TMI Blog1989 (5) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that he had borrowed Rs. 3.25 lakhs from his father-in-law Shri.Kasirajan but after examining Shri Kasirajan, the ITO was of the view that the father-in-law could not have advanced the amounts. The ITO, in the course of the assessment order, had mentioned the fact that the assessee has also in this period constructed a theatre in which the work in progress shown as on 31st March, 1985 as Rs. 27.42 lakhs against Rs. 1.98 lakhs on 31st March, 1984 showing an increase of investment of Rs. 25.43 lakhs. Under the provisions of s. 69C, he made an addition of Rs. 6,90,231 in framing the assessment. 3. The ITO also made an addition of Rs. 68,170 for interest on borrowings diverted for construction of the theatre, Rs. 23,730 income from sale of empty gunny bags and Rs. 6,831 10% profit on the work done in the name of Manimaran. 4. The assessee appealed. Before the CIT(A), the main ground was against the addition of Rs. 6,90,231. The assessee pressed into service the ratio of decision of the Tribunal in S.F. WADIA vs. ITO (1986) 19 ITD 306 (Ahd) and submitted that if under s. 69C an addition of Rs. 6,90,231 was to be made, an identical deduction would have to be given towards business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case and hence the relief allowed in this regard is not justified. 6. The Respondent craves the leave of the Hon ble Tribunal for modifying, amending and or raising additional grounds of cross-objection at the time of hearing." 7. At the hearing before us, the learned counsel submitted that the investment shown in the theatre at Rs. 27.42 lakhs was total investment in the building and this was evidenced by the valuation independently made by the Valuation Officer, a copy of which was not given to him on the plea that it would be supplied if it was to be used against the assessee. Therefore, the full amount of Rs. 6,90,231 will relate only to the Housing Board Contracts and the deduction to be allowed by the CIT(A) should have been the full amount. He also submitted that it was possible to link specifically some more items as relating to Housing Board Contracts out of the 15 items which aggregated to Rs. 6,90,231. In view of the contentions adduced by the learned counsel for the assessee and in view of the contentions raised in the cross objections by the Department and since the valuation report has not been made available to the assessee, we considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred but not accounted for. The resultant net addition would be rupees A minus D where unaccounted expenditure is rupees A and there is no personal expenditure and no capital expenditure and the whole unexplained expenditure relates to a disclosed business, then D will be equal to A and while rupees A can be added under s.69C, an equivalent amount of rupees D would have to be now separately allowed as a deduction. 11. Coming to the facts of the present case on the aforesaid background and starting with the Annexure to the assessment order and the position as clarified after verification by the ITO and the Remand Reports of the CIT(A), we find the following: S.No. Names of suppliers Amount as per vouchers Date relating to theatre as per Remand Order 1. Ramchandra Clamps. Rs. 23,369 2. Syndicate electricals. Rs. 4,800 2000 15-2-85 3. Five Star Supply. Rs. 8,005 6200 23-3-85 4. Blue Shine Supply Rs. 4,034 5. Madhagan Supply Rs. 55,220 6. Pain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee took the plea specifically that having regard to the ratio of the decision of the Tribunal in 19 ITD 306 since the full amount of Rs. 6,90,231 related to the Housing Board contracts, an equivalent amount should be allowed as a deduction. This argument of the assessee was put by the CIT(A) to the ITO. We quote below paragraph 4 of the order of the CIT(A): "I had a discussion with the ITO. He pointed out that during the year the appellant was, constructing a theatre called Kasi Theatre and approximately Rs. 25 lakhs was invested in this theatre. He pointed out that the major portion of the expenditure of Rs. 6,90,231 was related to the construction of the theatre and hence, being capital expenditure, the decision of ITAT, Ahamedabad relied by the learned representative will not apply to this case." It is clear that before the CIT(A), the categorical stand was that a major portion of the expenditure of Rs. 6,90,231 related to the construction of the theatre. Thereafter, we called for the Remand Report and after a complete analysis it has now been stated that only Rs. 12,726 related to the construction of the theatre. The Department in its Cross Objection has also co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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