TaxTMI 
TaxTMI 
2020 (9) TMI 863
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.... erred in giving the findings that the development agreement was not filed before the AO and shame was additional evidence. (iii) In the facts and circumstances of the case the ld. CIT(A) has erred in not providing opportunity before rejecting the additional evidences filed in paper book. (iv) In the facts and circumstances of the case the ld CIT(A) has erred in confirming the disallowing of Rs. 13,26,273/- (4888257-3561984) out of interest payment.'' ITA No. 328/JP/2019 -Assessment Year 2013-14. (i) In the facts and circumstances of the case the ld. CIT(A) has erred in confirming the action of the AO in the passing the order u/s 143(3)/153A of the Income Tax Act 1961 which is void ab-initio deserves to be quashed. (ii) In the facts and circumstances of the case the ld. CIT(A) has erred in giving the findings that the development agreement was not filed before the AO and shame was additional evidence. (iii) In the facts and circumstances of the case the ld. CIT(A) has erred in not providing opportunity before rejecting the additional evidences filed in paper book. (iv) In the facts and circumstances of the case the ld C....
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....riminating material was found which could justified the action of issuing notice u/s 153A. The entire assessment order also does not disclose reference to any material found with the assessee during the course of search. The addition has been made exclusively on the basis that the assessee has made interest free advances to its sister concern whereas this money was advanced for business purposes. These transactions were also disclosed in the books of the account of the assessee. Therefore, the A.O. erred in law in issuing notice u/s 153A of the Act. For this purpose, reliance was placed on the following judicial pronouncements: (i) Anil Kumar Bhatia Vs. Assistant Commissioner of Income Tax (2010) 1 ITR (Trib) 484 (Del) (ii) Singhad Technical Education Society Vs. ACIT (2011) 57 DTR 241 (iii) LMJ International Ltd. Vs. DCIT (2008) 14 DTR 540 (Kol Trib) (iv) ACIT Vs. Gambhir Silk Mills (2010) 6 ITR 376 (Ahm. Trib) 5. With regard to merit of disallowance, it was contended by the ld AR that the interest expenditure was incurred wholly and exclusively for the purpose of business and for the commercial expediency in so far as advances were given to ....
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....security deposit. This was done in compliance of para 4.1 of the development agreement. As per this para the assessee was required to pay interest free refundable security deposit of Rs. 56,00,000/- to the owner of the land in lieu of the owner granting license for carrying out the development project. Thus, the advance made by the assessee was wholly and exclusively for the purposes of business. In view of these facts the A.O. was not justified in making any disallowance out of interest payment. 09 Development Agreement with Kalyan Gems Export Ltd. has been executed on 03.09.2011. As per terms of this agreement, copy of which is available on paper book as cited supra the assessee agreed to develop a plot of land measuring 2994.62 sq. meter situated at K. No. 184 & 185/685, Village Manoharpura, Tehsil Sanganer, Jaipur the agreement that assessee was to act as a developer and was required to develop a project comprising of multi-storied commercial and residential complex. It was under this agreement that assessee paid a sum of Rs. 2,21,00,000/- Lacs to Shri Kalyan Realty Ltd on 03.09.2011 as a security deposit. This was done in compliance of terms at para 4.1 of the development a....
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.... that has to be decided from the point of view of the businessman and not by the subjective standard of reasonableness of the revenue. (e) S.A. Builders Ltd. Vs. CIT (2007) 158 Taxman 74/288 ITR 1 (SC) The decision relating to section 37 will also be applicable to section 36(1) (iii) because in section 37 also the expression used is "for the purpose of business". It has been consistently held in decision relating to section 37 that the expression 'for the purpose of business' includes expenditure voluntarily incurred for commercial expediency, and it is immaterial if a third party also benefits thereby. The expression 'commercial expediency' is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. The ratio of the Supreme Court decision, in Madhav Prasad Jatia Vs. CIT AIR 1979 SC 1291 is that the borrowed fund advanced to a third party should be for commercial expediency, if interest thereon is sought to be allowe....