TaxTMI 
TaxTMI 
2025 (12) TMI 671
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....Commissioner (Appeals), erred in sustaining the action of the learned Assessing Officer in rejecting in his assessment order the Appellant's computation of loss of Ra. 2,32,67,278/-under the head *Short Term Capital Gains/Loss' and its claim for carry forward to the subsequent year The Appellant's claim for this loss and its carry forward may please be allowed in appeal. 3. The Appellant reserves the right to add to, alter or delete any of the above grounds of appeal." Grounds of appeal in r/o ITA No. 4845/Mum/2025: 1. "On the facts and in the circumstances of the case, the Ld CIT(A) erred in deleting the addition of Rs. 4,54,63,267/- made u/s. 69A of the Income Tax Act on account of excess stock of 22Kt and 18Kt gold without considering the fact that assessee failed to discharge the initial onus to satisfactorily explain the excess stock found during survey proceedings." 2. "On the facts and in the circumstances of the case, the Ld CIT(A) erred in deleting the addition of 2,12,52,000/- made by the AO u/s. 69A of the Act without appreciating that the assessee failed to substantiate the claim of gold purchase and delivery with any c....
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....r under consideration. Thus, a show cause notice was issued in order to justify the short-term capital loss of Rs. 2,32,67,278/- claimed by the assessee. In response to the notice, the assessee submitted that, loss of Rs. 2,32,67,278/- on account of transaction of sale of property, was not claimed in profit and loss account, nor was it considered in the computation of total income. It was submitted that there were two properties under the block of assets of Rs. 15,56,05,717/- as opening balance. The assessee submitted that one of the property, among this was sold for Rs. 13,21,00,000/-and the other property continued to remain in the block of assets. The assessee during assessment proceedings revised the computation and the depreciation chart. In the revised depreciation chart, Ld.AO noted that block of Rs. 2,12,77,484/- still remains after claiming current year depreciation amounting to Rs. 23,64,165/-. The assessee revised total income at Rs. 8,13,42,630/- as against returned income of Rs. 8,36,69,360/-. The assessee further requested the Ld.AO to ignore the claim of carry forward of short term capital loss of Rs. 2,32,67,278/-. The Ld.AO after considering the above submissions o....
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....d that he did not take any such delivery from Mis Abhushan Creations Pvt Ltd. The AO has rebutted the submission of the appellant that the statement of Shri Kumawat cannot be relied upon since it was given under duress by referring to the statement again wherein Shri Kumawat states that he has given the statement without any external influence or duress. 7.4.4 I have perused the relevant question and the reply that forms the basis of the addition. The same has been reproduced by the AO in the assessment order in para 7.2 of his order. The translated version of the same is as under: Ques: Please tell as to whether you had collected 7 Kg of gold from M/s Abhushan Creation Pvt Ltd and deposited at the cash counter of M/s Royal Chains Pvt Ltd on 07.09.2018 at 1:30 PM? Ans: Yes, I have deposited 7 Kg of gold, collected from M/s Abhushan Creations Pt Ltd at the cash counter of M/s Royal Chains Pvt Ltd at the cash counter on 07.09.2018 at around 1:30 PM. Ques: Upon perusal of your statement in response to the question above it is clear that you have given a false statement earlier that you had delivered 7 Kg of gold purchased from M/s Abhushan Creation ....
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....ent proceedings. The reconciliation included names of parties (Abhushan Creations, Classic Solitaires, etc.), to whom notices u/s. 133(6) were issued and all responded with confirmations, books of accounts, bank statements, and delivery records, fully corroborating the appellant's version. Moreover, the survey was conducted on 07.09.2018 ie middle of the financial year and therefore it is fairly acceptable that the books of accounts are not updated on a real time basis and there is some lag. 7.4.6 I therefor hold that the appellant has maintained proper records and has reconciled the stock difference by way of proper documentation. Further, the transactions have also been confirmed by the counter parties and accordingly the appellant has been able to explain the stock discrepancy satisfactorily. The addition of Rs. 2,12,52,000/- on account of excess stock of 24 KT gold is deleted and the ground of appeal is allowed." 3.1. In respect of addition of Rs. 4,53,63,627/-, the Ld.AO observed and held as under:- "6.4.1 The facts of the case, submissions of the appellant and the findings of the AO have been considered. The instant ground pertains to the add....
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....8(1)(1), Mumbai. The reconciliation explained that the stock differences arose due to: * Purchase invoices received prior to survey but not yet entered (from Rishabh Jewellers, Abhushan Ornaments Pvt. Ltd., and Abhushan Creations Pvt. Ltd.); * Gold received for job work but not recorded at the time of survey (from Penta Gold Ltd. and Classic Solitaires Pvt. Ltd.); * Gold dispatched for export for which sales invoices were not entered (to Viva Jewellery FZCO, Vaama Gold Jewellery LLC, and Guru Trading Co. Inc.). (iii) Confirmation from third parties: During assessment proceedings, the AO issued notices under section 133(6) to the same parties mentioned in the reconciliation. All parties confirmed their transactions with the appellant by submitting ledger copies, ITRs, stock records, and bank statements. These confirmations substantiate that the gold found during survey was not unaccounted. (iv) Books of accounts and GST records updated: The appellant clarified that all transactions were subsequently recorded in the books of accounts, which were audited. Further, the same purchases and exports were declared in the GST returns and covered b....
