, the AO was bound to carry out the assessment by applying the provisions of that Act and not to ....
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....tion (P) Ltd. 3 4,31,209 iii) Prabhatam Developers (P) Ltd. 3,27,60,000 iv) Prabhatam Parkash 50,000 V) Smt. Santosh Devi 1,00,00,000 Total 4,82,41,209 20. Learned Assessing Officer has made the disallowance of interest @1% per month for six months. The Assessing Officer noted that assessee has claimed sum of Rs. 1,53,16,488/- on account of finance charges on the loans taken by it and accordingly, he made the disallowance on notional basis that there is diversion of interest bearing funds. 21. Before us, ld. counsel for the assessee submitted that assessee had utilized the loans purely for the business purpose and in any case it had huge surplus funds in the form of share capital, share application money and reserves and surplus aggregating to Rs. 15,75,16,837/-, which is evident from audited balance sheet which reflects the following figure:- Sr. No. Particulars Amount (Rs.) i) Share capital & Share Application money 2,77,55,310 ii) Reserves 12,97,61,527 Total 15,75,16,837 22. After relying upon various decisions in his written synopsis, he submitted that once it has been found that a....
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....ional basis on the ground that the Director has more than 20% of interest in the company and interest-bearing funds have been diverted. Once assessee's interest free surplus funds far exceeds the funds given to sister concern or to any joint venture company, then to hold that the said amount must have been given free interest-bearing funds would be farfetched so as to make any kind of disallowance of notional interest. Accordingly, following the same reasoning and the finding given in the foregoing paragraph, we direct the Assessing Officer to delete the said addition. 29. The next major issue is with regard to the addition on account of share capital/share premium raised by the assessee during the year from two shareholder companies, namely, (i) Prabhatm Investment Ltd. - Rs. 5 crore; (ii) Anjaninandan Steel Pvt. Ltd. -Rs.9,74,000/-. Learned Assessing Officer has made the addition on the ground that assessee could not file any confirmation, copy of bank statement and return of income of the subscribers, except for Form no.2 which is filledfor allotment of shares and assessee's own bank account. In absence of any details, the Assessing Officer added the entire amount u/s.68. ....
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....ent (P) Ltd. vi) Copy of group summary of shares in the case of Prabhatam Investments (P) Ltd. vii) Copy of confirmation of accounts from Prabhatam Investments (P) Ltd. viii) Copy of ledger account of M/s Prabhatm Advertising (P) Ltd. in the books of M/s Prabhatam Investments (P) Ltd. ix) Shares capital account alongwith Form 2 filed by appellant company before ROC. x) Copy of credit facilities from State bank of Account. xi) Copy of ledger account of Prabhatam Advertising (P) Ltd. (shares ) in the books of Prabhatam Investments (P) Ltd. xii) Copy of audited financial statement as on 31.3.2009 in the case of M/s Prabhatam Investments (P) Ltd. xiii) Copy of confirmation of purchase of shares filed by M/s Prabhatam investments (P) Ltd. before DCIT alongwith bank statement. xiv) Copy of bank statement of appellant company. In the case of M/s. Anjaninandan PVt. Ltd., he has referred to the following documents:- i) Copy of bank statement of M/s Anjani Nandan Steels Pvt. Ltd. and the appellant reflecting the relevant transaction. ii) Audited financial statement as on 31.3.2012 in t....
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.... Shareholders Fund Share capital 10,00,000 10,00,000 (63,209) (56,190) Non Current Liability 27,80,000 27,80,000 Other current liability 2800 2500 Grand Total 37,19,591 37,26,310 Non-Current Assets Long term loan and Advances 37,01,960 37,01,960 Current Assets Cash & Bank Balance 17,631 24,350 Loans & Advances Total 37,19,591 37,26,̐ 34. Thus, from these evidences, he pointed out that not only the company has creditworthiness but also the entire transaction is genuine. Ld. counsel also relied upon the catena of judgment. The detail of which have been given by him in his written synopsis. 35. On the other hand, ld. DR strongly relied upon the order of the ld. CIT(A) and submitted that ld. CIT(A) has threadbare discuss the financial status of these companies and also demonstrated as to how these companies were not generating any revenue but were routing money from their accounts for the purpose of investment. 36. We have heard the rival submissions and also perused the relevant findings given in the impu....