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2015 (9) TMI 1296 - ITAT DELHI

2015 (9) TMI 1296 - ITAT DELHI - TMI - Disallowance of expenses out of the improvement expenses to the property - CIT(A) restricted disallowance to 50% - Held that:- The proprietor of M/s Verma Associates though appeared before the AO and accepted the fact of carrying out work however, he failed to substantiate his oral statements with documentary evidence in the form of books of account. The proprietor of M/s Vinayaka Trade and Agency who supplied the Air Conditioners, on one hand admitted to h .....

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exact nature of item is not mentioned. Further the registered sale agreement though contains the clause that sale price of the said property include the cost and expenses for fitting and all other facilities provided in the said property, however, there is no specific mention that plastic moulded furniture was part of any fittings. Moreover, the buyer has specifically denied to receive any Air Conditioner or fittings. In view of the above findings, the action of the CIT(A) in restricting the di .....

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he Petitioner : Shri Ashok Jain, CA For the Respondent : Shri Robin Rawal, Sr. DR ORDER These four appeals are filed by different assessees against the separate orders passed by the Ld. CIT(A)-III, New Delhi relating to Assessment Year 2010-11. Since the issues involved in these appeals are common and identical hence, they are being consolidated and disposed of by this common order for the sake of convenience, by dealing with ITA No. 3834/Del/2011 (AY 2010-11). 2. The grounds raised in the ITA N .....

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n carried on the property owned by assessee company," which is based on surmises and conjectures, contrary to principles of natural justice, facts and provision of law as such the action of CIT(A) need to be undone and the disallowance of 50% of total expenditure confirmed by him needs to be deleted. 3. That the Commissioner of Income Tax (A)-III has erred on facts and in law in confirming the 50% adhoc disallowance of total expenditure of ₹ 11,59,314/- which is based on surmises and .....

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ief are that a house building property namely B-544, New Friends Colony, New Delhi was co-owned by all the assessees, each having unspecified ¼ share in the property. The property was purchased by all the four assessees through separate registered sale deed dated 21.05.2007 for a consideration of ₹ 37.50 lakhs paid by each. The property was sold on 28.07.2009 by all the four assessees through a common registered sale deed to M/s Radhey Krishna Infratech Pvt Ltd for a sale considerat .....

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tils of the improvement expenses was filed by the assessees as under: S.No. Name Amount Remarks 1. M/s Verma Associates 31,06,880 Paid for Repair Works 2. M/s Vinayak Trade and Agency 96,000 Paid for account purchase 3. M/s Nutech Engg. Corporation 14,34,376 Paid for Plastic Moulded Furniture 43,37,256 The Assessing Officer carried out enquires from persons in vicinty of the property through Inspector of his office and asked the assessee companies to produce the parties who had carried out the r .....

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oks of account and vouchers etc in support thereof and on subsequent date he filed a letter cliaming that books of account etc were lost by his employee and a FIR was lodged by him in this regard. Sh Ramesh Baheti, the proprietor of M/s Vinayak Trade and Agency also appeared before the Assessing Officer in compliamce of summon and admiited the fact of supplying the Air conditioners but denied installation of the Air conditioners. The notice u/s 133(6) of the Act was sent to M/s Nutech Engg, Corp .....

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issued summon at the new address for confirming sale and installation of furniture, which was duly served but was not complied. The Assessing Officer also carried out enquires from the buyer of the property and the buyer declined to have handing over of any furniture, fittings and air conditioner to him by the assessees. After considering written explanations of the assessees on the show cause notice of proposed disallowance of share of improvement expenses in the hands of each company, the Ase .....

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gned order dated 22.5.2014 has partly allowed the appeal. 5. Against the aforesaid order dated 28.3.2013 of the Ld. CIT(A), assessee is in appeal before the Tribunal. 6. Ground Nos. 1, 4, & 5 of the assessees being the general in nature and need no adjudication. 7. Ground no. 2 & 3 of the assessees relates to confirming of 50% of expenses out of the improvement expenses of ₹ 11,59,314/- disallowed by the AO. 8. The Ld. AR of the assessee vehemently argued that all the parties are i .....