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....rvey date; (b) job work gold received from third parties pending entry; and (c) goods dispatched for export for which sales invoices were yet to be entered. These included transactions with Rishabh Jewellers, Abhushan Ornaments Pvt. Ltd., Abhushan Creations Pvt. Ltd., Penta Gold Ltd., Classic Solitaires Pvt. Ltd., and export consignments to Viva Jewellery FZCO, Vaama Gold Jewellery LLC, and Guru Trading Co. Inc. These explanations were further corroborated during assessment proceedings when the AO issued notices under section 133(6) to the concerned parties. All such parties responded and submitted requisite details, including ledger accounts of the Appellant, copies of ITRs, bank statements, and stock movement registers. These responses confirm the genuineness of the transactions and fully support the reconciliation submitted by the appellant. Moreover, the survey has been conducted in the middle of the financial year and it is an accepted business practise that the books of accounts are not updated on a real time basis. The important thing is that the appellant should be able to properly reconcile the difference with bills, invoices etc. In the instant case, the appellant has bee....
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...., which arose from the sale of a factory building located at MIDC, Andheri, Mumbai. The AO disallowed the loss on the grounds that the said building was part of the block of assets that was still existing and therefore the question of having deemed short term capital gain did not arise at all. The appellant thereafter filed a revised computation of income and withdrew the claim of short term capital loss. The AO thereafter initiated penalty proceedings on the issue. The appellant has submitted that in view of the penalty being initiated, it retracts its earlier stand and wishes that the short term capital loss is restored. The appellant has raised a legal issue that the building which has been sold, resulting in short term capital loss, was never put to business use and no depreciation was claimed on it and therefore it should not form a part of the block of asset and should be treated as an individual asset. 8.4.2 I have considered the submissions of the appellant. It is an undisputed fact that the building that has been sold now was forming a part of the block of asset. Merely not claiming depreciation does not result in exclusion from the block, especially when the asse....
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....placed before us. 5. It is the claim of assessee that, donation paid towards CSR obligation under the Companies Act, 2013 by assessee are also eligible for deduction u/s. 80G of the Act. He submitted that payment made towards CSR obligation is supported by necessary certificates issued that clearly mention the allowability of the respective amounts u/s. 80G of the Act. As submitted by Ld.AR, this issue is no longer res integra. Assessee has filed all relevant details in respect of the documents to support the CSR expenditure as well as the certificate that allows the amount to be claimed as deduction u/s. 80G of the Act. 5.1. We place reliance on the following decisions passed by other Co-ordinate Benches of this Tribunal : (i) Synergia Lifesciences PVT Ltd/ v. DCIT [ITA No. 938/ Mum/ 2023] dated 20.06.2023 (ii) Sling Media (P) v. DCIT [135 taxmann.com 164 (Bang.)] (iii) Infineria India (P) Ltd. vs. JCIT [137 taxamnn.com 197 (Bang.)] (iv) FNF India (P) Ltd. v. ACIT [133 taxmann.com 251 (Bang.)] (v) JMS Mining (P) Ltd. v. Pr.CIT [130 taxmann.com 118 (Kol.)] 5.2. It is an admitted fact that CSR expenditure has to be mandatorily in....
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.... Bill, 2014 is as under: "The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditure cannot be allowed under the existing provisions of section 37 of the Income-tax Act. Therefore, in order to provide certainty on this issue, it is proposed to clarify that for the purposes of section 37(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and, hence, shall not be allowed as deduction under section 37. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed deduction under those sections subject to fulfilment of conditions, if any, specified therein." 5.5. From the above it is cle....
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.... view, expenditure incurred under section 30 to 36 are claimed while computing income under the head, 'Income form Business and Profession", whereas monies spent under section 80G are claimed while computing "Total Taxable income" in the hands of assessee. The point of claim under these provisions are different. 5.7. Further, intention of legislature is very clear and unambiguous, since expenditure incurred under section 30 to 36 are excluded from Explanation 2 to section 37(1) of the Act, they are specifically excluded in clarification issued. There is no restriction on an expenditure being claimed under above sections to be exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head, "Income from Business and Profession". 5.8. For claiming benefit under section 80G, deductions are considered at the stage of computing "Total taxable income". Even if any payments under section 80G forms part of CSR payments (keeping in mind ineligible deduction expressly provided u/s.80G), the same would already stand excluded while computing, Income under the head, "Income form Business and Profession". The effect of such disall....
