TMI Blog2022 (9) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... application of income against the disclosure made by the group before the settlement commission - HELD THAT:- In the order of the settlement commission the capitalization was granted to the assessee about the only earned which has been utilized by incurring the expenditure of this company. The fact shows that Wadhwa group Holdings private limited has admitted to certain receipts in the nature of loans as belonging to it. Having so admitted the receipts, that applicant also owns up outgoing in the seized material is being spent by the applicant Wadhwa Group Holdings Pvt Ltd on various projects of different entities of the group which also included the assessee and same are not in the nature of any tangible asset. In the settlement commission the expenditure incurred with respect to the projects of the assessee was also considered for capitalization. The settlement commission allowed the same. Therefore, We do not find any infirmity in the order of the learned CIT (A) in deleting the above addition and therefore, ground of the appeal is dismissed. Unaccounted cash receipt - HELD THAT:- As during the course of search it was found that Group was maintaining the record of unaccount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 is filed by the assessee against Appellate order passed by the Commissioner of Income-tax (Appeals)-53, Mumbai [the learned CIT (A)] dated 30th November, 2021 raising following grounds of appeal:- a) The Commissioner of Income Tax (Appeals) - 53, Mumbai [hereinafter referred to as CIT(A) ] erred in confirming the addition of Rs.3,68,000/- towards undisclosed income. The Appellant submits that the income has been offered on a percentage of receipt basis under the real income theory and thus the addition made is unjust and deserves to be deleted. b) The CIT (A) erred in not allowing the deduction of selling and administrative expenses as the same as Period Cost and such allowable in the year of its incurrence. 02. ITA No. 631/Mum/2022 is filed by the Asst. Commissioner of Income-tax, 5(4), Mumbai (the learned Assessing Officer) against the same order raising following grounds of appeal:- (1) Whether the Ld. CITIA) erred in admitting additional evidence under rule 46A despite the fact Whether the repeated opportunities were given to the assessee by the AO and he was not prevented by sufficient cause from producing the evidence as the land is an agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not deducted tax at source on purchase of land under Section 194IA of the Income-tax Act, 1961 (the Act) amounting to ₹7,03,96,000/- and therefore, it was disallowed under Section 40(a)(ia) of the Act. ii. as per data assessee has incurred expenditure of ₹1,79,55,000/- during the year and therefore, the addition was made under Section 69C of the Act on account of unexplained expenditure. iii. Addition of ₹3,68,000/- was made on account of undisclosed income. iv. Disallowance under Section 40a(ia) of the Act resulted into lower work in progress for the year but did not have any impact on the returned income of this year. 05. Accordingly, total income was assessed at ₹1,96,44,165/- vide Assessment order dated 29 December 2017 passed under Section 143(3) read with section 153A of the Act. 06. Assessee preferred appeal before learned CIT (A), who i. Deleted the disallowance under Section 40(a)(ia) of the Act for the reasons that there was no tax deductible under Section 194-IA of the Act as the impugned land purchased by assessee is an agricultural land. ii. With respect to the addition of ₹1,78,55,000/- under Section 69C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed property is an agricultural land . Assessee also furnished the letter from sub engineer dated 9 August 2019, stating that the impugned land is situated at a distance of 10 kilometers from the limits of municipal council. The Google Map also shows the distance of more than 12 kilometers. 09. The learned Departmental Representative vehemently supported the order of the learned Assessing Officer, where the learned Authorized Representative supported the order of the learned CIT (A). The learned Authorized Representative referred to the provision of Section 2(14) (iii) for definition of agricultural land stated that even if the area is measured aerially; the impugned land is an agricultural land. He referred to the provision of Section 194-IA of the Act, where agricultural land is excluded from the rigors of TDS. He referred to the explanation (a) to section 194IA , where the agricultural land is defined. Therefore, according to him, the learned CIT (A) has correctly deleted the addition. 010. We have carefully considered the rival contention and perused the orders of the lower authorities. The learned CIT (A) dealt with the above issue as under:- 5.3 The findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Shri Navin Makhija by his order dated 04.11.2019 in Appeal No. CIT(A)-53/1T-484/DCCC 5(4)/2017-18 for A.Y.2015-16. The relevant part of the appellate order is as under:- 5.5. I have considered the submission of the appellant carefully. It is noted that as per the last Census of 2011, the population of Panvel Municipal Council was 1,80,020. Later in 2016 the Municipal Council was upgraded to Panvel City Municipal Corporation and its population then was 5,09,000. The letter of Survey of India referred to by the assessing officer is general letter and does not give precise distance of the villages Bherle, Vardoli etc. It only states that the same are within 8 kms of the Panvel Municipal limits. In contrast, when asked to, the Appellant has filed a letter from Sub Engineer Raigarh Zilla Parishad dated 9.8 2019 certifying that Vardoli, Bhingerwadi and Bherle of Panvel Taluka are at a distances of 11,90. 10.00, and 10.00 km from the limits of Panvel City Municipal Corporation. A map of Panvel City Municipal Corporation was also issued which has been filed along with Panvel Taluka Map. Google Maps shows the distance by road as about 12 km. The aerial distance of the Googl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural land in India does not include land situated in any area within the distance measured a really not been more than 6 km from the local limits of any municipality and which has a population of more than 1 lakh but not exceeding 10 lakh. In the present case, such land is situated beyond 6 km from the local limits of Panvel municipality, which has a population of more than 1 lakh but not exceeding 10 lakhs. Assessee has submitted the aerial distance of the land purchased showing that it is situated at a distance of more than 6 km aerially from limits of Panvel Municipality. A communication was also submitted from Panvel Nagar Parishad. Revenue failed to bring on record any evidence, which proves that the impugned land is not an agricultural land. Therefore, We find that the impugned land is an agricultural land and no tax is required to be deducted on purchase of land under Section 194-IA of the Act. Accordingly, we confirm the order of the learned CIT (A) on this count and dismissed grounds no.1 to 5 of the appeal of the Revenue. 