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2016 (3) TMI 1021

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..... nue authorities that the assessee has paid anything beyond whatever has been disclosed we find no infirmity in the order of the CIT(A) deleting the addition - Decided in favour of assessee Deduction u/s 80IA(4)(i) in respect of profit earned by the assessee from development of infrastructure facilities - Held that:- We find merit in the submission of the Ld. Counsel for the assessee that netting of interest should be allowed for computation of deduction u/s.80IA in the light of the ratio of the decision of Hon’ble Supreme Court in the case of ACG Associated Capitals Vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA ]. We accordingly set aside the order of the CIT(A) and direct the AO to recompute the deduction u/s.80IA by netting the interest.- Decided in favour of assessee Deduction on account of proportionate interest on diversion of funds for non business purposes - CIT(A) allowed the claim - Held that:- The factual finding given by the CIT(A) that the advances were made to the sub contractors namely Sunil Construction and Ashok Chipre since 2001-02 and 2002-03 and therefore disallowance, if any, could have been made in those years and not in this year also could not be c .....

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..... tioned against these workings. In my opinion, the contents of page 7 do not reflect the unaccounted expenses of the appellant and the assessing officer is directed to reduce this sum from the total for assessment year 2010-11 and thereafter work out the expenses incurred on the basis of these papers as additional income of the assessee. - Decided in favour of assessee - ITA Nos.451 to 455/PN/2013, ITA Nos.228 to 231/PN/2013 - - - Dated:- 9-3-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Satish Mody and Shri O.S. Prabhu For The Department : Shri S.K. Rastogi, CIT ORDER PER R.K. PANDA, AM : ITA No.451/PN/2013 filed by the Revenue is directed against the order dated 29-11-2012 of the CIT(A), Kolhapur relating to Assessment Year 2005-06. ITA Nos.452/PN/2013 to 455/PN/2013 filed by the Revenue and ITA Nos.228/PN/2013 to 231/PN/2013 filed by the assessee are Cross appeals and are directed against the common order dated 29-11-2012 of the CIT(A) Kolhapur relating to Assessment Years 2007-08 to 2010-11 respectively. For the sake of convenience all these appeals were heard together and are being disposed of by this common order. .....

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..... the above address 29,62,480/- 39,67,000/- 10,04,520/- 5. The AO, therefore, asked the assessee to explain as to why the difference of ₹ 4,15,196/- relating to A.Y. 2005-06 should not be added to the total income of the assessee for the impugned assessment year. It was explained by the assessee that the valuation officer has made valuation of the property on presumptions and not on the basis of comparative rates prevailing in the market. It was argued that the Ist sale instance taken by the DVO is a shop on the ground floor whereas the assesse s office premises is on the first floor. Further, in the second instance the rate paid by the assessee per sq.ft. is more than the rate per sq.ft. of the sale instance for which the DVO ignored the sale instance. It was further submitted that the assessee being a company provisions of section 56(1)(vii)(b) are not applicable. 6. However, the AO was not satisfied with the explanation given by the assessee and brought to tax the difference between the value determined by the DVO and the value declared by the assessee and made addition of ₹ 4,15,196/- u/s.69B .....

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..... resumptions and not on the basis of comparative rates prevailing in the same building or in the vicinity. I find that the assessing officer was also apprised of these facts. However, the contentions were not accepted without assigning any reason. Under these circumstances, I hold that the additions have been made without rebutting the evidences put forth by the assessee in respect of its contention that the DVO has adopted arbitrary methods for valuing the properties in question and the same can only be stated to be on the basis of presumptions and surmises. The assessee has also demonstrated that on a comparative basis, it has paid more or similar price for the flats purchased by it. The appellant succeeds on this ground. 9. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 10. The Ld. Departmental Representative heavily relied on the order of the AO. 11. The Ld. Counsel for the assessee on the other hand while supporting the order of the CIT(A) submitted that the DVO instead of considering comparable cases in the same building has considered sale instances in some different buildings. According to the Ld. Counsel for the assessee a comparison h .....

