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2016 (11) TMI 961 - AT - Income TaxUnexplained investment u/s.69 - unexplained expenditure u/s 69C - survey conducted - Held that:- The whole exercise of revenue was based on conjectures and surmises and there was no material on record which proved that the renovation work was met out of money other than the borrowed from the Bank, nor could the AO or ld.CIT(A) record any findings that the assessee had any other source of income apart from its regular income of the assessee. In our opinion, the assessee has explained the source of expenditure and the nature of expenditure incurred and therefore the Additions made by the AO u/s 69 of the Act as unexplained investments and u/s 69C unexplained expenditure could not be sustained in the present facts and circumstances. Moreover, the co-ordinate bench of the Tribunal for the assessment year 2004-05 deleted the addition by ld. CIT(A) which was made by the AO on the basis of loose papers page no 4 and 5 impounded during the course survey action - Decided in favour of assessee Disallowance of depreciation on hotel building - Held that:- We find that the assessee has already proved before the authorities below that the assessee has incurred expenditure for the purpose of construction and renovation of the hotel for creating some more space/rooms for residential purposes and the source was out of money borrowed from Corporation Bank. We have already decided in grounds no.1 and 2 above that the source of renovation and repairs were out of funds arranged from the Corporation Bank by the assessee firm. Accordingly we are of the considered opinion that money spent by the assessee towards construction and renovation in the block of assets was eligible for depreciation as the same was being used for the purpose of business of the assessee as the fact of expenditure having incurred on renovation was proved - Decided in favour of assessee Disallowance of interest paid to the Corporation Bank - Held that:- We find that the assessee has already proved that the renovation and construction of hotel out of funds borrowed from the Corporation Bank which has already been elaborately discussed while deciding grounds of appeal no.1 and 2 of this appeal and decided in favour of the assessee. In our opinion, the assessee has proved that the loan was taken ,borrowed and used for the purpose of business of the assessee and therefore , the assessee is entitled to claim the depreciation on the amount of expenditure capitalized during the year. On the same analogy , the interest on loan from Corporation Bank would be allowed as admissible expenses.- Decided in favour of assessee Unexplained expenditure u/s 69C - Held that:- We find merit in the contentions of the assessee that since the assessee has already offered and added a sum of ₹ 50 lakhs suo mottu at the time of filing of return and the benefit of unexplained transactions ₹ 44,81,000/- should be allowed to be adjusted against the said voluntary disclosure which was specifically made to cover any expenses , notings or cash transactions as per the affidavit as in respect of suo motto disclosure no other materials was found. We are, therefore, not in agreement with the findings of the ld. CIT(A) in upholding the addition. In our opinion, the same should be allowed to be covered and adjusted against the surrender of ₹ 50 lakhs at the time of filing of return of income - Decided in favour of assessee Addition u/s 69C - Held that:- We find that the ld.CIT(A) has recorded the finding of the facts while deleting the said addition and by holding that the entries in the said papers/sheets did not belong to the assessee or sister concern or its partners. We are in agreement with conclusion drawn by the ld.CIT(A) as nothing to controvert the finding of ld.CIT(A) has been brought before us by the ld. DR. Therefore we dismiss the appeal of the revenue - Decided in favour of assessee
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