012. Ground no. 6 to 10 of Revenue s appeal is with respect to the deletion of addition under Section 69C of the Act. 013. The brief fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the order of the settlement commission deleted the addition. In the order of the settlement commission at paragraph number 13 the capitalization was granted to the assessee about the only earned which has been utilized by incurring the expenditure of this company. The fact shows that Wadhwa group Holdings private limited has admitted to certain receipts in the nature of loans as belonging to it. Having so admitted the receipts, that applicant also owns up outgoing in the seized material is being spent by the applicant Wadhwa Group Holdings Pvt Ltd on various projects of different entities of the group which also included the assessee and same are not in the nature of any tangible asset. In the settlement commission the expenditure incurred with respect to the projects of the assessee of 3,58,06,000 was also considered for capitalization. The settlement commission allowed the same. Therefore, We do not find any infirmity in the order of the learned CIT (A) in deleting the above addition and therefore, ground no.6 to 10 of the appeal is dismissed. 018. In the result, the appeal of the learned Assessing Officer for A.Y. 2015-16 is dismissed. 019. Coming to the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed return of income on 30th November, 2016, declaring loss of ₹30,97,955/-. The return of income culminated in the assessment order under Section 143(3) of the Act dated 29th December 2017. In the assessment order, additions of ₹1,79,51,000/- was made on account of unexplained expenditure under Section 69C of the Act. This is identical to the expenditure added in A.Y. 2015-16. The learned Assessing Officer further made disallowance of ₹37,02,693/- on account of interest paid on late deposit of tax deducted at source. On appeal before the learned CIT (A), the addition under Section 69C of the Act of ₹1,79,51,000/- was deleted on the identical reasoning given by him for A.Y. 2015-16. The disallowance of interest on late payment of TDS was confirmed. 027. At the time of hearing, the learned authorised representative submitted that assessee does not want to pursue the same. Accordingly, ITA No.585/Mum/2022 is dismissed. 028. Coming to the appeal of the learned Assessing Officer, both the parties confirmed that all the grounds raised therein are identical to ground nos. 6 to 10 in appeal of the learned Assessing Officer for A.Y. 2015-16. 029. On car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 2(1A) of the Income tax Act, 1961. (6) On the facts and in the circumstances of the case and in law, the Id CIT(A) erred in restricting the disallowance of Rs. 21,08,798/- u/s. 14A to the tune of Rs.65,197/-even when the AO rightly worked out the disallowance u/s 14A as per the rule 8D(ii) of Income tax Rule, 1962. (7) On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in restricting the disallowance u/s. 14A r.w.r 8D to the extent of the exempt income earned by the assessee during the year under consideration without appreciating the CBDT Circular No. 05/2014 dated 11.02.2014 wherein, it has been clarified that Rule 8D r.w.s. 14A provides for disallowance of expenditure even where the assessee in particular has not earned exempt income. (8) Whether the Ld CIT(A) is justified in deleting the addition of Rs. 21,08,798/- made by the assessing officer u/s 14A r.w. Rule 80D on the basis that the same is not to be applied if no exempt income is earned during the year and neither can it exceed the quantum of exempt income earned during the year, ignoring the clear provisions of the Act and as clarified by the CBDT Circular No. 05/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 14A of the Act, it was found that assessee has only earned exempt income of ₹65,197/- whereas the disallowance of expenditure is ₹21,08,798/-, he restricted the disallowance to the exempt income. c. With respect to the debenture investment by the two companies, he obtained the remand report on information submitted by the assessee. The learned Assessing Officer issued notice under Section 133(6) of the Act and the reply was received from both the parties. The learned CIT (A) noted that M/s. Silfix Trade link Private Ltd (STPL) was allotted 250 debentures of ₹1 lac each on 8th March, 2014 amounting to ₹2.5 crores for the above debentures upfront fees was paid to IIFL Wealth Management Services Ltd. the above debentures were redeemed and interest was paid to F.Y. 2015-16. The interest paid was also subjected to tax deduction at source. The finding of the learned Assessing Officer shows that the return on income filed by the above party has shown the above investments. With respect to M/s. Silfix Tradelink Private Ltd (STPL) 150 debentures of ₹1 lac each were allotted on 25th February, 2014 for ₹1.5 crores similarly same were redeem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. of ₹ 2.5 crores. The debenture was at the coupon rate of 20% per annum payable quarterly. The tenure of the debenture was for 36 months. The debentures were held in Demat account. These debentures were redeemed in 2015. During the course of assessment proceedings, the assessee submitted the requisite bank account, Permanent Account Number, annual accounts and confirmation etc. Sources of fund were stated to be redemption of mutual fund units from income opportunities fund real estate fund. In case of Sitaram Investment Ltd and Silfix Tradelink Private Ltd made investment from Sunlife, the balance sheet of Silfix Tradelink pvt ltd. shown the investment in mutual funds of 45 crores. Similarly, in case of Sitaram Investment Ltd. had investment in alternative investment fund [ AIF] of ₹ 3 crores. It has investment in tax free bonds of ₹4.64 crores as well as investment in quoted mutual fund of ₹57,10,000/-. The investment in quoted equity such as NTPC, CIPLA is also to the tune of ₹65 lacs. The income of this company is ₹1.53 lac for 31st March 2014 and ₹1,61,00,000/- for 31st March 2015. 038. It is further shown that both these c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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