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..... f the valuation report of the DVO, therefore, in absence of any contrary material/evidence brought before us by the revenue authorities that the assessee has paid anything beyond whatever has been disclosed we find no infirmity in the order of the CIT(A) deleting the addition. We accordingly uphold the same and the ground raised by the revenue is dismissed. ITA No.228/PN/2013 (A.Y. 2007-08) (By Assessee) : 13. Grounds raised by the assessee are as under : 1.0 On the facts and in law, Ld. CIT(A), Kolhapur eared in confirming the shifting of undisclosed income for the asst. years from 2007-08 to 2010-11 by bringing to tax ₹ 2,75,17,600/- for the asst. year under appeal, on the basis of papers seized from Technical Director of Joint Venture partner M/s Mahalakshmi Infra-projects Limited, Pune during the action u/s 132( 4) held on. 24-09-2009 instead of allowing appellant's appeal by accepting undisclosed income offered by it for the asst. year 2009-10 2010-11 on the basis of papers seized from it's own premises during the course of search conducted on 23-10-2009 1.1 Ld. CIT(A) ought to have appreciated the fact that the Joint Venture/consortium agreem .....

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..... in the case of MIPL. 15. The AO noted that during the course of search certain loose papers marked Bundle No.1 containing 40 loose sheets were found from the residence of Shri Dhirendra Anant Bhat, Technical Director of MIPL. The above loose sheets indicated evidences of speed money depicting the name of the project, amount, date of payment, name of payer, name of the recipient, designation of the prime recipient, share of such unexplained expenditure between Mahalaxmi Infra Projects Pvt. Ltd. and its J.V. Partner B.T. Patil and sons, Belgaum Construction Company Ltd. etc. The main evidence of speed money payment relates to Ghodzhari project, a project of irrigation department of Government of Maharashtra undertaken by joint venture comprising of Mahalaxmi Infra Projects Pvt. Ltd. and B.T. Patil and sons, Belgaum Construction Company Ltd. The said seized documents contain details of total speed money paid in respect of Ghodzhari project upto 04-02-2009. The total speed money paid in respect of Ghodzhari Project as on 04-02-2009 amounts to ₹ 43,83,64,000/-. 50% of the above amounting ₹ 21,91,82,000/- relates to MIPL and the balance 50% of ₹ 21,91,82,000/- to B.T .....

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..... residence proves this fact beyond doubt. Moreover, seizure of documents of B.T. Patil sons in respect of speed money from the residence of Shri D.A. Bhat fortifies this fact. Had Shri D.A. Bhat not been maintaining accounts related to speed money there was no need to send speed money statements by B.T. Patil sons to Shri D.A. Bhat for reconciliation from time to time. (vii) There are irrefutable evidences to prove that the speed money payments have actually been made and they are not projected expenses. (viii) Infact, there are evidences to prove that speed money payments have been made at pre-tender stage in order to get the contract allotted. (ix) There are evidence to prove that speed money expenses are shared equally by the assessee company and B.T. Patil sons. 17. The AO further noted that in respect of the search conducted at the assessee s premises, an excel file was found, the hard copy of which was printed and seized as bundle No.1 containing 17 pages. The entries in these pages reflected unexplained expenses as payable, which was contrary to the evidences seized at Shri Bhat s premises which showed that unexplained expenses were actually incurred and pa .....

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..... ₹ 2100.87 lakhs Paid by MIL c. 18 07/08/2008 ₹ 1867.57 lakhs - do - d. 34 16/06/2007 Rs.1337.63 lakhs Paid by MIL the assessee, B T Patil Sons e. 32 26/02/2008 ₹ 2226.31 lakhs Paid by MIL 21. The assessing officer has also included scanned pages no. 17, 22, 28, and 31 of bundle no. 1, seized at Shri Bhat's residence which indicates that the documents pertained to the assessee. He noted that these were sent by the assessee to Shri Bhat for reconciliation. In connection with seized paper no. 32 above, the assessing officer has specifically pointed out that the sum of ₹ 2226.31 lakhs was already paid by 26/02/2008 and hence the assessee's contention that these were projected expenses, was totally wrong. Similarly, it was mentioned that the reverse side of page no. 16 also indicated that payments were actually made and were not projected expenses. Based on the a .....

