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2015 (4) TMI 833 - GUJARAT HIGH COURT

2015 (4) TMI 833 - GUJARAT HIGH COURT - TMI - Bogus expenses - Indirect expenses including interest on Reliance Capital loan - ITAT deleted the addition - Held that:- CIT(A) has elaborately discussed the issue and has recorded that the assessee was involved in the business of “sub-letting” of properties, and during the relevant year, it had taken 45 properties on rent and paid ₹ 49.20 lacs, and while on subletting he received ₹ 56.24 lacs resulting into net surplus of rent shown as b .....

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S on the interest payment wherever applicable. There being no material before us to controvert these findings of the CIT(A), we hold that there is no mistake in the order of the CIT(A) in deciding the issue in favour of the assessee, and accordingly, we hold that it could not be proved by the Revenue that the assessee’s expenditure were bogus or not incurred for business construction - Decided in favour of assessee.

Valuation of work-in-progress - ITAT deleted the addition - Held tha .....

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ibunal as well as the learned CIT(A) in deleting the addition - Decided in favour of assessee. - TAX APPEAL NO. 204 of 2015 - Dated:- 31-3-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ. FOR THE APPELLANT : MRS MAUNA M BHATT, ADVOCATE ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad, C Bench (hereinafter referred to as the Tribunal ) dated 05.09.2014 passed in ITA No. .....

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(A) Whether the Appellate Tribunal has substantially erred in deleting the addition of ₹ 56,04,681/- claimed as indirect expenses including interest on Reliance Capital loan when the assessee has not shown any business income? (B) Whether the Appellate Tribunal has substantially erred in deleting the addition of ₹ 73,48,000/- on the premise that the valuation of work-in-progress was supported by the certificate of Engineer without appreciating that the assessee has arranged a false c .....

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e Income Tax Act along with the detailed questionnaire were issued. That the assessee claimed and shown indirect expenses of ₹ 56,04,681/- which includes interest on Reliance Capital Bond of ₹ 27,41,274/-. That the assessee also shown work in progress of ₹ 1,01,52,000/- relying upon the certificate of structural engineer. That the Assessing Officer doubted the certificate of work in progress issued by the structural engineer certifying that the work in progress was of ₹ 1 .....

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fficer in making the aforesaid additions, the assessee preferred the appeal before the learned CIT(A) and the learned CIT(A) allowed the appeal preferred by the assessee deleting the aforesaid additions. 2.2. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) deleting the additions made by the Assessing Officer, the Revenue has preferred the appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal has dismissed the said appeal confir .....

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ing Officer is concerned, from the order passed by the learned CIT(A) while deleting the aforesaid addition, it appears that the learned CIT(A) has considered, in detail, and given cogent reasons in paragraph No.5.3. What is weighed with the learned CIT(A) is seems to be that the assessee used the said income for the business purpose and, in fact, even paid the TDS on the income of interest on Reliance Capital Bond. The aforesaid deletion has been confirmed by the learned Tribunal by observing i .....

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8377; 47.60 lacs was earned as rent and shown under the head income from house property . The balance amount of ₹ 114.34 lacs was claimed by the assessee to have been utilized for business of construction. The CIT(A) has further recorded that this fund flow has substance to slow clear nexus of utilization of borrowed fund for earning income in the form of interest, rent income and business income of construction, and has paid TDS on the interest payment wherever applicable. There being no .....

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as the order passed by the learned CIT(A) deleting addition of ₹ 56,04,681/- which were made on considering the same as bogus expenses. Therefore, proposed question No.1 is answered against the Revenue. 5. So far as the question No.2 with respect to the addition of ₹ 73,48,000/- made by the Assessing Officer being difference in valuation of closing work in progress is concerned, it is required to be noted that the Assessing Officer made the aforesaid addition rejecting the certifica .....

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ved in paragraph No.7 as under:- 7. We have considered rival submissions and orders of the AO and the CIT(A). We find that the CIT(A) has passed a well reasoned speaking order on this issue. The CIT(A) has recorded that the AO has not rejected books of accounts of the assessee and has made addition to closing stock based on the statement of Shri J.P. Shah and inquiry from Inspector without confronting to the assessee. We are unable to appreciate the stand of the AO that structural engineer, Shri .....

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