TaxTMI 
TaxTMI 
2015 (8) TMI 167
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....aluation of this property to the DVO, who determined its value at Rs. 40,50,000/-. It was also intimated that the assessee had made additions/alterations by way of furniture and fixtures amounting to Rs. 3,81,999/-. On being called upon to explain as to why difference of Rs. 5,85,000/- (Rs.40,50,000/- minus Rs. 34,65,000/-) should not be added as unexplained investment u/s 69 and, further, why a sum of Rs. 3,81,999/- be not added as unexplained expenditure u/s 69C for additions/alterations to the said property, the assessee submitted that besides the above sale consideration of Rs. 34.65 lac, the assessee also paid Rs. 1,76,300/- towards stamp duty, Rs. 30,880/- towards registration fees and Rs. 1,50,000/- towards cost of parking space. As regards the sum of Rs. 3,81,999/-, the assessee submitted that renovation was carried out in the succeeding financial year 2008-09 and the investment/expenditure of Rs. 3,81,999/- was disclosed in the balance sheet of M/s NGK Trading Company. Not convinced with the assessee's submissions, the AO made addition of Rs. 9,39,999/- (Rs.5,85,000/- plus Rs. 3,81,999/-). The ld. CIT(A) ordered for the deletion of these additions. The Revenue is aggrieved....
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....Here it is relevant to mention that the legislature has carried out amendment by the Finance Act, 2013 w.e.f. 1.4.2014 by substituting section 56(2)(vii)(b) providing that where an individual or HUF receives any immovable property, inter alia, for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs. 50,000/-, the stamp duty value of such property as exceeded such consideration shall be taxed as 'Income from other sources.' The legislature has brought in section 56(2)(vii)(b) with the sole intention of bringing such under-payment of sale consideration of immovable property to tax. This provision has been enshrined w.e.f. the AY 2014-15 and is not applicable retrospectively to the AY 2008-09 under consideration. Since this provision is prospective and there is no other authentic evidence of the assessee having actually made any investment over and above the declared sale consideration, we are of the considered opinion that the ld. CIT(A) was justified in deleting the addition to the extent of Rs. 5,85,000/-. 4. As regards the other amount of Rs. 3,81,999/-, we find that the assessee made a categorical claim before the authorities that th....
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....vancing loans in various segments, the first being loans and advances of Rs. 57,40,000/- given to sister concerns, viz., Exotic Fresh Fruits Produce Ltd., and M/s Narco Exports. In this regard, it is pertinent to note that the assessee charged interest @ 11% on such amounts which was shown as income in its Profit & Loss Account. It is obvious that when interest has been received @ 11% as against payment of interest @ 10% to 11% on the loans taken by the assessee, there can be no question of making any disallowance of interest. 7. The second component is additional payment of Rs. 16,05,662/- made by the assessee for purchase of shop at South City, Gurgaon, which was shown as Investment in the balance sheet of M/s NGK Trading Company. We have gone through the assessee's balance sheet of NGK Trading Company, a copy of which is available at page 5 of the paper book. It can be seen that the assessee made investment of Rs. 16,05,662/- in shop at South City-II, Gurgaon during the year under consideration and the remaining amount of Rs. 10 lac was invested in the preceding year, making the total figure of investment in shop at Rs. 26.05,662 appearing in the balance sheet. The case of the ....
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.... to sister concerns, namely, Exotic Fresh Produce Pvt. Ltd., and Narco Exports. The assessee charged interest on such advances to sister concerns at 11% against the payment of interest at 10% to 11% on loans and advances taken by him. As such, there can be no question of making any disallowance of interest towards the use of interest bearing funds for non-business purpose. 10. The next item is cash and bank balance of Rs. 1,50,17,867/- which includes demand drafts in hand amounting to Rs. 51,03,840/-. The very fact that this much cash and bank balance is available with the assessee at the year end, can't be a ground for making any disallowance towards the interest paid on interest bearing loans taken by the assessee for the simple reason that retaining of amount in cash and bank balances does not in any manner indicates the diversion of funds for non-business purpose. It is for the assessee to decide as to how he has to conduct his business by keeping the borrowed funds in cash or otherwise. If loan is taken for business purpose and the loan is still in the possession of the assessee, the interest paid thereon has to be allowed as deduction. 11. The next item is repayment of old ....