TaxTMI 
TaxTMI 
2025 (7) TMI 120
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....he disallowance of Rs. 19.01 crores made u/s. 69C by the AO without appreciating the fact that the assessee failed to produce entire details of final purchaser for verification of genuineness of loss claimed?. 2. Whether on the facts and. circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the disallowance of Rs. 19.01 crores without appreciating the fact that the assessee could not prove the genuineness of the losses claimed. The assessee did not furnish the payment details through banking transactions made. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made u/s. 68 by the AO in respect of unsecured loan amounting to Rs. 534,80,09,689/- without appreciating the fact that confirmation of loan in the bank account of the assessee is remained unverified? 4. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance u/s. 68 without appreciating the fact that the assessee did not furnish corroborating evidences to substantiate his claim during the Remand proceedings. As such the additional evidences filed by the a....
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.... when the aforesaid residential flats were sold to the final customer by BDMC with the consent of the Assessee in terms of the aforesaid MoUs, the increase in the selling price of the residential flats was offered to tax as income credited to Profit & Loss Account under the head 'Upside on Sale of Flats' while the decrease in the selling price of the residential flats was claimed as expenses debited to the Profit & Loss Account under the head 'Downside on Sale of Flats'. In the preceding years, the income offered to tax by the Assessee was accepted by the Assessing Officer. However, during the relevant previous year since there was a net decrease in the selling price (after aggregation of 23 flats sold during the relevant previous year), the Assessee had claimed deduction of expenses under the head 'Downside of Sale of Flats' amounting to INR.19.10 Crores. This was disallowed by the Assessing Officer on the ground that the Assessee had failed to furnished relevant details and documents to explain the aforesaid expenditure. Therefore, the Assessing Officer made an addition of INR.19.10 Crores under Section 69C of the Act holding that the same to be unexplained expenditure. Before th....
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....Learned Authorized Representative, the Assessee had secured contractual rights which were transferred and profit/loss arising from such transfer was recorded in books of accounts and offered to tax as business income or claimed as business expense. The Assessee has offered to tax such business income from 'Upside on Sale of Flats' in the preceding years and the same was accepted by the Revenue without raising any doubts about the nature or genuineness of the transactions. By following the same methodology Assessee had suffered losses during the relevant previous year and had, therefore, claimed deduction was claimed for the same. 4.5. We have perused the MoUs placed on record by the Assessee. As per the 'Risk and Rewards' clause [Clause No. 4 reproduced hereinafter], all risk and reward attached to the flats were transferred to the Assessee from the date of execution of MOU. The same is also reproduced below: "RISKS & REWARDS: 4.1 It is hereby explicitly agreed and confirmed between the Parties hereto that although the said Apartments are yet to be constructed by the Developers, all risk and rewards attached to the said Apartments shall be that of the Purchaser....
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.... Assessee had to pay to BDMC, therefore, there was an aggregate gain of INR.0.59 Crores. As a result, there was a Net loss of INR.17.01 Crores on account of the aforesaid transaction. Further, the Assessee had also reimbursed brokerage expenses of INR.2.09 Crores to BDMC. Accordingly, an amount of INR.19.10 Crores was debited to the Profit & Loss Account under the head 'Downside on Sale of Flats' and claimed as business expenditure in the return of income. 4.9. We note that the stand taken by the Revenue stems from the fact that the Assessee during the assessment proceedings stated that the Assessee had purchase the flats and had suffered loss on sale of such flats. However, during the appellate proceedings before the Tribunal the Learned Authorized Representative for the Assessee clarified that there was no purchase/sale of flats the Assessee. We find that the arrangement between the Assessee and BDMC was in the nature of an underwriting agreement whereby the Assessee had agreed to purchase specified number of flats from BDMC. What is apparent is that while the MoUs use the term 'purchase', 'sale', 'purchaser' and 'new purchaser', there was no sale of immovable property aff....
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....ale Services Limited and the Bombay Dyeing & Manufacturing Company Ltd dated March 30, 2012 for TWO ICC (viii) Price sheet for TWO ICC - 1201 (ix) Brokerage vouchers 4.11. On perusal of application filed by the Assessee for admission of additional evidence, we find that the Assessee filed following additional evidences: (i) MOUs between SCAL and BDMC for sale of flats to SCAL (which were not submitted during assessment proceedings) (ii) Payment Vouchers for Brokerage paid by BDMC on behalf of SCAL (iii) Relevant extract of Audited Financial Statements from Assessment Year 2013-2014 to Assessment Year 2016-2017 (iv) Assessment Order under Section 143(3) of the Act for Assessment Year 2013-2014 and Assessment Year 2014-2015 (v) Intimation Order under Section 143(1) of the Act for Assessment Year 2015-2016 and Assessment Year 2016-2017 4.12. Perusal of the record further shows that the Assessing Officer had made following observation in the Remand Report in relation to additional evidence filed by the Assessee in relation to disallowance of INR.19.10 Crores made under Section 69C of the Act. "1. In view of t....
