Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1806 - AT - Income TaxAddition u/s 68 - unexplained loans as well as unexplained share application money received from five companies - assessee is a group concern of Kota Dall Mill (KDM) group and subjected to the search and seizure action U/s 132 - CIT(A) has deleted the major part of the addition for which the A.O. was not having any material in his possession but confirmed the addition in respect of which the statement of the alleged entry provider was with the A.O - HELD THAT:- Finding of the CIT (A) are based on the facts as well as the documentary evidence produced by the assessee whereas the AO has not brought on record any contrary evidence except the allegation made in the report of the Investigation Wing Kolkata - documentary evidences brought by the assessee cannot be negated merely on the basis or allegation made in the report which is nothing but narration of the statements recorded of certain persons. The report of the DDIT Investigation cannot substitute the documentary evidence. No error or illegality in the order of the ld. CIT (A) qua this issue. The finding of the ld. CIT(A) for the year under consideration is based on the identical grounds as in the case of M/s Kota Dall Mill while deleting the addition made by the A.O. in respect of all these five companies. Thus having regard to the facts and circumstances of the case as well as the documentary evidence produced by the assessee in respect of the claim, the addition made by the A.O. based on merely allegations in the report of DDIT (Inv.), Kolkata without any supporting cogent material or documentary evidence is not sustainable. Therefore, in view of the earlier order as well as evidence produced by the assessee, we do not find any error or illegality in the order of the ld. CIT(A) in deleting the addition. Hence, we uphold the same. - Decided in favour of assessee. Disallowance u/s 14A - as per AO expenditure directly incurred in respect of investment in shares and income from such investment does not form part of the total income - CIT(A) has deleted the addition on the ground that the A.O. has even not recorded any satisfaction that the alleged expenditure has any direct nexus with the investment when the assessee was having sufficient interest free funds - HELD THAT:- The assessee is in the business of finance and therefore, the interest expenditure is essentially connected with the business of the assessee if except the borrowed fund is directly used by the assessee for the purpose of investment in shares. There is no fresh investment made by the assessee during the year but all these investments were old investments, therefore, in absence of any finding that the assessee has used the borrowed fund at the time of making the investment, the disallowance on the ground of interest expenditure is not warranted. As regards the indirect expenditure, CIT(A) correctly noted that the A.O. has applied amended provisions of Rule 8D(2)(ii) of the Rules, however, that the amendment is w.e.f. 02/6/2016 and not applicable for the year under consideration even otherwise when these investments are old investments and the A.O. has not identified which of the indirect expenditure for any direct or proxy nexus for earning the exempt income. Disallowance by invoking the provisions of Rule 8D of the Rules is not automatic, there may be case when the assessee does not claim any expenditure or the expenditure claimed by the assessee is less than the amount of disallowance computed under Rule 8D of the Rules then the disallowance if any cannot be more than the actual claim of expenditure. - Decided against revenue. Addition on account of retention charges - allowable business expenditure u/s 37(1) or not ? - Whether this amount was paid as fee to the RIICO for not supporting the commercial activity at the industrial site allotted by the RIICO to the assessee? - HELD THAT:- We find that this amount was paid by the assessee being the fee for not commencing the commercial activity at the industrial site allotted by the RIICO, therefore, to be retained the right over the commercial site. The assessee to pay the fee as per the rules of the allotment. Thus, the expenditure was incurred by the assessee to retain its right over the site allotted by the RIICO and to protect the interest of the assessee. Once the charges are paid for extending the time period to start the commercial activity at the site allotted by the RIICO then the same is an allowable business expenditure U/s 37(1) - Decided in favour of assessee. Validity of order passed U/s 153A read with Section 143(3) - assessee has raised issue regarding the addition made by the A.O. without any incriminating material as well as the order of the A.O. is not sustainable when the assessee was not given the opportunity of cross examination - HELD THAT:- As decided in case of M/s Multimetals Limited [2019 (1) TMI 1591 - ITAT JAIPUR] either in the assessment order, the Assessing Officer has referred or relied upon any incriminating material found during the course of search and seizure action in the case of assessee nor the CIT(A) has disputed this fact that the AO was not having any incriminating material in his possession found and seized during the course of search and seizure action in the case of the assessee which has disclosed any unaccounted or undisclosed income of the assessee. Information received from the Investigation Wing, Kolkata as well as the statement of Shri Anand Sharma and Shri Ankit Bagri cannot be regarded as incriminating material unearthed during the course of search and seizure U/s 132 in the case of the assessee. As regards the order passed by the A.O. without giving the opportunity of cross examination, we find that the facts on this issue are identical as in the case of other group concerns of Kota Dall Mill. In the case of M/s Multimetals Limited Vs DCIT (supra), the Tribunal has again considered this issue and followed the decision of the Tribunal in the case of Kota Dall Mill [2019 (1) TMI 344 - ITAT JAIPUR] . The relevant findings of the Tribunal are reproduced in the foregoing paras of this order. Hence, following the earlier orders of this Tribunal, we decide this issue in favour of the assessee and against the revenue.
|