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..... 25. However, the AO was not satisfied with the explanation given by the assessee. He observed that the Mahalaxmi-B.T. Patil, J.V. is formed for the purpose of Ghodzhari project and Koyna projects. During the course of search loose papers 1 to 40 (Bundle No.1) was found at the residence of Shri D.A. Bhat who is technical director of MIPL. The loose papers depicted date wise details of various unexplained business expenditure of Ghodzhari project of ₹ 43.8364 crores. Since share of MIPL in such expenses is 50%, managing director of MIPL Shri R.D. Shinde had admitted the additional income of ₹ 21.9182 crores. 26. According to the AO Shri D.A. Bhat, who is a trusted and loyal employee of MIPL working for nearly 2 decades, is involved in the project right from awarding of the contract till completion including release of payments etc. The seized documents are in anyway of Shri D.A. Bhat who has categorically stated u/s.132(4) that speed money payments have been made. The statement u/s.132(4) has immense evidentiary value. The seized documents contain quantum, date of payment of speed money, details of payer and recipient. Shri D.A. Bhat was maintaining the accounts rela .....

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..... t u/s.132(4) carries strong evidentiary value and observing that the statement of Shri D.A. Bhat is corroborated by independent evidences the AO made addition of ₹ 275.175/- lakhs to the total income of the assessee for the A.Y. 2007-08. While doing so, the AO made the following observation which is reproduced hereunder : 10.6.8 It is significant to note that all the evidences related to speed money payments in respect of Ghodzari project were found with assessee s JV Partner. Since business relation between assessee and M/s. Mahalaxmi Infraprojects Ltd. is an undisputed fact, the evidences found with assessee s JV partner would be equally applicable to the assessee. Moreover, page Nos. 31, 28, 22 17 of Bundle No.1 seized from residence of Shri D.A. Bhat are in fact documents of M/s. B.T. Patil Sons Belgaum Construction Pvt. Ltd. These documents were sent to Shri D.A. Bhat for the purpose of reconciliation as periodical reconciliation is very important in these matters related to cash payments. 10.6.9. As discussed above, when two evidences are there, one speaking and contemporaneous and the other clouded with doubts, the former commands superior evidentiary value. .....

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..... AY 2007-08 AY 2008-09 AY 2009-10 Total Total speed 550.35 2981.35 851.94 4383.64 money paid Lakhs Lakhs Lakhs Lakhs Assessee's 275.175 1490.675 425.97 2191.82 share ie 50% Lakhs Lakhs Lakhs Lakhs 11.3. In view of the foregoing, unexplained expenses in the form of speed money payments should be taxed in the year of payment. As per the said working aggregate amount of speed money for AY 2007-08 is ₹ 550.35 Lakhs. Assessee's share is 50% which works out to ₹ 275.175 Lakhs. Therefore, ₹ 275.175 Lakhs is required to be added for A Y 2007-08. 11.4. However, instead of disclosing the unexplained expenses in the year of payment, the assessee company disclosed the unexplained expenses related to Ghodzari project for the AYs 2009-10 and 2010- .....

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..... director of Mahalaxmi Infraprojects Ltd. and therefore there was no question of sharing information with him. Hence, Shri Bhat's statement and the documents seized from his possession are not reliable and has no evidentiary value. The assessing officer had failed to prove the correctness of statement made by the third party i.e. Shri D A Bhat. It was submitted that the assessing officer had merely presumed that pages no. 17, 22, 28 and 31 seized from Shri D A Bhat's residence belonged to the assessee. No evidence was brought on record to prove this fact. Further, the assessee was not confronted with these seized papers and was not allowed an opportunity to rebut the presumptions made by the assessing officer. 29. Relying on various decisions it was argued that presumption under section 132(4A)/292C of the Act is not available regarding correctness of contents of books of account etc. recovered from the third party. 30. It was submitted that neither Shri Bhat in his statement record under section 132(4) had stated that the documents belonged to the assessee nor the Investigation Wing had presumed so, otherwise, the provisions of section 153C would have come into force .....

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..... A Bhat. I had also deleted the protective additions made in assessment years 2009-10 and 2010-11. The relevant portion of the above appellate order is reproduced hereunder :- 56. I have given careful consideration to the contentions of the appellant with reference to the facts of the case. This is a case where Shri D A Bhat, Director in appellant company, has retracted from the statement given earlier on 24/09/2009 and Shri Ravindra D Shinde, Managing Director/Promoter of the appellant firm has brushed aside the revelations made by Shri D A Bhat as also the documents pertaining to Ghodzhari project, executed by the appellant firm in joint venture with B T Patil Sons (Belgaum) Construction Co. Ltd. retrieved from Shri D A Bhat's residence. As per the joint venture agreement dated 03/08/2007, Shri Navin B Patil (son of Shri B T Patil) and Shri D A Bhat were nominated to be the authorized representative of Joint Venture. Shri D A Bhat representing Mahalaxmi Construction Corporation Ltd. and Shri Navin Bhat was on board on behalf of B T Patil and Sons were witnesses to the joint venture agreement. These facts lead to an irrefutable conclusion that Shri D A Bhat was a close con .....

