AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 470
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....of both the parties, the appeal of the assessee in ITA No. 6574/Mum/2019 for the Asst Year 2012-13 is taken as the lead year and decision rendered thereon would apply with equal force for Asst Year 2013-14 for identical issues, except with variance in figures. 3. The first issue to be decided in this appeal is as to whether the ld.CIT(A) was justified in treating the receipt of Rs 84,98,670/- on sale of shops and flat as "Income from Other Sources" u/s 56(1) of the Act as against "Income from Business". 3.1. We have heard the rival submissions and perused the materials available on record. The assessee is engaged in the business of trading, renting of immovable property and IT related services. The assessee had reported activity of trading in shops and flats during the year. The assessee filed its return of income for the Asst Year 2012-13 declaring total income of Rs Nil after setting off the loss of the brought forward losses under normal provisions of the Act and declaring book profits of Rs 3,02,64,526/- u/s 115JB of the Act. We find from the perusal of the audited balance sheet and profit and loss account of the assessee as on 31.3.2012, which is enclosed in pages 25 to ....
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....as inventory in the audited accounts for the year ended 31.3.2012. The assessee had computed gross profit of Rs 17,21,070/- in respect of sale of 7 shops and 1 flat as under:- Sale consideration of 7 shops and 1 flat - Rs 84,98,670 Less: Cost of acquisition of above (9810300-3032700) - Rs 67,77,600 Gross profit from this trading transaction Rs 17,21,070 3.4. We find that the income from sale of shops and flat were offered to tax by the assessee as business income. We find that the ld. AO made addition of sale value of above flats and shop of Rs 84,98,670/- as unexplained cash credit u/s 68 of the Act ; treated amount of Rs 38,35,500/- as unexplained investment u/s 69 of the Act and treatqed cost of shops and flat sold of Rs 67,77,600/- as unexplained expenditure u/s 69C of the Act. The ld. CIT(A) observed that the submissions made by the assessee indicated that these three issues were interlinked and pertain to the same transaction of acquisition of shops and flats from Jamshri and sales thereon. The ld. CIT(A) during the course of appellate proceedings called for a remand report on the following issues :- a) Whether there was an actual....
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....ds with the purchasers of the property. It is not in dispute that the entire sale consideration wsa received from Jamshri by the assessee. The confirmation of accounts from Jamshri was filed before the lower authorities, copy of which is also enclosed in pages 107 and 108 of the paper book filed before us. 3.8. We find that the ld. AR before us vehemently argued that the assessee had carried on the activity of acquisition of flats / shops in a systematic and organized manner and hence the profit earned from the said activity is to be construed as income from business and not income from other sources. But we find from the records that the only document available with the assessee is the unregistered MOUs pursuant to which shops / flats were acquired. Hence this cannot be construed as an organized and systematic activity of carrying on real estate business, so as to bring the receipts thereon under the ambit of income from busienss. We find that the predominant activity of the assessee is only BPO services from which income is earned by the assessee. Hence the reliance placed by the ld. AR on the decision of Hon"ble Jurisdictional High Court in the case of Central Provinces Manga....
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.... rival submissions and perused the materials available on record. The ld. AO noticed that the assessee had made additions to fixed assets totaling to Rs 1,26,80,147/- and claimed depreciation. The assessee submitted all the details with supporting documents along with proof of acquisition. The ld. AO on perusal of the same noticed that the following assets had been acquired from one of the group concerns of the assessee:- Furniture & Fixtures - Rs 17,96,600/- Computers - Rs 63,22,300/- The assessee furnished the copy of bills prepared on a letter head, which was not properly stamped without containing any terms for payment , details of delivery , transportation etc. The ld. AO issued a detailed questionnaire to the assessee seeking more details, which were duly replied by the assessee. However, the ld. AO did not find the said reply to be acceptable. Accordingly, he issued notice u/s 133(6) of the Act to Iping Technologies PVt Ltd calling for various details. In response to notice u/s 133(6) of the Act, Iping Technologies Pvt Ltd submitted its explanation with supporting evidences. The ld. AO however observed that these assets were purchased from related party ....
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.... furnished the remand report dated 19.2.2019 which was duly forwarded through the office of Additional CIT vide letter dated 5.4.2019 before the ld. CIT(A), by observing as under:- a) There is no agreement between Iping Technologies Pvt LTd and assessee for sale of above assets. b) Iping has raised 4 invoices in the name of Suchetan Commercial and Marketing Pvt Ltd (i.e assessee herein) dated 26.3.2012 for total sum of Rs 84,50,900/-. c) All invoices were made on same date and these invoices does not have the details of VAT / CST TIN numbers on it nor has the VAT / Sales tax amount. These invoices does not have the certifications / declaration like all other genuine invoices/tax invoices. No sales tax has been paid on these sales. There is no transfer of title to goods from Iping to assessee on account of sale of assets and the same does not constitute sale under the Sale of Goods Act . As a result , the assessee does not become the owner of those assets and consequently not eligible for depreciation. d) In any case, the assessee had not justified the rates at which assets were acquired to be at fair market price in view of the fact that the said assets w....
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....ation would be eligible for the same to the assessee. The entire transactions have been duly confirmed by Iping directly before the ld. AO in response to notice u/s 133(6) of the Act. Even if all the alleged defects pointed out by the revenue is to be accepted, still the fact remains that the assets so acquired had been utilized by the assessee herein for the purpose of its BPO services and business income derived thereon. We hold that in this regard, the reliance has been rightly placed by the ld. AR on the decision of Hon"ble Supreme Court in the case of Mysore Minerals Ltd vs CIT reported in 239 ITR 775 (SC). Hence we have no hesitation in directing the ld. AO to grant depreciation to the assessee for the correct amount of Rs 20,43,520/- and make corresponding rectification for the mistakes committed by him while calculating the depreciation. Accordingly, the Ground No. 2 raised by the assessee is allowed. 5. The Ground No. 3 raised by the assessee is challenging the disallowance of Rs. 4,36,940/- being amount reimbursed to Iping u/s 40(a)(ia) of the Act. 5.1. We have heard the rival submissions and perused the materials available on record. As stated in Ground No. 2 supra....
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....ologies Pvt Ltd and assessee, the question of such payment is doubtful and not acceptable. In para no. 5, we have not accepted the sale of assets, hence the veracity of such expenses is doubtful. The assessee company nor M/s Iping Technologies Pvt Ltd has produced any evidence of TDS deducted on such payments. Hence the expenses are to be disallowed. 5.4. The assessee filed rejoinder to the aforesaid remand report before the ld. CIT(A). 5.5. We find that the ld. CIT(A) in para 8.6. of his order had observed that the assessee had made payment of expenses to Iping on actual cost basis pursuant to oral agreement / understanding entered into with Iping for smooth transition of BPO business acquired from Iping by assessee. The ld. CIT(A) having accepted the fact that expenses were paid by assessee to Iping only on actual cost basis, had practically agreed to the contention of the assessee that it is only reimbursement. We hold that the ld. CIT(A) having accepted that it is only reimbursement of expenses, he ought not to have confirmed the disallowance u/s 40(a)(ia) of the Act for violation, if any, of provisions of section 194C of the Act. We hold that the provisions of section 19....