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e Bench of Delhi in the case of Midland International Ltd. having citation 109 ITD 198 (DEL) (2007). He further placed reliance on decisions in the case of ACIT V. Allied Constructions 26 SOT 50 (DEL), CIT V. Dr Ratan Kumar Singh 35 Taxmann.Com 441(All))(2013), DCIT V. M/s Epcot Securities Pvt Ltd ITA No. 359/Mum/2009, Omprakash Joshi V. ITO 123 TTJ 246 (JODH)(2009), ACIT v. Intermedia Cable Communication (P.) Ltd. 146 TTJ 476 (Pune), DCIT v. Sophisticated Marbles and Granites Industries 3 ITR ( .....

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) vi) ACIT v. Intermedia Cable Communication (P.) Ltd. 146 TTJ 476 (Pune) vii) DCIT v. Sophisticated Marbles and Granites Industries 3 ITR (Trib) 220 (Del): viii) Rohini Builders 76 TTJ 521, confirmed by Gujarat High Court at 256 ITR 360 (Guj) and approved by Supreme Court at 254 ITR (St) 275 (SC) ix) CIT v. Dwarkadish Investment (P.) Ltd. 194 Taxman 43 (Del) x) CIT v. Bhawani Oil Mills Pvt. Ltd. (2011) 239 CTR 445 (Raj.). xi) Prem Kumar 161 Taxmann 50 (All). 9. On the other hand, the Ld. DR rel .....

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ore the Ld. CIT(A), who vide impugned order dated 22.5.2014 has partly allowed the appeal of the assessee by disallowing 50% of the total expenditure. The relevant portion i.e. para no. 6.1 to 6.3 of the Ld. CIT(A) s finding is reproduced as under:- "6.1 It is seen that the only question which requires to be adjudicated is whether the repairs work/improvement etc. have been carried by the appellant in respect of the premises no. B-544, New Friends Colony, New Delhi, which was sold to Radhey .....

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uot; 6.2 It is also a fact that Verma Associates to whom payment of ₹ 31,06,880 have been made appeared before the AO and they have confirmed having carried the repair work but because of theft of books of accounts they were unable to produce the same. In my view when the payments have been made by an account payee cheque, and the party receiving the same has confirmed that they have carried on the repair jobs, in that event, AO is not right to come to the conclusion that no work is carrie .....

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ency who supplied the Air Conditioners admits that the account were sold to the appellant but they did not install the same. In my view it is quite possible that the Air conditioner may be got installed by the appellant from somewhere else. And it is also quite possible that after the sale of the property, the purchaser might have sold the same outside the books of accounts and therefore there is a force in the appellant's arguments that in the information procured from purchaser under Secti .....

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levied for non-compliance by him. Thus, if the AO has no levied any penalty or he has not enforced the attendance than in that event without going into the root and investigating the matter further, in my view, solely relying on the basis of non attendance, AO cannot come to the conclusive proof that no repair work has been done. 6.3 Thus, taking into consideration the totaling of all the facts and evidences available on record, I am of the view that the AO has not been able to prove conclusivel .....

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arly states that ''sale price is inclusive of all fitting etc." Thus looking into the evidences available in my humble view, 50% of the total expenditure are disallowed, as it will meet the ends of justice. In the result the addition in the hands of appellant stands confirmed." 10.1 After perusing the aforesaid finding of the Ld. CIT(A), I am of the view that the Assessing Officer disallowed the improvement expenses of ₹ 11,59,314/- to the property. The ld. Commissioner o .....

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/s Vinayaka Trade and Agency who supplied the Air Conditioners, on one hand admitted to have sold the Air Conditioners to the assessee but on the other hand stated that he did not install the same. Further, the assessee has not claimed any separate expenses on installation of Air conditioners. M/s Nutech Engineering Corporation did not comply with the summon issued by the AO. On perusal of the Bill of M/s M/s Nutech Engineering Corporation which is filed at page no. 104 of paper book of the asse .....

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