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2017 (11) TMI 325 - AT - Income TaxDisallowance of the office expenses - Held that:- The profit and loss account clearly shows that the assessee derived income from rentals profit on sale of property rights and interest income to a tune of ₹ 9,06,827/-, as such, it is not correct on the part of the AO to conclude without any basis that there was no business activity during the year. On a careful consideration of this matter with reference to the details furnished by the assessee, we are of the considered opinion that the AO should not have disallowed the expenses in the absence of any discrepancy pointed out with reference to the books of accounts of the assessee. We, therefore, direct the AO to delete the same. Sale of property - property was purchased as a capital asset or stock in trade - Held that:- As perused the agreements dated 19.01.2001 and 27.01.2002, and sale deed dated 27.03.2004. It is clearly mentioned therein that out of 48,31,250/- the assessee received only a sum of ₹ 24,15,625/- and the balance of ₹ 18 lacs was received by one G.K.S. Holdings and on this aspect it is the submission of the Ld. AR that whatever may be the consideration receivable by the vendors under the sale deed had to be apportioned between the assessee and GKS Holdings and the entire ₹ 53,98,763/- cannot be thrown to the share of the assessee. Further the documents indicate that the assessee held the property for more than three years and the acquisition of the property was for the purpose of their office and it is only since it was insufficient for their office they sold it away to one Vaishnavi Associates. Period of holding of the property and the expenses for Genset and Air conditioner also support the contention of the assessee that the property was purchased as a capital asset but not stock in trade. It is a verifiable fact as to what exactly the portion of the sale consideration under sale deed dated 27.03.2004 was receivable by the assessee so as to apportion the amount of ₹ 53,98,763/- could be attributed to the assessee. While working out the amounts received or receivable by the assessee the liquidated damages have to be taken into consideration for the purpose of reducing the cost of acquisition. For this purpose, we deem it just and proper to set aside the matter to the file of the AO and AO will consider the questions of the sale consideration attributable to the assessee while taking into consideration the liquidated damages and the period of holding of the asset by the assessee. Needless to say that AO will afford opportunity to the assessee to produce the evidence, if any, on this aspect. With this view of the matter, we restore the issue to the file of the AO for implementing the above direction.
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