TMI Blog2012 (7) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... - assessee has challenged the valuation – Held that:- Valuation adopted, approved by the DVO is based upon detailed working and the value of the house as on 1.4.1981 including the cost of the land/cost of the construction. There are very minor variations in the approach of the authorities - no infirmity in the direction of the learned Commissioner of Income Tax (Appeals) to recalculate the long term capital gain by taking the sale consideration at Rs.35.71 lakhs by adopting the cost of the house as on 1.4.1981 at Rs.5.11 lakhs as determined by the DVO Disallowance on account of bad debts - disallowed on the plea that identically in earlier assessment year also, the bad debt was disallowed – Held that:- Relief was given to the assessee and for the remaining amount of Rs.9,52,500/- in respect of fixed deposits and recurring deposits with Gujarat Mercantile Bank are concerned, these can be considered as capital loss, therefore, the Assessing Officer is directed to examine the claim of the assessee, consequently, the amount to the extent of Rs.9,52,500/- is remanded back for consideration of the ld. Assessing Officer for which due opportunity of being heard be provided to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annexed with copy of his balance sheet, P L account which was processed u/s 143(1) of the Act on 31.3.2007. The case of the assessee family was selected for scrutiny for which notices u/s 143(2) were issued which were complied with by the assessee. The assessee furnished written submission and produced books of accounts. A revise return u/s 139(5) of the Act was filed on 23.11.2007 claiming long term capital loss from sale of house at 77/4, Vallabh Nagar, Indore at Rs.6,78,000/-, which could not be claimed in the original return. The ld. Assessing Officer framed the assessment u/s 143(3) of the Act on 19.12.2007 determining the total income at Rs.13,53,324/- (other than long term capital gain) and long term capital gain from the sale of house at Rs.11,87,900/- which resulted into addition of Rs.32,07,254/-. The same is summarized as under: S.No. Head of account Amount (Rs.) 1. Donation 30,000 2. Adhoc disallowance of administrative expenses and disallowance of TDS debited in P L account 5,896 3. Alleged excessive payment of interest u/s 40A(2)(a) 10,34,196 4. Disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has not specifically mentioned about the loans and the interest rates as to how it was excessive and at the same time, the business exigencies are to be considered by the assessee. Admittedly, it is not that in every case, the interest on borrowed loans has to be allowed but it depends on facts and circumstances of the respective case. So far as the measurement of commercial expediency is concerned, it has to be judged by the assessee. The expression for the purpose of business is wider in scope than the expression for the purpose of earning income, profit and gains. Interest and borrowals is allowable as deduction only when the borrowals are used for the purpose of business and continued as such where the assessee paid interest on borrowals for use of his business, its reasonableness is to judged by the assessee alone and the Revenue is not expected to sit on the armchair of the businessman unless and until a glaring unreasonableness for non-business purposes is brought on record. There is a categorical finding in the impugned order that no case has been made out by the ld. Assessing Officer for sustaining the disallowance of interest. Even otherwise, sec. 40A(2)(a) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the businessman and not by the Revenue unless and until some adverse material is brought on record, therefore, we find no infirmity in the conclusion drawn in the impugned orders. Same are affirmed. 4. Now, we shall take up the cross-objection of the assessee wherein it has been objected that the learned first appellate authority erred in not accepting the detailed explanation with regard to long term capital gain on the sale of the house and further not accepting the fair market value as on 1.4.1998 by rejecting the claim of loss on account of sale of the house. 4.1 During hearing of this Cross-objection, the ld. Counsel for the assessee advanced his argument which is identical to the ground raised by further explaining that one house situated at 77, Vallabh Nagar, Indore was constructed by the previous owner in the year 1960, which was sold through a registered sale deed for a consideration of Rs.30 lakhs on 6.12.2004. The stamp valuation authority determined the value at Rs.35,71,000/- for the purposes of stamp duty levy. The assessee computed long term capital loss of Rs.6,78,000/- on the sale of the house. It was claimed that the fair market value should have been adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that identically in earlier assessment year also, the bad debt was disallowed. The copy of the bad debt ledger has been reproduced in para 4.3.1 of the impugned order. The explanation and the discussion has been reproduced in para 4.3.2 to 4.3.4 and conclusion is in 4.3.5 of the impugned order. After analyzing each and every entry of the bad debt, it was found that the disallowance of Rs.2,91,000/- was unjustified, therefore, the relief was given to the assessee and for the remaining amount of Rs.9,52,500/- in respect of fixed deposits and recurring deposits with Gujarat Mercantile Bank are concerned, these can be considered as capital loss, therefore, the Assessing Officer is directed to examine the claim of the assessee, consequently, the amount to the extent of Rs.9,52,500/- is remanded back for consideration of the ld. Assessing Officer for which due opportunity of being heard be provided to the assessee. The assessee is also at liberty to furnish any evidence, if any, in support of its claim, therefore, this Cross-objection is allowed for statistical purposes only. Finally, 1. The appeals filed by the revenue are dismissed 2. Cross-objection No.10/Ind/2012 filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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