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....ration the submissions dated 22/02/2022, filed by the Assessee. 4.13. We note that the CIT(A) had, after taking into consideration the additional evidence, the remand report as well as the reply/submission of the Assessee deleted the addition of INR.19.10 Crores holding as under: "7.2.1 I have gone through the assessment order, remand report, submission of the appellant and facts of the case. The appellant has claimed loss and expenses of INR.19,10,62,946/- on account of downside on sale of flats. The appellant has pleaded that the brokerage expenses of INR.2.09 Crores incurred on sale of flats has been accepted by the Assessing Officer in the remand report but the loss incurred on account of sale of flats (which is in accordance with the MOUs entered with BDMC) has been rejected by the Assessing Officer in the remand report. The Assessee has during the course of remand proceedings submitted before the Assessing Officer the details of 23 purchasers alongwith copy of agreement and statement showing working of flat-wise upside earned/downside loss incurred w.r.t. the flats sold during the year under consideration. Reply filed by BDMC in response to the notice under Sectio....
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.... end consumers. On perusal of the above said documents, we find that a statement of downside on sale of flats was filed by BDMC giving details of the flat as well as the name, address, Permanent Account Number and e-mail address of the end customers/new purchasers. Therefore, even though the aforesaid information/details were not furnished by the Assessee, the same were available with the Assessing Officer during the remand proceedings. 4.16. We also note that during the remand proceedings, the Assessee filed reply dated, 08/02/2024 linking the documents filed in support of loss incurred on downside of each flat with the evidence filed during the assessment proceedings and during the proceedings before the CIT(A) as additional evidence and the same reads as under: "(i) The Assessee had purchased certain residential flats from the Bombay Dyeing & Mfg.Co. Ltd. (BDMC) vide MOU entered between them in the past for which the Assessee had paid a certain amount as booking advance. Below are the details of the said flats: S.No. Building Flat No. MOU Reference Annexure reference Submitted during assessment/ Additional evidence 1. ONE ICC 501 MOU ....
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....6 Additional Evidence 20. TWO ICC 1201 MOU TWO ICC dated 30.03.202 & Addendum dated 20.01.2017 to MOU Annexure 7 & 11 Annexure 7 submitted during Assessment 21. TWO ICC 1703 Addendum MOU dated 10.01.2016 Annexure 10 & 11 Additional Evidence 22. TWO ICC 1801 MOU TWO ICC dated 27.03.2014 & Addendum dated 20.01.2017 to MOU Annexure 8 & 11 Additional Evidence (ii) Amount paid towards booking of flats under MOU as standing in the books of accounts as on 31/03/2018 is INR.186.12 crores showing under heading 'Amount paid towards flats booked' in Note no. 14 of the Financial statements for the FY 2017-18. Copy of the Financial statements for FY 2017-18 and the copy of ledgers accounts for 'amount paid towards flat booked' is attached herewith as Annexure-12 & Annexure 13 respectively." 4.17. A perusal of record shows that the Assessee had filed all the MoUs referred to in the table reproduced in Table in paragraph 4.16 above before the Assessing Officer either in original assessment proceedings or in the remand proceedings. Further, the Assessee as well as BDMC had filed bank statements to show that the pa....
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....ng the assessment proceedings. Per contra, it was contended on behalf of the Learned Authorized Representative that failure to furnish relevant documents/details before the Assessing Officer was on account of short period of time granted by the Assessing Officer to furnished response/details and the technical problems faced by the Assessee while downloading the documents from the Income Tax Portal. It was further submitted that the Assessee had furnished additional evidence before the CIT(A), which was admitted and that the Revenue has not challenged the admission of additional evidence in appeal before the Tribunal. In rejoinder, the Learned Departmental Representative submitted that even during the remand proceedings the Assessee had failed to furnish collaborative evidence in support of its claim. It was further submitted that the Assessing Officer had clearly stated in the remand report that the bank statements furnished by the Assessee could not be verified. In this regard, we note that the Revenue has not challenged the exercise of discretion by the CIT(A) to admit the additional evidence. By way of Ground No.4 it has been contended by the Revenue that the CIT(A) had deleted ....