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..... stress at the time of making the statement. However, what is of relevance is the fact that it is not the case of Shri D. A. Bhat that the statements were untrue, or involuntary; or were made under undue influence, pressure or coercion. 60. Logically the burden to prove the admission as ineffective is on the maker. Thus, on the failure of the maker to prove that earlier stated facts were wrong, his earlier statements are sufficient to conclude a matter. At this juncture, it must be noted that the statement to bind the maker must be voluntary and only if it appears to have been obtained by coercion, inducement or threat it must be rejected. On retraction, earlier stated facts or admissions, lose their effect as a binding evidence and it may not be permissible for the income-tax authority to conclude a matter on the basis of earlier statement alone. At the same time, bald retractions of earlier admissions will not be enough and even after retraction such statements cannot automatically become nullities. Merely because a statement is retracted, it cannot become as involuntary or unlawfully obtained. For any retraction to be successful in the eyes of law the maker has to show as to .....

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..... explaining the reasons for making a statement earlier and giving substituted facts in support of retraction. Total denial of what has been stated in the previous statement cannot be said to be effective and it shall at best be deemed merely as a plea of denial which may not be of much help. 62. The important aspect of the matter is that during the course of search Shri D. R. Bhat came with an explanation that amounts written in the papers and documents discovered from him were in the nature of speed money or gratuitous payments made for the purpose of acquiring the contract for Ghodzhari project by the Joint venture between the appellant and B. T. Patil and Sons (Belgaum) Ltd. The explanation proffered had two limbs viz. one pertaining to the nature of expense recorded and the other pertaining to the period in which the expense was incurred. In respect of the nature of entries, Shri Ravindra D. Shinde, Managing Director of the assessee company, did not accept that the recordings made by Shri Bhat indicated instances of payment of speed money. What he admitted in the statement made under section 132(4) on 12/10/2009 was that the amounts in question reflected the income of the ap .....

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..... 'Bhat documents') that Shri Bhat was involved in the project since inception in more ways than just being responsible for technical matter. The fact that he used to maintain the account of unaccounted payments and was the appellant company's main interface with the joint venture partner B T Patil and Sons is apparent from the fact that B T Patil and Sons used to send the financial reconciliation statement to Shri Bhat on regular basis. The assessing officer has elaborately discussed the issue between pages no. 3 to 43 of the assessment order for the assessment year 2007-08. This aspect of assessment is repeated in assessment years 2008-09, 2009-10 and 2010-11. The assessing officer has also made the seized documents a part of the assessment order in these pages. The evidences indicate that certain amounts were paid to various persons on specific dates. In all the papers, the word 'paid' is very conspicuous. The seized material also refers to the persons who have made the payment i.e. either B T Patil and Sons or Mahalaxmi Construction Corporation Ltd. as the appellant company was known its earlier avatar. Page no. 39 mentions various dates on which payments wer .....

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..... of Shri D A Bhat and accordingly taxed the unexplained expenses in the assessment years 2007-08, 2008-09 and 2009-10. 64. Consequently, the protective additions of ₹ 3.20 crores in assessment years 2009-10 and ₹ 10.55 crores in 2010-11 stands deleted. The decision and the reasons given in the case of Mahalaxmi Infraprojects Ltd. will hold good in the instant case as well. Consequently, the additions made on protective basis of ₹ 5,05,03,000/- and ₹ 12,60,82,000/- in assessment years 2009- 10 and 2010-11, respectively, stands deleted since these amounts have been shifted and brought to tax in assessment years 2007-08, 2008-09 and 2009-10. 29. In respect of the contention of the appellant that Shri D A Bhat is a technical director of Mahalaxmi Infraprojects Ltd. and, therefore, there was no question of sharing of information with him is as also the contention that the material seized from Shri D A Bhat's possession is not reliable and has no evidentiary value because presumption under section 132(4)/292C of the Income-tax Act is not available if the books of account etc. is recovered from a third party, I need to point out that the contract for th .....

