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2014 (9) TMI 627 - AT - Income TaxGenuineness of expenditure – Whether construction can be continued even after date of completion certificate – Held that:- CIT(A) while deleting the addition has given a finding that AO has not doubted the source of payments and further the payments have been made through bank and TDS has also been deducted wherever applicable - AO has failed to appreciate that the occupancy certificate does not bar the Assessee to carry out certain works which does not allow structural changes - for disallowing the expenses - AO has to bring on record evidence to prove that the expenses were not for the business purpose or were bogus in nature, which has not been done by AO - Revenue has not brought any material on record to controvert the findings of CIT(A) – the order of the CIT(A) is upheld – decided against revenue. Proportionate interest expenses – Whether the expenses was utilized for the business purpose or not – Held that:- CIT(A) after considering the submissions of the Assessee and perusing the ledger account and the loan account has given a finding borrowed amount was used for the business purposes and therefore the interest was allowable - CIT(A) has also accepted the submission of Assessee that the deposits were carried forward from earlier years and in earlier years no disallowance on account of business purpose was made - Revenue has not brought any contrary material in its support to contradict the findings of CIT(A) – the order of the CIT(A) upheld – Decided against revenue. Confirmation of long term gain on sale of land - Held that:- Assessee contended that it has incurred loss on sale of land and at the same time has earned gains on the sale of building (which is a depreciable asset) - During the course of hearing a specific query was put to the assessee and he was asked about the basis of bifurcation of the value of land and building - assessee could not satisfactorily explain the basis of bifurcation and thus the basis of bifurcation appears to the arbitrary - AO has arrived at a conclusion that by adopting a most consecutive approach the annual appreciation of land was 20% on year to year basis - AO has not brought any material on record to support its conclusion - an estimated addition to cover the revenue loss due to arbitrary bifurcation in the valuation of land and building by the Assessee will meet the ends of justice – the addition is restricted to ₹ 10 lacs – Decided partly in favour of assessee.
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