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2023 (7) TMI 230 - AT - Income TaxAssessment u/s 153A - Addition of deemed dividend u/s 2(22)(e) - CIT(A) in this case has deleted the addition so made by the Assessing Officer observing that the aforesaid advances received by the assessee from the two concerns were purely business transactions - HELD THAT:- As noted that M/s Safari Retreats Pvt. Ltd. had given the loan in the regular course of business, where the lending of money was the substantial part of the business of the company. The assessee had duly paid interest @12% per annum on the loan amount which was reasonably high commercial rate of interest. - as in the case of advances from “Forum Ventures Pvt. Ltd”, the said advances were received pursuant to an agreement entered into with the said concern of the assessee for purchasing 40,000 sq.ft. in the form of six flats for a real estate project. This was a pure business deal. Since, the project did not mature, therefore, the agreement was cancelled by an exit agreement dated 29.01.2010 and the entire amount was refunded by the assessee to the said Forum Venture Pvt. Ltd. CIT(A) therefore held that both the transactions with the aforesaid concerns were business and commercial arrangements duly supported not only by agreements but also by the conduct of the parties involved. CIT(A) has further observed that it was not the case of the Ao that the said amounts were given gratuitously to the assessee only by virtue of its company beneficial shareholder. This addition was not based on any incriminating material found during the search action and that in the absence of incriminating material found during the search action, no addition could have been made by the Assessing Officer in an assessment carried u/s 153A of the Act. The above issue is squarely covered by the recent decision of the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. reported in [2023 (4) TMI 1056 - SUPREME COURT] No reason to interfere with the above findings of the ld. CIT(A), the same are accordingly upheld. Addition u/s 14A r.w.r. 8D - proportionate disallowance of expenditure relating to earning of tax exempt income - HELD THAT:- Since this was a case of reassessment proceedings u/s 153A pursuant to the search action u/s 132 of the Act, therefore, the addition if any could have been based on the basis of incriminating material found during the search action. CIT(A) observed that the aforesaid addition u/s 14A was not based on any incriminating material found during the search action, therefore deleted the impugned addition correctly. Disallowance of statutory deduction claimed by the assessee u/s 24(i) - CIT(A) deleted the addition - HELD THAT:- CIT(A) correctly deleted the aforesaid disallowance made by the Assessing Officer observing that the assessee himself had suo moto added back the aforesaid administrative expenditure relating to building maintenance etc. and that no double deduction was claimed and also held that even this addition was not based on any incriminating material found during the search action and that in the absence of incriminating material found during the search action, no addition could have been made by the Assessing Officer in an assessment carried u/s 153A.
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