TaxTMI 
TaxTMI 
2025 (9) TMI 569
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..../- confirmed by the CIT(A) ought to be deleted. 2. The Ld. CIT(A) has erred in confirming the action of the Ld. AO in disallowing, on ad hoc basis Rs. 7,55,306/-being 10% of the business expenditure incurred during the year. On facts and circumstances of the case and in law, disallowance of Rs. 7,55,306/-confirmed by the CIT(A) ought to be deleted." 2. The assessee is a company and is engaged in the business of development and construction of Township, construction of residential and commercial premises building, mixed use development of the land. The assessee was incorporated on 02.02.2017. The assessee did not have any turnover for the AY 2017-18 and filed the return of income on 31.10.2017 declaring a total business loss of Rs. 77,55,186/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) issued notice under section 142(1) and also a show cause notice to provide details of the shares issued by the assessee to the following shareholders: (i) Smart Dream Management Pte. Ltd. - 90,00,000 shares of Rs. 10/- each - Rs. 9,00,00,000/-. (ii) Bright Sunshine Singapore Holding Pte. Ltd. ....
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....nd management of real property. 2. Development of townships, construction of residential/commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure. 3. To carry on the business of property development, investment and the purchase, lease, exchange or other means of acquisition, solely or by joint venture with others, lands, estates and buildings, or interests therein, by preparing for building purposes, demolishing, altering, constructing, building estates, houses, condominiums, commercial complexes and buildings of all kinds, landscaping and by advancing money to and entering into contracts and arrangements of all kinds which may or may not incorporate interest charges, management charges or profit sharing schemes with builders, property developers and others. 4. To carry on business as contractor and structural engineers, mechanical, electrical and civil engineers, masons and masonry and building contractors and as general and civil contractors whatsoever known to engineering, steel, fabricators, iron founders, welders, tool makers, brass, in copper, aluminu....
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....utions, recreational facilities, city and regional level infrastructure, townships. As per the guidelines of the above mentioned circular, the FDI amount of Rs. 10,00,00,000/- received for the development of real estate business is not acceptable. Thus it is evident from the appellant's Memorandum Of Association Of Leading Frontier Private Limited, the Objectives of the company is engaged in the rent/sell the plots for building/constructing residential houses, bunglows, business premises & colonies etc and not in the government's infrastructure i.e. Road, Dam's, Canal etc., development which were utilized for public welfare. As per the conditions laid down by the RBI Act, FDI is not permitted for the real estate sector and prior permission or approval of the FIPB is required which was provided but the permission or certificate issued by the Bank does not state whether it is allowable for FDI investment in shares of company, when such investment is prohibited by the RBI and Government policy. Therefore, the appellant's contention is not acceptable. It is observed that the appellant has brought on record permission from the competent authority to obt....
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....ct to the Real Estate Business or Construction of Farm House where real estate business has been defined to mean dealing in land and immovable property with a view to earning income there from and does not include development of township, construction of residential/commercial premises, roads or bridges, educational institution, recreational facilities, city and regional level infrastructure township. The ld. AR submitted that from the main objects of the company it is clear that the assessee is not engaged in the business where there is prohibition on FDI. Without prejudice the ld. AR argued that violation of Regulations of RBI cannot lead to addition under section 68 of the Act. In this regard the ld. AR placed reliance on the decision of the Co-ordinate Bench in the case of Shri Bhageeratha Pattina Sahakara Sangha Niyamitha vs. ITO (ITA No. 346/Bang/2021 dated 18.02.2022). 6. The ld. DR on the other hand submitted detailed written submission and placed reliance on the order of the lower authorities. 7. We heard the parties and perused the material on record. During the year under consideration, assessee has received share capital from two Singapore entities. The AO called ....