TMI Blog2015 (3) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... ind no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue and the ground raised by Assessee in the C.O are dismissed. - Decided in favour of assessee. Interest expenses - CIT(A)deleted the disallowance - Held that:- We find that A.O while making the addition has noted that no details were furnished by the Assessee in support of his claim of interest for expenses. We find that before ld. CIT(A) Assessee had filed details on the basis of which the ld. CIT(A) has granted relief to the Assessee. Rule 46A of the I.T. Rules stipulate that CIT(A) for the reasons to be recorded, can admit the evidence produced by the Assessee in the appeal. However, the evidence produced by the Assessee under Rule 46(A)(1) cannot be considered on merits under Rule 46A(3) unless the A.O is given an opportunity to examine the evidence or document produced by the Assessee. In the present case, we find that on the additional evidence submitted by Assessee before CIT(A), the same were not confronted to the A.O nor any remand report was obtained from A.O. Therefore are of the view that in the interest of justice, the A.O should have been given an opportunity to examine the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.12.2011 and the total income was determined at ₹ 2,27,67,920/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 24.12.2012 granted substantial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and Assessee has also filed a C.O. The grounds raised by Revenue reads as under:- 1. The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts' in accepting the 'Samjuti Karar' as valid transfer document. 1A The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in deleting the addition made in the hands of Assessee on account of 100% profit in document price of land sold as against 25% offered by Assessee. 2. The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in deleting the disallowance of ₹ 6,70,519/- made on account of interest expenses. 3.On the facts and in the circumstances of the case, the Ld. Commissioner of Income-tax (Appeals)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4.It is therefore, prayed that the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount shown by the Assessee, considered the difference amount of ₹ 2,06,63,064/- as income of the Assessee. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A). Ld. CIT(A) after considering the submissions of the Assessee decided the issue in favour of the Assessee by holding as under:- 5.1.2 On the basis of above discussion and consideration of facts following conclusion can be drawn: (a) The A.O.'s contention that family agreement (Samjuti Karar) dt. 01/08/07 is a part of planning is not substantiated. The A.O. failed to highlight the evasion of tax through such planning. (b) Appellant as well as other family members are in the business of real-estate i.e. purchase sale of land apart from other business and the income derived from sale of land is taken under the head 'income from business profession.1 Otherwise also, considering the fact that time period between purchase sale is less than 3 years and appellant got converted the Agricultural land to Non Agricultural land, the same is sufficient intention for business activity akin to Adventure in the nature of business trade. The A.O. got confused with the business incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deeming provisions of section 50C of the Act for replacement of sale consideration in actual by the valuation adopted by stamp valuation authority comes in to play. No such deeming provisions are there under the head 'income from business profession. (f) The profit out of sale of these land is duly reflected by the co owners in their respective return of income for their respective share. In one of the case the department has accepted the same. As far as purchase consideration are concerned, the appellant was having sufficient fund in the name of such co owner at the time of purchase as well as at the time of apportioning the money in the respective account. It is not that appellant utilized his own money for the purchases and later on recovered the money from co owner. The land records were also upgraded to include the name of co owners. The 'family agreement' (Samjuti Karar) is in the form of a ratification of an oral agreement which is permissible in law. In the case of partnership also, orally agreed partnership can he ratified through a written deed in subsequent reasonable period with the date of such agreement duly as well as regally accepted by law. (g) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit and Loss account, A.O noticed that Assessee has claimed interest expense of ₹ 6,70,519/-. The Assessee was asked to provide the nexus with evidence to prove that the interest bearing funds have been utilized to earn the business income. A.O noted that Assessee has not proved by furnishing any evidence that the amount borrowed was utilized to earn business income. He accordingly disallowed the claim of the Assessee. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A). Ld. CIT(A) decided the issue in favour of the Assessee by holding as under:- 5.3.11 The Ground No. 6.1 is related to disallowance of interest expenses in the absence of appellant's proper explanation to A.O,, who held that there were no evidences with regard to utilization of the amount to earn business income has been furnished and relying on decision in the case of B H Sesechron Ptv. Ltd. Vs. CIT (supra) disallowed the same. The A.O. observed that in the absence of any detail showing nexus between interest bearing funds utilized for non interest bearing advances to sister concern, the interest so paid is disallowable. The A.O. totally over looked the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences of utilization of funds for the purpose of business and which Assessee had failed to furnish. He therefore submitted that in such circumstances, the A.O was fully justified in making the addition. He thus supported the order of A.O. The ld. A.R. on the other hand reiterated the submissions made before ld. CIT(A) and supported his order. 14.We have heard the rival submissions and perused the material on record. We find that A.O while making the addition has noted that no details were furnished by the Assessee in support of his claim of interest for expenses. We find that before ld. CIT(A) Assessee had filed details on the basis of which the ld. CIT(A) has granted relief to the Assessee. Rule 46A of the I.T. Rules stipulate that CIT(A) for the reasons to be recorded, can admit the evidence produced by the Assessee in the appeal. However, the evidence produced by the Assessee under Rule 46(A)(1) cannot be considered on merits under Rule 46A(3) unless the A.O is given an opportunity to examine the evidence or document produced by the Assessee. In the present case, we find that on the additional evidence submitted by Assessee before CIT(A), the same were not confronted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal. 19. Ground no. 2 is with respect to disallowance of ₹ 14,32,167/- on account of various expenses like depreciation, interest expenses, salary expenses etc. 20.A.O noticed that Assessee had claimed various expenses aggregating to ₹ 14,32,167/- as listed at page 20 of the assessment order. He noted that there appear to be no business activity carried out by the Assessee and therefore there was no justification for claiming the expenses. He further noted that since the entire share of 6.25% of land consideration was added on substantive basis in the case of Mafatlal Patel, there appear to be no justification for claiming the expenses. He accordingly disallowed the same. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A). Ld. CIT(A) decided the issue by holding as under:- 5.3.11 Ground No. 5.1, 5.2 and 5.3 are related to disallowance of various expenses amounting to ₹ 14,32,167 since appellant incurred and claimed the same against business income of real estate out of the profit of sale of land (6.25% share) at village Sughad and A.O. held such transaction as not belonging to appellant but that of his father. The addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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