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....r AY 2018-19, the assessee claimed depreciation only on the first building and not on the second building. In support, he placed reliance on the computation of income as well as the financial statements of the assessee for assessment year 2017-18. 6.1. The Ld.AR submitted that this position was not disturbed by the revenue authorities and the return of income filed by the assessee was accepted. The Ld.AR further submitted that similar was the situation for assessment year 2018-19. However, during the financial year relevant to the assessment year under consideration, the second factory building along with land appurtenant were sold by the assessee. He submitted that unless the assessee has put it to use, the same cannot be subjected to depreciation u/s. 32 of the Act. The Ld.AR submitted that assessee had not put to use the second factory building and, therefore, it cannot be added in the working of block of asset nor it can be reduced when it is sold. The Ld.AR submitted that based on this understanding of the law, assessee worked out the capital gains on the sale of the second building on a stand-alone basis that resulted in a short-term capital loss of Rs. 2,32,67,278/-. 6....
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....ady existing building on the land prior to its demolition establishes that the "put to use criteria" u/s. 32 of the Act stands satisfied. 6.6. Further, the Ld.DR submitted that intention of the assessee to demolish the old building and to reconstruct a new one was to use it for its business purposes and, therefore, the Ld.AO has correctly considered the second asset in the block of asset. The Ld.DR emphasised that, once an asset enters block its individual identity is lost and thus, the claim of the assessee of short-term capital loss cannot be allowed. The Ld.DR thus, placed reliance on the orders passed by the authorities below. 6.6. In the rejoinder, Ld.AR submitted that the electricity bill paid in respect of the old premises prior to its demolition was very much meagre which also leads to the presumption that the assessee had put to use the said building for the purpose of business. We have perused the submissions advanced by both the sides in light of the records placed before us. 7. It is noted that the assessee purchased the second asset vide agreement dated 03/05/2016 for a value of Rs. 15 Crores. Admittedly, during the relevant financial year, assessee did not....
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....e alleged property. On perusal of the depreciation chart for Income tax purposes from assessment year 2017-18 at page 39 of paperbook, assessment year 2018-19 at page 22 of the paperbook and for the year under consideration at page 15 at the paperbook, as extracted below:- 7.5. From the above charts, we notice that, the assessee was having only on block of building to which the construction cost to the new building is show as addition till AY 2018-19. However, in assessment year 2019-20, the assessee split the old building as a separate block and the new constructed building and land as a separate block as "land". As per Schedule AL, the assessee cannot group land and building under a single block as "land". Further the new building constructed by the assessee should be part of the buildings which is eligible for depreciation at 10%. 7.6. Under such factual circumstances, we are unable to ascertain if there is any other asset which still remains in the block. If there is any asset still existing in the block, assessee cannot claim short term capital loss since the sale value would go to reduce the WDV of the asset on which the assessee is eligible for depreciation as per the ....
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....9/2018. It was submitted that these details confirmed the dealing of assessee with M/s. Abhushan Creations Pvt. Ltd.. It is noted that, the goods so purchased were received prior to the commencement of the survey action for which the invoices were not entered. Subsequently, the Ld.AO also issued notice u/s. 133(6) of the Act various parties to reconciled the statement and stock of sales made by the to the assessee. It is noted that, the Ld.AO without cross verifying all these details below the statements furnished by the parties from whom the assessee stated to have purchased the gold and made an addition treating the excess stock in the hands of the assessee as undisclosed. The Ld.CIT(A) after considering all the details, observed as reproduced hereinabove. 11. There is nothing contrary to the observations of Ld.CIT(A) that has been brought on record by the revenue. We, therefore, do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld. Further in respect of the discrepancy of stock in 24KT gold, the Ld.CIT(A) in para 7.4.1 to 7.4.6. has dealt with the issue in great detail by relying on the statements and details furnished by M/s. Abhushan Creations....
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....00 Total 39283457.0 0 205462561. 00 7912036.00 .302062.00 · 0.00 0 14217793.0110681559.0 0 24899352.0 227456640 CHAINS 180 days or mora Less than 180 days 180 days or more Less than 100 days 13768261.0 O 10881559.0| O 24449820.0 0.00 13768261.0 10881559.0| 24449820.0 14217793.0110681559.0 14217793.0110681559.0 24899352.0 227456640 22 ROYAL CHAINS PVT LTD Depreciation Chart For Assessment Year '2018-2019' Business Name :ROYAL CHAINS PRIVATE LIMITED S.No Description /Block of Assets Rate Opening WDV · Additions Deductions Normal Dep. Additional Dep. Total Dep. Closing WDV 180 days or more Less than 180 days 180 days or more Less than 180 days Buildings 10% - Buildings 10.00 153764935. 55 1291464.00 590914.00 0.00 0.00 · 41597.00 0.00 4.1597.00 155605716 2 Furniture and fittings |10% - Furniture and fittings 10.00 % 2978797.50 57000.00 1042788.00 0.00 0.00 355719.00 0.00 355719.00 3722866.5 O 3 Machinery and plant 15% - Machinery and plant 15.00 % 70564684.3 3 42348131.0 D 42096418.0 0 0.00 0.00 0 20109153.0 0 11231113.0 0 31340266.0 .33 123768967 4 Machinery And plant 140% - Compu....