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2016 (7) TMI 1435 - AT - Income TaxBogus transportation expenses - Addition on the basis of sworn statement u/s 131 of Mr.R.Gangadhar - Held that:- Main basis for this disallowance is statements of the transporters of whom the assessee requested for cross examination but the same was not allowed by the AO - As decided in case of CIT Vs SMC Share Brokers Ltd. [2006 (8) TMI 110 - DELHI HIGH COURT] in the absence of third party being made available for cross examination despite repeated requests by the assessee, his statement could not be relied upon to the detriment of the assessee - Decided in favour of assessee. Disallowance of expenses as 40% of the business is illegal - Held that:- In the present case, we are not concerned as to whether he assessee is engaged in illegal mining or not but in the present case, because this is not the case of the AO that any deduction has been claimed by the assessee for facilitating to carry out the illegal mining alleged by the AO or for any penalty in respect of such illegal mining because the disallowance has been made by the AO to the extent of 40% of the total mining expenses and since 60% of the expenses are allowed by the AO, the remaining 40% of the same expenses cannot be considered as expenses for the purpose of offence or unlawful purposes. Hence, this disallowance is not justified. Addition of expenditure incurred on vehicles, Telephone for personal use of directors - Held that:- This issue is covered in favour of the assessee by the judgment of the Hon’ble Gujarat High Court rendered in the case of Sayaji Iron & Engg.Co.(2001 (7) TMI 70 - GUJARAT High Court ) wherein it was held by the Hon’ble High Court that in respect of expenditure incurred on vehicles, Telephone etc., even if there is any personal use by Director/employee of the assessee company, addition can be made in the hands of such Director/employee on account of perquisite value of such personal use by concerned person but no disallowance can be made in the hands of the assessee company. Thus this disallowance is deleted. However, the A.O. of the concerned director is at liberty to make addition as per law in the hands of the concerned director Addition of gross amount of sale proceeds of land which was kept as advance by the assessee in its balance sheet at the end of the year - Held that:- The amount of ₹ 86,60,079/- for which addition has been by the AO is the amount of assessee’s share in the sale consideration for sale of land and hence, even if it is held that income on this account is to be taxed in the present year, the same cannot be to the extent of gross amount of sale proceeds and income has to be assessed after allowing deduction regarding cost of acquisition, if any incurred by the assessee but since there is no discussion on this aspect in the orders of the authorities below, we feel it proper that this issue should be restored back to the file of the AO for a fresh decision in the light of the above discussion after providing adequate opportunity of being heard to the assessee.
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