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TMI Blog2014 (3) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... - made by the Assessing Officer on account of disallowance of interest. 2. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs.5,83,673/- made by the Assessing Officer on account of disallowance of interest. 3. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in directing the Assessing Officer not to apply the Rule 8D of the Income Tax Rules, 1962 but to work out the disallowance u/s 14A of the Act, if any, having regard to the proximity of expenses to earn the income which does not form part of total income. 4. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 3. We have heard the arguments of both the sides and perused the relevant material placed before us. The Assessing Officer made the disallowance of interest of Rs.4,79,773/- on the ground that advance of Rs.51,60,000/- to eleven persons was continuing since long and no interest whatsoever was being charged on these loans. He, therefore, disallowed the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.29 crore only. In view of these facts and the principles laid down in the case laws cited by the learned AR, i.e. SA Builders Ltd. (SC) supra, Reliance Utilities Ltd. (Bom) supra and Hotel Savera Ltd (Mad) supra, I am of the opinion that the disallowance of interest of Rs.5,83,673/- is not justified. Accordingly, the disallowance is deleted." 5. After considering the facts of the case and the arguments of both the sides, we do not find any infirmity in the order of learned CIT(A). With regard to advance of Rs.1.31 crores, the CIT(A) has recorded the finding that these advances were for the purpose of business because the assessee is in the business of real estate, share trading etc. and these advances were given for the purpose of purchase of property or as share application money. He also observed that the own funds available with the assessee are Rs.10.39 crores while such advances are only Rs.1.31 crores. With regard to the advance of Rs.51,60,000/-, again, the CIT(A) has recorded the finding that these advances were given in the earlier years and no interest was disallowed in those years. There is no nexus of the borrowed money with these advances and the own funds availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rning of exempt income and compute the disallowance under Rule 8D. Perhaps his direction is only to verify the working of disallowance under Rule 8D and whether the disallowance is correctly worked out as per Rule 8D. We, therefore, do not find any infirmity in the above direction of the CIT(A). The same is also sustained and ground No.1 of the Revenue's appeal for AY 2008-09 is rejected. 9. The only ground now left is ground No.3 of the Revenue's appeal for AY 2008-09 which reads as under:- "That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs.2,32,930/- made by the Assessing Officer u/s 50C of the Income Tax Act, 1961." 10. The facts of the case are that during the accounting year relevant to the assessment year under consideration, the assessee sold the following assets:- (i) The flat situated at First Floor of Rupali Building, 17/1, Madan Mohan Malviya Marg, Lucknow sold at Rs.8,00,000/- on 22.01.2008. (ii) Room No.205, Chintels House, 16 Station Road, Lucknow - sold for Rs.30,90,500/- on 08.12.2008. 11. That the stamp duty valuation of both the properties was more than the actual sale consideration. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to second flat, i.e., flat at Chintels House. From a perusal of the assessment order, it is not clear whether the assessee objected to the valuation made for stamp duty purposes of both the flats or one flat. If assessee objected to the valuation of one flat only, i.e., flat at MM Marg, then the addition with regard to computation of capital gain of the second flat cannot be deleted on the ground that the same was not referred to the DVO. Sub-section (2) of Section 50C reads as under:- "(2) Without prejudice to the provisions of sub-section (1), where-- (a) the assessee claims before any Assessing Officer that the value adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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