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2017 (10) TMI 874 - ITAT MUMBAIAddition of business income - compensation received by the assessee from Bhuminath Construction - addition on estimation basis - Held that:- There is no dispute about the fact that the assessee and Bhuminath Construction have entered into MoU for development of a Hotel. It is also a fact that as per the terms of MoU, Bhuminath Construction will advance a sum of ₹ 5 crore in installments to the assessee for development of the project. It is also made clear in the MoU that the said amount of ₹ 5 crore shall be interest free. Neither of the Departmental Authorities have taken into consideration the advantage derived by the assessee from the interest free fund received by it from Bhuminath Construction. Moreover, it appears that in case of Bhuminath Construction, the Assessing Officer has accepted the compensation paid of ₹ 6,75,150 to the assessee while completing the assessment. Therefore, if actually higher compensation has not been paid to the assessee, no addition can be made notionally and on mere presumption and surmises that the assessee might have received excess compensation or the compensation received is meager. Commissioner (Appeals) has categorically stated that the Assessing Officer had never doubted the genuineness of the purchases and total cost incurred towards the construction, however, he has sustained the addition primarily for the reason that expenditure incurred by the assessee on account of interest payment at ₹ 9,60,000 is more than the compensation received. However, on a perusal of the audited Profit & Loss account for the year ending 31st March 2007, we find the total expenditure debited to the Profit & Loss account of ₹ 6,30,617, including interest expenditure of ₹ 1,59,706. Thus, we are unable to understand where from the learned Commissioner (Appeals) has obtained the interest payment amount of ₹ 9.60 lakh. Thus, on the basis of such half baked facts addition cannot be made on mere presumption and surmises. Therefore, we have no hesitation in deleting the addition made on estimate basis.
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