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..... sment year 2007-08 (repeated in other assessment years) and I concur with the findings given therein. 30. The contention of the appellant that the assessing officer has not conducted any enquiries with the recipient of the unexplained expenditure can be, at best, described as an anecdote. Firstly, the appellant has not provided the full details including names and addresses of the persons who are the recipients of speed money. Secondly, I doubt even if these persons were contacted they would accept the receipt of the aforesaid amounts which is against public policy and which lies in the realm of Prevention of Corruption Act. 31. The contention of the appellant that the excel file was prepared two days prior to the search was an act of coincidence, is produced here only to be rejected. It is common knowledge that consequential search and seizure are undertaken on all persons connected with a group. Hence, any person who is closely associated with another person in a work jointly undertaken normally expects a search and seizure action either immediately or within a reasonable period. Therefore, the contention of the appellant that it would be impossible to anticipate a conseque .....

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..... 33. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 34. The Ld. Counsel for the assessee submitted that the assessee has disclosed a sum of ₹ 21,91,82,000/- as unexplained expenditure out of inflation of expenses as it was unable to reconcile the said expenditure incurred in A.Yrs. 2009 - 2010 and 2010 - 2011 on the basis of the excel file found in the assessee's premises during the course of search on 23-10-2009 and cash found and the statement of its Director Shri B. B. Patil. He submitted that the AO has assessed the said sum of ₹ 21,91,82,000/- in A.Yrs. 2007 - 2008, 2008 - 2009 and 2009 - 2010 on the basis of papers found during the course of search at Mahalaxmi Infraprojects Ltd. on 23-09-2009 from the possession of its Technical Director Shri D. A. Bhat and the statement recorded of Shri D. A. Bhat on the basis of such papers. He submitted that the CIT(A) has upheld the order of the AO disregarding the papers found at the premises of the assessee during the course of search and the statement of the assessee s director. 35. The Ld. Counsel for the assessee submitted that Shri D.A. Bhat is only the technical director of M .....

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..... n the ground that he was under mental tension and pressure due to search and the said statement was made on mistaken belief and hearsay basis. 37. Referring to the decision of the Pune Bench of the Tribunal in the case of Jyotichand Bhaichand reported in 139 ITD 10 (Pune) he submitted that the Tribunal in the said decision has held that a statement made under mistaken belief can be withdrawn. Further, no declaration regarding any income or year has been made in the said statement of Shri D. A. Bhat. He submitted that the Managing Director of MIL Shri Shinde in his statement recorded u/s. 132(4) of the Act has clearly mentioned otherwise. The AO has not brought any independent corroborative evidence on record so as to establish the payment of the said unexplained expenditure. The AO has relied upon the loose papers found during the course of search at the premises of Shri D. A. Bhat. Thus the AO has relied upon third party evidence without bringing any corroborative independent evidence on record justifying what has been mentioned in such loose papers is true. He submitted that it is the settled prposition of law that loose and unsigned papers do not have any evidentiary value un .....

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..... ng pages 1 to 17 forming annexure to the order of the AO are presumed to be true unless the AO proves it otherwise. 40. He submitted that the AO has miserably failed to discharge the onus cast upon him. Hence the contents of the excel file found at the assessee s premises are presumed to be true and consequentially the income has to be assessed in the year 2009 - 2010 and 2010 - 2011 as offered by the assessee. He submitted that even on the basis of the cash found in the assessee's premises and deposits in its bank account led credence to the evidence found in the nature of excel file in the assessee's premises and the statement of the Director of the assessee. The said cash found clearly shows that certain sums are still payable. If the version of the AO is accepted that all the amounts are paid then no cash would have been found at the assessee's premises. 41. As regards the allegation of the AO that the statement of Shri D. A. Bhat has more evidentiary value as it has the element of surprise he submitted that the statement of its Director Shri B.B. Patil has the same element of surprise as it was also recorded during the course of search at its premises, more s .....

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..... ersons date-wise with the names of the payers and the recipient. Based on the bifurcation of payments of alleged speed money at page 30 of the assessment order the AO taxed the amount of ₹ 2,75,17,500/- being 50% share of the assessee for the impugned assessment year. Similar additions were made in A.Y. 2008-09 at ₹ 1490.675 lakhs and ₹ 425.97 lakhs in A.Y. 2009-10 which has been upheld by the CIT(A). It is the contention of the Ld. Counsel for the assessee that notings on the loose papers are not about the payments actually made but these are projected expenses to be incurred. Further, it is also his contention that the seized papers do not indicate any payment of speed money and therefore the revenue authorities are not justified in holding that the payment noted on the seized papers reflect speed money paid by the assessee company especially when Mr. Bhat had retracted his statement immediately at the earliest opportunity. We do not find any substance in the above arguments of the Ld. Counsel for the assessee. The AO has made addition not only on the basis of the papers seized from the premises of Shri D.A. Bhat, but also on the basis of statements recorded fro .....

