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2022 (1) TMI 925 - AT - Income TaxEstimation of profit @8% of the work-in-progress - HELD THAT:- We find that Co-ordinate bench of the Tribunal in the assessee’s own case [2009 (9) TMI 1060 - ITAT AHMEDABAD] and [2019 (1) TMI 1953 - ITAT AHMEDABAD]has examined and discussed at length issue of estimation of net profit at the rate of 8% on the alleged work-in-progress, and came to the conclusion that the assessee was a developer, and the WIP did not belong to it. The assessee is consistently following mercantile system of accounting, where receipts in the form of development fees have been recognized on completion of project. The ld.AO without any basis construed that WIP belonged to the assessee, Accordingly, the Tribunal confirmed claim of the assessee. CIT(A) has reproduced order of the Tribunal in entirety for appreciating the facts in right perspective. In view of this fact, there is no reason for us to deviate from the findings of the ld.CIT(A) based on findings of the ITAT in the assessee’s own case cited (supra), and therefore, which we uphold and confirm deletion of additions on account of estimation of work-in-progress for both the years. Thus, ground no.1 of both appeals of the Revenue stand rejected. Addition u/s 14A read with Rule 8D - disallowance of interest expenses - assessee explained that the investment was made out of interest free funds available with the assessee, and therefore, no expenditure was incurred by the assessee towards investment for making such investment which yielded exempt income - HELD THAT:- .AO in making disallowance under section 14A read with Rule 8D was not justified in view of the fact that the assessee has demonstrated that it has sufficient funds for making investment which yielded exempt income. As per the figures demonstrated by the assessee, assessee’s interest free funds far exceeded investment made for earning exempt, against which, there is no material with the Department to establish that borrowed funds were utilized by the assessee for the impugned investment. The ld.CIT(A) in the impugned order noticed that the assessee had sufficient interest free funds in excess of investment made for earning tax free income. After examining the explanation of the assessee and based on decision of the Tribunal in assessee’s own case for the Asstt.Year 2011-12 cited (supra), the ld.CIT(A) deleted the interest portion of the disallowance and the balance amount was sustained. We do not find any infirmity in the order of the ld.CIT(A) on this issue, which accordingly confirmed, and this ground of the Revenue stands dismissed.
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