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2017 (11) TMI 1369 - AT - Income TaxAssessment u/s 153A - Held that:- Respectfully following the decision of the Hon‟ble Delhi High Court in case of CIT versus Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) no addition can be made in the hands of the assessee for these and impugned assessment year in absence of any incriminating evidence as this assessment is concluded/completed assessment. Addition of bogus purchases - Held that:- Assessing Officer has made this disallowance based on some Inquiry carried on by him in some other party which could not be found at the given address. It is stated that assessee has not purchased any goods from that party. In view of this we do not find any infirmity in the order of the Ld. CIT (A) in deleting the addition by holding that the appellant company has discharged its onus by providing copy of the bills raised by the contractor containing full address, nature of services rendered or goods supplied on payment has been made by account payee cheque and tax deduction at source has been deducted as per the provision of the law. He further held that the Assessing Officer is not conducted any enquiry to disbelieve these documents furnished by the assessee, but simply arrive at the conclusion that these expenses are not genuine. In view of this we find no infirmity in the order of the Ld. CIT (A) in deleting the above addition Addition u/s 14A - Held that:- The assessee explained that assessee has invested a sum of ₹ 5.5 crore in fixed deposits received for which the loan was the source of the funds FDR was encashed on 11/01/2007 and invested in principle floating-rate mutual fund on which the assessee has received dividend. Therefore, with respect to this amount. There is a direct nexus of amount borrowed for the purpose of earning exempt income. Hence the interest were doubted in the table given at page No. 3 of the assessment order at serial No. 5 in investment in mutual fund was made from 1/11/2007, which was encased on 26/3/2007 for 5.5 crores and interest is working out thereon of rupees 1142945/– related to 74 days. In view of this, interest disallowance under rule 8D (2) (i) is required to be upheld. With respect to the other investment where the interest expenditure of ₹ 1 943289/–. There is no nexus of the sum borrowed with the amount of some invested in the mutual funds. The some of the interest amount is with respect to investment made by the assessee in sister Concern Company from which no dividend has been received. Even otherwise, looking to the balance sheet of the company assessee has share capital of rupees 278 lakhs and reserves and surplus of 1346 Lacs which makes the total shareholder‟s funds of rupees 1624 Lacs. The amount of investment made by the assessee is for 0 Lacs as on 31/3/2006 and only ₹ 7 lakhs as on 31/3/2007. Therefore it is apparent that the investment made by the assessee in exempt income generating investments is far less than interest-free funds available with the assessee. Addition on account of lease agreement charges - Held that:- The expenditure is incurred by the assessee in present day business environment in different ways. It is for the revenue to first understand the business of the assessee and then decide about the allowability of the same by putting themselves into the shoes of businessmen. The business are being carried out in today‟s environment involved most volatile manner, it has also become innovative. Therefore, the time has come that revenue should also become contemporary with the running businesses and acquaint themselves with its volatility and innovativeness. Considering the business intent of the assessee and the manner of incurring expenditure, it is apparent that expenditure incurred by the assessee cannot be considered to be not business expenditure. According to us, it is for the purpose of the business of the assessee and hence deductible. For aforesaid reasons we reverse the finding of the lower authorities and direct the Ld. Assessing Officer to allow the claim of the assessee on account of lease agreement charges as deductible business expenditure under the head of profits and gains of business and profession.
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