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..... presentative has no objection. Accordingly, this ground is dismissed as not pressed . 47. Ground of appeal No.3 by the assessee reads as under : 3.0 Having allowed the deduction u/s 80IA(4)(i) in respect of profit earned by the assessee from development of infrastructure facilities, Ld. CIT(A) was not justified in rejecting such deduction in respect of interest income of ₹ 25,90,058 received from Bank Guarantee deposits provided to the project authorities, in respect of such projects. 48. Facts of the case, in brief, are that the assessee during the course of appeal proceedings raised a fresh claim of deduction u/s.80IA(4) in respect of interest on bank guarantee deposits held in respect of development of infrastructure projects. It was contended that while availing bank guarantee, which was to be given to the concerned agencies as earnest money deposit and security deposit, the assessee had to keep 10% of bank guarantee amount as fixed deposit. Interest earned on such deposit, according to the assessee, is eligible for deduction u/s.80IA(4) being incidental to its main business. A statement showing working of interest income received from the banks for such depos .....

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..... of appeal No.1 by the Revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made u/s.69B on account of difference in valuation to the tune of ₹ 56,676/-. 56. After hearing both the sides we find the AO made addition of ₹ 56,676/- being the difference between the value declared by the assessee and the value determined by the DVO in respect of purchase of Flat No.8 at Star Tower, Khanapur Road, Belgaum. In appeal the Ld.CIT(A) deleted the addition for which the Revenue is in appeal before us. 57. We find the above ground is identical to the ground raised by the revenue in ITA No.451/PN/2013 for A.Y. 2005-06. We have already decided the issue and the ground raised by the revenue has been dismissed. Following the same reasoning this ground by the revenue is dismissed. 58. Ground of appeal No.2 by the revenue reads as under : 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on diversion of funds for non business purposes of ₹ 10,33,466/. 59. Facts of the case, in brief are t .....

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..... 2005-06 500.00 1572.03 2072.03 2006-07 500.00 1889.88 2389.88 2007-08 500.00 2348.49 2818.49 2008-09 500.00 2578.11 3078.11 2009-10 500.00 2999.86 3499.86 2010-11 500.00 5265.83 5765.83 It was accordingly argued that no disallowance of proportionate interest on diversion of funds for non business purpose is called for. 61. Based on the arguments advanced by the assessee the CIT(A) deleted the addition by observing as under : 44. I have considered the submissions of the appellant. It is apparent from the assessment order that an opportunity of being heard on this disallowance was not given to the appellant. Hence, the addition appears to be made on an adhoc basis. The appellant has pointed out that advances were made to Sunil Construction and Ashok Chipre as far .....

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..... in the future years also could not be controverted by the Ld. Departmental Representative. In view of the above and in view of the detailed reasoning given by Ld.CIT(A) while deleting the addition and in absence of any contrary material brought to our notice by the Ld. Departmental Representative we do not find any infirmity in the order of Ld.CIT(A). Accordingly, we uphold the order of the CIT(A) on this issue. The ground raised by the revenue is accordingly dismissed. 64. Ground of appeal No.3 by the Revenue reads as under : 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on investment in non business activities of ₹ 11,20,935/-. 65. Facts of the case, in brief, are that the AO during the course of assessment proceedings noticed that the assessee had invested borrowed funds for acquiring equity shares of group companies and had also introduced capital in a firm wherein it was a partner. The Assessing Officer taking recourse to the provisions of section 14A of the Act inserted by Finance Act 2002 w.e.f. 11-05-2010 and noticing that the assessee had claimed deduction un .....

