TaxTMI 
TaxTMI 
2019 (6) TMI 1446
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....rming the addition of Rs. 20,00,000/- ignoring that the said compensation expenditure has been proved in view of Notarized document filed with the A.O. 3 On the facts and in law, the ld. CIT(Appeals) has erred in confirming the addition to the extent of Rs. 3,60,750/- on account of land development expenses incurred in the course of business and recorded in the audited books of accounts. 4 On the facts and in law, the ld. CIT(Appeals) has erred in confirming the addition to the extent of Rs. 56,21,900/- on account of disallowance of depreciation on flat at Pune used for business purpose. 5 On the facts and in law, the ld. CIT(Appeals) has erred in confirming the addition to the extent of Rs. 69,093/- on account of disallowance of depreciation on flat at Mumbai used for business purpose. 6 On the facts and in law, the ld. CIT(Appeals) has erred in confirming the addition to the extent of Rs. 9,00,000/- on account of alleged unexplained advance received against land from Shri Prashant Hire. 7 On the facts and in law, the ld. CIT(Appeals) has erred in confirming the addition to the extent of Rs. 3,63,455/- on account of disallowance of dedu....
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....ividual engaged in the business of building and developing housing projects, manufacturing and selling of transformers under the name and style of "PVN Transformers". The assessee had expired on 06-05-2010. The return of income was filed by the legal heir, i.e. his wife by declaring total income of Rs. 39,86,430/-. The Assessing Officer noted that the assessee had debited a sum of Rs. 20,00,000/- to the profit and loss account. In reply, the assessee pointed out that the said payment was made to Shri Balu Nivruti Kadali as compensation for acquiring right for approach road to get access to the assessee's plot. In support, copy of Sathekhat dated 24-01-2010 and ledger extract of the payment made was furnished before the Assessing Officer. The Assessing Officer noted that the total payment was made in cash. In this regard, the assessee explained that the said person was an Adivasi residing at Chandsi Village and since the village was not served by any bank and he was not having any bank account, the entire payment was made in cash to him, In the agreement dated 24-01-2010 also, this fact was mentioned that the said person had no bank account. The Assessing Officer in order to verify ....
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....he same condition. On a later date, the assessee acquired the right to alter the road and paid Rs. 20,00,000/- by a document dated 20-01-2010. The learned Authorized Representative for the assessee stressed that both the Assessing Officer and the CIT(A) have made the aforesaid addition on the ground that the payment was made in cash and the person could not be produced. The CIT(A) further holds that Shri Balu Nivruti Kadali had no right in the road. In reply, learned Authorized Representative for the assessee stressed that Shri Balu Nivruti Kadali was an Adivasi and was not traceable but the identity and genuineness of the transaction stands established. The second plea raised by him was that where the assessee had already expired then his wife was not in a position to produce the said person. 10. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below. 11. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against the addition of Rs. 20,00,000/-. The said payment was made in cash to one Shri Balu Nivruti Kadali vide document executed between the assessee and said Shri ....
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....perusal of the notarized agreement dated 20-01-2010 placed at pages 114 to 119 of the paper book also reflect that the photo identity of Shri Balu Nivruti Kadali was there and the agreement was duly notarized and hence, the same merits to be accepted. Merely because the said person could not be produced would not disentitle the assessee form the aforesaid claim of expenditure especially in the circumstances where the assessee was no more and the case was being represented by his wife (as legal heir). Accordingly, we direct the Assessing Officer to allow the claim of the assessee. 13. Now coming to the additional ground of appeal raised by the assessee, i.e. against the legal issue of computation of accumulated profits for the purpose of section 2(22)(e) of the Act, the issue raised is purely legal and the same is admitted for adjudication. 14. The plea of the assessee before us is that in order to compute the accumulated profits for the purpose of section 2(22)(e) of the Act, the current profits of the lender company have to be excluded. It was also pointed out at the start of the year, the accumulated profit of the lender company was Nil and therefore, no addition u/s.2(22)(....
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....n the present appeal in favour of the assessee and against the Revenue. Consequently, the present appeal deserves to be dismissed and is accordingly dismissed. No order as to costs." 18. The assessee before us has also furnished the audited balance sheet of the said concern Shree Ninad Builders Contractors & Land Developers Pvt. Ltd. The accumulated profits at the start of the year were NIL. The share capital issued and paid-up capital and also Reserves & Surplus as on 01-04-2009 were NIL. Following the parity of reasoning as laid down by the Hon'ble Gujarat High Court (supra), we hold that no addition is to be made in the hands of the assessee by invoking the provisions of section 2(22)(e) of the Act. Hence, the additional ground of appeal raised by the assessee is allowed. 19. Now coming to the appeal filed by Revenue the first issue raised is against the pro-rata deduction allowed u/s.80IB(10) of the Act. Grounds of appeal No. 1 and 2 raised by the Revenue are against the deletion on the aforesaid issue by the CIT(A). 20. Ground of appeal No.3 raised by the Revenue is against the order of CIT(A) while deciding the issue u/s.2(22)(e) of the Act. Since we have already dec....