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.... 30/01/2018 4.00 Loan Disbursement Refer IDBI bank statement at FPB page no.25 6. 28/02/2018 12.00 Loan Disbursement Refer IDBI bank statement at FPB page no.27 7. 07/03/2018 28.50 Loan Disbursement Refer IDBI bank statement at FPB page no.28 8. 27/03/2018 6.00 Loan Disbursement Refer IDBI bank statement at FPB page no.28 Grand Total 534.80 5. The same was reflecting in note 4 of the notes to financial statements under the heading 'Long Term Borrowings'. The loan confirmation statement as on 31/03/2019 is also placed at FPB page no. 69-70 for your ready reference. 6. The Assessing Officer in the impugned order has made an addition amounting to INR.534.80 crores under Section 68 of the Act as unexplained credits citing that no documentary evidence was provided during the assessment proceedings. 7. The Assessing Officer has failed to take note of the Assessee's submission dated 09/01/2021 wherein the Audited financial statements including Balance Sheet for the year under consideration was submitted. It was evident from 'note 4' of the notes to financi....
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....5800 Yes-Electronic clearing system DHFL xx AAACD1977A 5348009589 No 5348009589 Yes-Electronic clearing system 9. Further the receipt of the proceeds of said loan has been disclosed in the Cash Flow Statement under "Cash Flow from Financing Activities' as Proceeds from borrowing /ICDs INR.561.12 crores. Also, the loan was utilized for repayment of past borrowings/ICDs INR.497.53 crores, payment of interest and other finance charges - INR.60.32 crores which can be traced from the Cash Flow Statement. The same is also reproduced below for ready reference: C Cash Flow From Financing Activities Proceeds from borrowings/ICD's 5,61,11,65,389 3,21,66,00,027 Repayment of borrowings/ICD's (4,97,52,67,088) 2,87,94,88,439 Interest and other financing charges (60,31,79,457) 58,53,76,812 Interest income on inter corporate deposits 3,47,101 1,24,57,334 Net Cash From Financing Activities 3,30,65,945 (23,58,07,890) 10. Hence, the Assessing Officers contention that no documentary evidence was provided during assessment is factually in....
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....e No.54-64 of FPB) * The Loan agreement dt. 05/10/2017 with Dewan Housing Finance Ltd. for loan of Rs. 650/- Crs. (Refer Page No.31-53 of FPB) * The loan was a secured loan and the charge was also duly registered with the Registrar of Companies a mandated in the Companies Act, 2013 (Refer Annexure-5 of the Letter dt. January 10, 2024) * The receipt of Loan in the IDBI Bank on various dates - Thus the loan is received through Banking Channel (Refer Bank Statement - (Refer Page No.21-29 of FPB) * As per the Sanction of Term Loan of Rs. 650/- Crs mentions loan is for General Corporate Purpose against receivables of apartments allotted to assessee by BDMC in One ICC and Two ICC as purpose of the Loan. * Loan Confirmation statement by DHFL as on 31/03/2019 - (Refer page no.69-70 of FPB) * The transaction of loan was reflected in the Financial Statements under note no 4 "Long Term Borrowings". The transaction of loan is also reflected in the Tax Audit Report in Form 3CD in clause 31a - (Refer page no.71-174 of FPB) submitted during the assessment proceedings. * The NCLT order dated 21/02/2019 for demerger of the Real Estate B....
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....n of INR.534.80 Crores. However, the Assessing Officer rejected the same for the sole reason that notices issued under Section 133(6) of the Act to IDBI Bank Ltd. to confirm the genuineness of Bank Statement submitted by the Assessee were not responded to by the said bank. 5.9. After taking into consideration the additional evidence and the contention raised by the Assessing Officer in the remand report, the CIT(A) deleted the addition made of INR.534.80 Crores made under Section 68 of the Act holding as under: "7.3 Ground No. 3: Vide the said ground the appellant has contended that the AO has erred in making addition of Rs. 534,80,09,689/- as unexplained credit u/s 68 of the Act. The appellant has alleged that the AO failed to appreciate that the amount of Rs 534.80 Crores were shown as Long term loan from Dewan Housing Finance Limited. 7.3.1 On perusal of submission and audited books of account of the appellant, it is seen that Dewan Housing Finance Ltd ("DHFL") has sanctioned to the appellant long term loan of Rs. 650 out of which Rs. 534.80 crores were disbursed till the end of FY 2017-18, details of which as submitted by the appellant are as under: SI. ....