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2015 (7) TMI 35 - AT - Income TaxDisallowance on account of interest expenses - CIT(A) allowed claim - Held that:- CIT(A) has elaborately discussed the issue and recorded that the assessee was involved in the business of “sub-letting” of properties, and during the relevant year, it had taken 45 properties on rent and paid ₹ 49.20 lakhs, and while on subletting he received ₹ 56.24 lakhs resulting into net surplus of rent shown as business income of ₹ 7.04 lakhs. Assessee has utilized ₹ 47.60 lakhs for purchase of properties from which income of ₹ 14.95 lakhs was earned as rent and shown under the head “income from house property”. The balance amount of ₹ 114.34 lakhs was claimed by the assessee to have been utilized for business of construction. The CIT(A) has further recorded that this fund flow has substance to show clear nexus of utilization of borrowed fund for earning income in the form of interest, rent income and business income of construction, and has paid TDS on the interest payment wherever applicable. There being no material before us to controvert these findings of the CIT(A), we hold that there is no mistake in the order of the CIT(A) in deciding the issue in favour of the assessee. Difference in valuation of closing work in progress - CIT(A) deleted the addition - Held that:- CIT(A) has recorded that the AO has not rejected books of accounts of the assessee and has made addition to closing stock based on the statement of Shri J.P. Shah and inquiry from Inspector without confronting to the assessee. We are unable to appreciate the stand of the AO that structural engineer, shri J.P. Shah, being 77 years of age, and suffering from blood pressure, sugar and other diseases, his certificate could not be relied upon. The CIT(A) has further recorded that the AO’s exercise of such estimation will not result into any substantial Revenue gaining exercise because the assesse after following proper method and accounting standard already reflected profit in respective year and paid taxes thereon. In reply to a specific query from the Bench, the learned counsel for the assessee submitted that project has already completed and its final profit & loss has already been declared and taxed as such by the department. We find that there is no material before us to reject the valuation of work-in-progress which was also supported by certificate of structural engineer, Shri J.P. Shah. In these facts of the case, we hold that there is no mistake in the order of the CIT(A) in directing the AO to accept the valuation of closing work-in-progress as certified by the structural engineer in his certificate, and in deleting the addition - Decided in favour of the assessee.
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