TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 627
X X X X Extracts X X X X
X X X X Extracts X X X X
....) has erred in confirming disallowance of wooden work expenses for Rs. 16,63,883 incurred for housing project constructed by it when no such disallowance is called for. The same may be deleted. 3. On facts and in the circumstances of the Appellant's case, the Ld. CIT (Appeals) has erred in confirming disallowance of other material expenses for Rs. 8,89,664 incurred for housing project constructed by it when no such disallowance is called for. The same may be deleted. 4. On facts and in the circumstances of the appellant's case, Ld. CIT(A) has erred in confirming disallowance of miscellaneous work expenses for Rs. 12.93,301/- incurred for housing constructed by it when no such disallowance is called for. The same may be deleted. 5. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in not giving direction to the Assessing officer for charging interest u/s.234A, 234B and 234C of the Act. 6. The appellant craves to add to, alter, amend and/or withdraw any grounds of appeal either before or during the course of hearing the appeal. 3. The 1st issue raised by the assessee is that Ld. CIT(A) erred in confirming the addition made by the AO by sustai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erest expenses. It is because the bank while charging the interest does not give any relief for the holidays. 4.8 Thus the AO worked out proportionate interest amounting to Rs. 11,32,288/-only and disallowed the same by adding to the total income of the assessee. 5. Aggrieved assessee preferred an appeal before the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that Goyal & Co owned the land and therefore it was signing the sale deed as 1st party. 5.1 The marketing activities were carried out by Goyal & Co, and therefore it was having its reputation and brand value as well as trusts in the market. Therefore all the units of the assessee were sold by Goyal & Co. So the sale consideration was 1st received by Goyal & Co. 5.2 Indeed there is a clause in the agreement that both the parties can collect the sale proceeds, but there was no prohibition that one party cannot receive sale consideration on behalf of another party. 5.3 However the Ld. CIT(A) rejected the contention of the assessee by observing that there was no reason to hold the payment of the assessee by the Goyal & Co. Accordingly, the Ld. CIT-A confirmed the disallowance made by the AO on account of interest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee has done some work which was not allotted to it, the same would be a matter of dispute between the assessee and Goyal & Co. By no stretch of imagination, the expenditure incurred can be disallowed. 12. On a conspectus reading of the assessment order and the order of the First Appellate Authority vis-à-vis the facts in issues relating to the impugned expenditures, we do not find any merit in the disallowances made by the A.O. and therefore decline to interfere with the findings of the ld. CIT(A). All the grounds taken together are accordingly dismissed." 9.1 As the facts of the case on hand are identical to the facts of the case as discussed above, we respectfully following the same reverse the order of authorities below. Thus we set aside the order of Ld. CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 10. The 2nd issue raised by the assessee is that the Ld. CIT (A) erred in confirming the disallowance of wooden material expenses of Rs. 16,63,880/- only. 10.1 The assessee in its opening work in progress has claimed the expenses for wooden material amounting to Rs. 16,63,880/- only which was carri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see on the purchase of wooden material which was not part of labor expenses. 11.4 However the Ld. CIT(A) disregarded the contention of the assessee by observing that the wooden material expenses were not incurred as per the joint development agreement. Accordingly, he confirmed the order of the AO. Being aggrieved by the order of Ld. CIT(A) assessee is in appeal before us. 12. The Ld. AR before us submitted that in the identical facts and circumstances this tribunal in the case of the CIT Vs. M/s Anshul associates in ITA No. 3063/AHD/2015 vide order dated 16th April 2018 decided the issue in favor of the assessee. 13. On the other hand the Ld. DR vehemently supported the order of authorities below. 14. We have heard the rival contentions and perused the materials available on record. At the outset, we note that M/s Goyal & Co was having a similar contract with M/s Anshul associates. In the case of M/s, Anshul associates the ITAT was pleased to delete the addition made by the AO. The relevant extract of the order is reproduced as above in ground no 1. As the facts of the case on hand are identical to the facts of the case as discussed above, we respectfully following the same r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f this Tribunal in the case of M/s Akshar Finance Ltd. Vs. ITO in ITA No. 3215/Ahd/2010 dated 05/12/2013 wherein it was held as under: "5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well the judgement relied upon by the ld.counsel for the assessee. We find that in AY 2005-06 this issue has been decided by the Coordinate Bench (ITATAhmedabad) against the assessee on identical facts, but the assessee was not able to prove that recipients of the interest were also paying tax at maximum marginal rate, however in the instant case, the ld.counsel for the assessee has submitted the details at page No.37 of the paper-book which shows that the recipients of the interest were also paying maximum marginal rate of tax, therefore there is no evasion of tax. The undisputed facts are that the transactions have been effected between the related parties as contemplated u/s.40A(2)(b) of the Act. The assessee has paid interest @15% and interest received on advances to its sister-concern @ 10%. The AO made addition on the basis that the assessee received only 10% of interest, however, paid @15%, thereby the pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made by him. Hence the ground of appeal of the assessee is allowed. 15. The 3rd issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition of the other material expenses of Rs. 8,89,664/-only. 16. The AO during the assessment proceedings observed that the assessee had incurred certain expenses such as chemicals, small pipe, etc. which were not incurred as per the joint development agreement. 16.1 However, the assessee in support of the expenses filed the copies of the bills and submitted that the payment was made through banking channel. 16.2 However, the AO disregarded the contention of the assessee by holding that these expenses were not incurred in pursuance of the agreement as discussed above and assessee failed to substantiate that these expenses were incurred in connection with the work allocated to it. Accordingly, the AO disallowed the sum of Rs. 8,89,664/- and added to the total income of the assessee. 17. Aggrieved assessee preferred an appeal to the Ld. CIT(A), the assessee before the Ld. CIT(A) submitted that all the expenses were incurred in connection with the business of the assessee. The assessee in support of such expenses filed the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1.3 We also note that genuineness and the business connections of the expenses have not been doubted. The only reason for the disallowance is that these expenses are not in pursuance to the joint development agreement. Thus such expenses were either to be allowed to the assessee or Goyal & Co. and both the companies are paying the tax at the same rate. Therefore, respectfully following the reasoning as given in the preceding ground no. 2 Para 14 of this order, we reverese the order of the authorities below. Thus we set aside the order of the ld. CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 22. The last issue raised by the assessee is that the Ld. CIT(A) erred in confirming the disallowance of miscellaneous work expenses amounting to 12,93,300/-. 23. The assessee during the year has made payment was labor charges amounting to Rs. 12,93,300/-to 5 parties. All the payments were made through banking channel. 23.1 However the AO found that the assessee was not authorized to incurred such expenses as per the joint development agreement. The AO also noted that the assessee failed to prove the genuineness of the exp....