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2015 (4) TMI 438 - AT - Income TaxDisallowance u/s.14A - Held that:- The Hon'ble Delhi High Court in the case of Maxopp Investments Ltd. V CIT [2011 (11) TMI 267 - Delhi High Court] has held that by virtue of the provisions of sub-section (2) and (3) of Section 14A of the Act, if the Assessing Officer is not satisfied by the correctness of the claim of the assessee in respect of such expenditure or no expenditure, as the case may be, cannot embark upon the determination of the amount of expenditure in accordance with Rule 8D. While rejecting the claim of the assessee, the Assessing Officer has to render cogent reasons for the same. In a case where the assessee states that no expenditure has been incurred by it to earn exempt income, the Assessing Officer has to verify the correctness of the assessee's claim having regard to the accounts of the assessee. In the case on hand, we find that the Assessing Officer has not given any cogent reason in the order of assessment for disbelieving the contention of the assessee that it has incurred no expenditure to earn the exempt income of ₹ 18,400 but has proceeded to apply the provisions of Rule 8D to arrive at the disallowance of ₹ 1,93,730 as the expenditure deemed to be incurred for earning exempt income. Further, as contended by the learned Authorised Representative, the judicial pronouncements relied on by the assessee i.e. J.M. Financial Ltd (2014 (4) TMI 752 - ITAT MUMBAI), apply to the factual matrix of the case on hand and in this view of the matter, it cannot be said that the assessee was incurring expenditure to maintain and / or monitor its long term investments of ₹ 3,87,00,000 in its sister / associate concern M/s. Trichy Steel Rolling Mills P. Ltd. and ₹ 46,000 invested in the shares of Andhra Bank. Thus we delete the disallowance of ₹ 1,93,730 made by the Assessing Officer under Section 14A r.w. Rule 8D. - Decided in favour of assessee. Addition u/s.41(1) - difference in liability towards Karnataka Breweries & Distilleries Ltd. ('KBDL') - Held that:- It has been submitted by the assessee that the impugned addition of ₹ 5,87,817 can be made only if the liability claimed by the assessee is higher than the dues shown by the creditor viz. KBDL. In the case on hand, the undisputed facts as per record show that the liability claimed by the assessee is ₹ 3,65,92,256, whereas on examination of the books of KBDL by the Assessing Officer, it was found that the assessee was shown to be liable to pay KBDL ₹ 3,71,80,073. We find that it is in these factual circumstances the finding of the authorities below is erroneous as the basic requirement that a liability no longer exists is not present in the case on hand to warrant the application of the provision of section 41(1) of the Act - Decided in favour of assessee. Interest under Section 234B - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court) and we, therefore, uphold the action of the Assessing Officer in charging the said interest. - Decided against assessee. Income from 'Prestige Shantiniketan' Project - CIT (Appeals) deleted the addition and upheld the basic contention of the assessee that the property, which is the subject matter of JDA between the assessee and PEPL, is held as stock-in-trade by the assessee and not as a capital asset, therefore income arising under Section 45(2) in respect of the conversion of the capital asset to stock-in-trade, as well as business income arising on the sale of such stock-in-trade will accrue and arise only in the year in which the stock-in-trade is actually sold - Held that:- The lands which are subject matter of the JDA dt.5.2.2005, between the assessee and PEPL, are stock-in-trade of the assessee at the time of JDA was entered into. There is a finding to this effect, rendered by a co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2005-06 [2015 (4) TMI 465 - ITAT BANGALORE]. No sale of such stock-in-trade has been reported to have taken place during the year under consideration i.e. Assessment Year 2009-10. The assessee has reportedly been consistently following the completed contract method of accounting and the same appears to have accepted by revenue. AO has not brought on record any material evidence to demonstrate that the system of accounting followed by the assessee does not show a true and correct picture of income, which in turn would warrant rejection of the books of account. The Assessing Officer has not rejected the books of account maintained by the assessee in the year under consideration. The assessee is basically a landlord simpliciter as far as the JDA between the assessee and PEPL is concerned thus there is no requirement in law that the assessee ought to adopt the percentage completion method of accounting merely because PEPL, the developer in the JDA, in following the said method.In the light of the above facts, it would be incorrect to conclude that the assessee has earned any income out of the JDA in the period relevant to the impugned assessment year 2009-10. As decided in case of R.Gopinath (HUF) V CIT [2009 (7) TMI 1209 - ITAT CHENNAI] when an immovable property is held as stock-in- trade, the same is to be considered as sold only when the sale is conveyed by means of a registered sale deed and not before that. The learned CIT(A) has also expressed the same view in the impugned order in the case on hand and the said view, in our considered opinion, is in order Non-refundable deposit would par take the character of sale consideration only upon the ownership of the undivided interest in land being transferred by a sale deed and not before and then only to the extent of the amount proportionately applicable to the extent of the land so transferred. 11.6.4 In the light of the facts and circumstances of the case as discussed above and the observations made and findings rendered by us, we see no reason for interfering with the findings rendered by the learned CIT(A) in the impugned order deleting the addition as income from the Shantiniketan Project in the year under consideration - Decided against revenue.
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