TaxTMI 
TaxTMI 
2018 (12) TMI 1505
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....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 vide Para No. 6 of the Assessment Order in an envisaged manner without cons....
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....ete, 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 under: "Except for the transaction of Sale of Shares booked in the Profit & loss account for a sum of Rs. 1,20,56,085/-. It has....
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....d-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 the auditor's note clearly states that the shares have been sold by the assessee. Thus, there is no question of any sale not being recorded in the P&L account. The dispute was with regard to the broker only and this is the reason why the auditors have given their remark. 8. On the other ....
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....y 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 which has been treated as Deferred Revenue Expenditure by the AO, it has been pointed out by the learned counsel that this issue stands covered by the decision of the Tribunal in assessee's own case for the Assessment Year 2011-12 in ITA No.1439/Del/2015, wherein this Tribunal following the decision of Hon'ble Delhi High Court in th....
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....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 go beyond the said return. There is no estoppel against the Statute and the Act enables and entitles the assessee to claim the entire expenditure in the manner it is claimed." 13. In view of the ratio laid down by the Hon'ble Apex Court, that once the assessee has shown it as revenue expenditure, then revenue cannot disallow the same by spreading it over the y....
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....aken 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 assessee has surplus funds, then no disallowance can be made on advances given to the subsidiary/sister concern. 23. On the other hand, ld. DR has strongly relied upon the order of the authorities below and submitted that assessee has to prove the nexus between the interest bearing funds and the surplus funds which has not been given. 24. After hearing the rival submission and on perusal of the relevant material referred to before us, we find....
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....oning 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. 30. Before the ld. CIT(A), the assessee in support of the aforesaid transactions, filed confirmation from the parties; income tax return of the parties and the bank statement of the parties showing the creditworthiness of these companies. Further, assessee has also filed following documents:- (i) Confirmation letter dated 20.12.2011 from M/s Prabhatam Investment Pvt. Ltd. subscriber; (ii) Copy of E filing acknowledgement 1TR-V for the AY. 2009 10 showing ....
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....i) 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 the case of Anjani Nandan Steels (P) Ltd. Copy of confirmation from Anjani Nandan Steel (P) Ltd. v) Copy of acknowledgement of return of income dated 13.10.2011 alongwith audited financial statement for assessment year 2011-12 in the case of Anjani Nandan Steel (P) Ltd. vi) Copy confirmation from Anjani Nandan Steel (P) Ltd. vii) Copy of application for issue of shares by M/s Anjani Nandan Steels (P) Ltd. to appellant company. viii) Copy of ledger account of appellant company in the books of M/s Anjani Nandan Steels (P) Ltd. ix) Copy of acknowledgement of return of income dated 22.9.2009 alongwith computation of income and audi....
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....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 impugned orders as well as material referred to before us. From the stage of the Assessing Officer, addition has been made on the ground that the assessee could not file confirmation, balance sheet or income tax return of these companies. However, before the ld. CIT(A) all the evidences were filed as noted above which were also sent to the AO to submit his remand report.However, ld. CIT(A) has merely gone by the fact that these companies were not having substantial income and in their balance sheet there were having huge liabilities and therefore,these companies have been used as a conduit for routing the assessee's own unaccounted money. First of all, it is not in dispute that the money received by the assessee company in the form of share application has come through these companies from their bank accounts on various dates through account payee cheques. These companies ha....