TMI Blog2015 (12) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... d modified tenancy agreement has been cancelled by the tenant due to failure on the part of the assesses to complete the construction in time. In these circumstances, we find no infirmity in the order of the ld.CIT(A) deleting the addition of ‘rental receipts’ as ‘Income from Other Sources’ - Decided against revenue Fresh share capital received by the assesses - unexplained cash credit u/s 68 - Held that:- AO had clearly stated in his remand report dated 4.5.2012 that from the documents and papers filed and subsequent enquiries conducted by him in remand proceedings, the receipt of share application money by issue of further shares stand explained. In these circumstances, we hold that there is no reason for the revenue to be aggrieved as the Learned AO himself had given a categorical finding that the receipt of share capital stands explained pursuant to his independent verification. We have already held in the previous ground in favour of the assessee that there is no violation of Rule 46A of the IT Rules by the Learned CITA in as much as the remand report has been called for by the Learned CITA only after admission of additional evidences by him and Learned AO had been given du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards loan repayment to State Bank of India (In short SBI ). Later at the instance of State Bank of India, which agreed to grant loans to the assesses for completing the balance super structure in the subject mentioned building situated at 145, Rash Behari Avenue, Kolkata-29, the assesses entered into a modified tenancy agreement on 18-08-2005. Under the said modified tenancy agreement, which has been mutually agreed between the assesses and M/s. SDPL, the assessee(s) shall complete the entire construction of the super structure ( i.e. incomplete portion). It was also mutually agreed in the modified tenancy agreement that in case if the assesses were not able to complete the balance super structure of the building within the stipulated time i.e by 31.12.2005, then the rentals paid by the tenant as per the original tenancy agreement shall be treated as advance and the same shall become recoverable from the assesses by the tenant. Both the original agreement and the modified tenancy agreement are subjected to Notarial Certificate pursuant to section 8 of the Notaries Act, 1952. For the sake of convenience, the relevant clauses of the original tenancy agreement dated 18-08-2005 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement is only an afterthought. 2.4. On first appeal, before the ld. CIT(A) the assessee produced all relevant documents i.e. original tenancy agreement, modified tenancy agreement, all the correspondences exchanged between the assesses and the tenant which eventually led to cancellation of the modified tenancy agreement, among others. The assesses also pleaded before the ld.CIT(A) that all the aforesaid documents were duly submitted before the ld.AO except the modified tenancy agreement. The ld.CIT(A) duly called for the remand report from the ld.AO in due compliance of Rule 46A of the IT Rules. In the said remand report, the ld.AO did not dispute the contents and genuineness of the modified tenancy agreement, but only sought to raise a technical ground on admission of the additional evidences by the ld.CIT(A). The ld. CIT(A) having satisfied with the various documents as submitted by the assessee before him and undisputed findings of the ld.AO in the remand report agreed with the contentions of the assesses that the subject mentioned receipts from M/s. SDPL amounting to ₹ 49,49,677/- shall be treated only as advances as the assesses have not honoured their commitment of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to withdraw from the contract permanently. He also argued that the tenant in order to have control over the subject mentioned property sought to pay the monies for the period of 4 months and 13 days, which in any case is repayable by the assessee to the tenant if the property is never let out to tenant and hence the interest of the tenant is protected. Accordingly, he pleaded before us that the ld.CIT(A) has rightly approached the entire gamut of transactions and vehemently supported the order of the ld.CIT(A). 2.7. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. The facts mentioned herein above remain undisputed and hence the same are not re-iterated for the sake of brevity. We find lot of force in the arguments of the Learned AR. We find that the tenant had paid these monies with bonafide belief that the assesses would be able to complete the construction sooner or later so that the property in a prime locality would not go out of their hands which in turn would turn detrimental to the business interest of the tenant. We also find that the payment of ₹ 49,49,677/- was directly made by the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain conditions on its part. These conditions ( i.e. completion of the building construction) are not satisfied by the assesses and hence the subject mentioned receipt changes its colour and character and accordingly gets converted into advance till the date of completion of the construction of building. We also find from the remand report that the ld.AO in his remand report had not objected to the contents mentioned in the modified tenancy agreement, correspondences exchanged between the assesses and the tenant. The said modified tenancy agreement has been cancelled by the tenant due to failure on the part of the assesses to complete the construction in time. In these circumstances, we find no infirmity in the order of the ld.CIT(A). We uphold the same. Ground no.1 raised by the revenue is dismissed. 3. The last point to be decided in this appeal is as to whether the Learned AO is justified in treating the fresh share capital received by the assesses amounting to ₹ 25,55,000/- each as unexplained cash credit u/s 68 of the Act in the facts and circumstances of the case. 3.1. The brief facts of this issue is that the assesses received fresh share capital in their respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 4.5.2012 that from the documents and papers filed and subsequent enquiries conducted by him in remand proceedings, the receipt of share application money by issue of further shares stand explained. In these circumstances, we hold that there is no reason for the revenue to be aggrieved as the Learned AO himself had given a categorical finding that the receipt of share capital stands explained pursuant to his independent verification. We have already held in the previous ground in favour of the assessee that there is no violation of Rule 46A of the IT Rules by the Learned CITA in as much as the remand report has been called for by the Learned CITA only after admission of additional evidences by him and Learned AO had been given due opportunity on the additional evidences. Hence we hold that the receipt of share capital stands clearly explained in all the cases before us and there is no need to make an addition u/s 68 of the Act. Accordingly, the ground no. 2 raised by the revenue is dismissed in all the cases. 4. In the result, all the appeals of the revenue against the respective assessees are dismissed. Order Pronounced In The Open Court On 16 /12/2015. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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