TMI Blog2013 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial transaction between the parties, then in the absence of proving contrary by the department, the addition to the extent of ₹ 58 lacs is not justified. Hence, the addition to the extent of ₹ 58 lacs u/s 2(22)(e) is deleted and consequently, the addition of balance amount of ₹ 7,99,604/- is confirmed. Partly in favour of assessee. Disallowance u/s 57(ii) - interest paid on overdrawn capital with partnership firm - Held that:- The assessee has introduced ₹ 50 lacs as capital in Aditya Developers and withdrawal of ₹ 56 lacs with Sagar Construction. Thus, the assessee has earned interest income from partnership firms M/s Aditya Developers, at the same time, the assessee had interest expenditure of ₹ 65,429/- on debit balance with the other partnership firm. There is no dispute about the fact that the assessee has overdrawn from the partnership firm M/s Sagar Construction; therefore, the interest paid to the Sagar Construction for debit balance in the capital account is an allowable expenditure against the business income of the assessee and particularly against the interest/remuneration received from the partnership firm. In favour of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2 lacs as salary income and ₹ 10,10,396/- as opening debit balance. 3.4 As regards the contention of the assessee that ₹ 58 lacs was received for purchase of property, which was later on refunded, the CIT(A) did not accept the same. Accordingly, the CIT(A) has confirmed the addition to the extent of ₹ 65,99,604/- after giving a relief to the extent of ₹ 12 lacs. 4. Before us the ld AR of the assessee has submitted that the CIT(A) has failed to appreciate the fact that the advance of ₹ 58 lacs was given to the assessee by the company for the purchase of flat. In support of his contention, he has referred the statement of account with M/s Korodia Construction P Ltd as well as Schedule to the balance Sheet and the P L account of M/s Koradia construction P Ltd. The ld AR has pointed out that Schedule E to the Balance Sheet for current asset, loans and advances indicates the advances given by the company to the assessee as advance for the purchase of flat. The accounts of M/s Korodia construction P Ltd are already available on the website of Registrar of Companies. He has further submitted that return of income for the company was filed elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) CIT vs Nagindas Kapadia ( 177 ITR 393) ii) CIT vs Creative Dyeing Printing P Ltd (229 CTR 250) 4.2 The ld AR has also referred the memorandum of understanding dated 30th Nov 2006 between the assessee and her husband and M/s Koradia Construction P Ltd regarding the purchase and sale of flat no. C-402 and C-403, 4th Floor, Gokul Divine, Irla, Vile Parle (W) Mumbai . He has pointed out that the total consideration as per the said agreement was to be paid to the assessee at ₹ 60 lacs; therefore, the payment of ₹ 58 lacs towards purchase of the said flat. 4.3 On the other hand, the ld DR has submitted that the Memorandum of understanding cannot be considered at this stage when the assessee has not filed the same before the authorities below. The assessee has not produced the evidence to show as how the transaction of purchase and sale of flat could not materialize due to refusal of permission by the Society. The MoU is between the closely related parties; therefore, it is a self serving document and cannot be relied upon. He has relied upon the order of the authorities below and submitted that the CIT(A) has relied upon the decision of the Hon ble jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 8 lacs . It is otherwise not permissible to make full addition of the said amount for the year under consideration. Once the assessee has established that the said amount was given to the assessee for the purchase of flat which is in the nature of commercial transaction between the parties, then in the absence of proving contrary by the department, the addition to the extent of ₹ 58 lacs is not justified. This view is fortified by series of decisions as relied upon by the assessee. Hence, in view of the above discussion and in the facts and circumstances of the case, the addition to the extent of ₹ 58 lacs u/s 2(22)(e) is deleted and consequently, the addition of balance amount of ₹ 7,99,604/- is confirmed. 6. Ground no. 2 is regarding disallowance of ₹ 65,429/- on account of interest. 6.1 The assessee is a partner in two partnership firms i.e M/s Aditya Developers and M/s Sagar Constructions. She earned interest income of ₹ 1,08,333/- on capital with Aditya Developers . The interest income was adjusted against interest payment of ₹ 65,429/- to M/s Sagar Construction. The Assessing Officer disallowed the claim of the assessee on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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