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..... iew was expressed by the Hon 'ble jurisdictional High Court in the case of Reliance Utilities and Power Ltd. 221 CTR 435 (Born). Following this verdict of the Hon 'ble jurisdictional High Court, we hereby affirm the view of the learned CIT(A), this part of the ground of the revenue is therefore, dismissed. Respectfully following the above decision of the Honourable ITAT, Pune, the addition made for the years under consideration also is deleted. This ground of appeal is therefore, allowed. 68. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 69. After hearing both the sides we do not find any infirmity in the order of the CIT(A) who has deleted the addition based on the order of the Tribunal in assessee s own case for A.Yrs. 2003-04 to 2006-07. Since admittedly the own capital and free reserves of the assessee company are far more than the investment in group companies, therefore, respectfully following the order of the Tribunal in assessee s own case for A.Yrs. 2003-04 to 2006-07 and in absence of any contrary material brought to our notice against the order of CIT(A) we find no infirmity in the order of the CITA) deleting the disallowan .....

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..... 2007-08 2008-09 2009-10 2010-11 Share Capital 500.00 500.00 500.00 500.00 Reserve Surplus 2348.48 2578.10 2999.86 5265.83 Total 2348.48 3078.10 3499.86 5765.83 In view of the above it is amply clear that the appellant had sufficient funds to absorb the payments made to the above parties. Further, I find that the this issue was already covered by the Honourable ITAT had vide their appellate orders in ITA No. 1139/PN/2009, 1140/PN/09, 1141/PN/09 and 1142/PN/09 dated 07/04/2010 for assessment years 2003-04 to 2006-07 and had decided in favour of the appellant. The relevant portion of this order is reproduced below: ............ Considering the facts and figures and the availability of own funds, the impugned amounts advanced to the said three parties can be said to be out of assessee's own funds, hence, there was no necessity for invoking the provisions of sect .....

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..... of the Act towards such expenditure. For the above proposition, we find support from the decision of Hon ble Bombay High Court in the case of Kolhapur Sugar Mills Vs. CIT reported in 119 ITR 387 wherein it has been held that expenses incurred for Pooja is not an allowable deduction. Similar view has been taken by the Hon ble Chattisgarh High Court in the case of Hira Ferro Alloys Ltd. Vs. DCIT reported in 326 ITR 261 according to which the expenditure incurred in Pooja could not be treated as expenditure u/s.37(1) of the Act. We accordingly set aside the order of the CIT(A) on this issue and the ground raised by the revenue is allowed. 80. Ground of appeal No.6(a) and 6(b) by the Revenue read as under : 6(a) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of u/s.80IA(4) of ₹ 2,38,71,620/- which was earlier confirmed by the Ld.CIT(A) for A.Y. 2000-01 2001-02 as the assessee is only work contractor and not a developer as per the explanation below 80IA(13). 6(b) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing additional deduction u/s.80IA(4) of the additi .....

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..... g the arguments advanced by the assessee and distinguishing the various decisions cited before him the AO held that the assessee is not entitled to deduction u/s.80IA(4) of the I.T. Act. 83. Before CIT(A) the assessee gave the details of the work undertaken for construction of Tunnel/Canal, manufacture of crest gates, cranes and hoist etc. in various infrastructure project in pursuance to agreement entered into with the Government of Maharashtra the details of which are as under : Sr.No. Infrastructure Project Purpose of the project 1 Mhaisal Lift Irrigation Project, Jath, Sangli Irrigation Multipurpose 2 Jihe Khatapur Lift Irrigation Project Irrigation Multipurpose 3 Bhima Sina Link Canal tunnel Irrigation Project Irrigation water supply 4 Godzari Irrigation project Irrigation water supply 5 Koyna Hydro Power Project Power Generation Irrigation .....

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..... Hon ble Bombay High Court in the case of Jute Corporation of India Ltd. Vs. CIT reported in 187 ITR 688 and the decision of Hon ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 23 taxmann.com 23 allowed the additional ground made during the course of appeal proceedings. 87. The Ld.CIT(A) following various decisions including the decision of Hon ble Bombay High Court in the case of ABG Heavy Industries Ltd. (Supra) allowed the claim of deduction u/s.80IA(4) of the Act. 88. So far as the additional claim made u/s.80IA during appeal proceedings is concerned, he allowed the claim of assessee by observing as under : 83. The appellant contended that on the basis of the loose papers seized from its premises, it had declared additional business income and accordingly offered the same in the return of income. Therefore, since the additional income was declared as appellant s business income, the appellant was entitled for deduction under section 80IA(4)(i) on such income in proportion to total business turnover to eligible project turnover. 84. The appellant further contended that the above issues were also raised during the co .....

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..... e available when the return was filed. The first part viz. if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made ... clearly relate to cases where the ground was available when the return was filed and the assessment order was made but could not have been raised at that stage. The words are could not have been raised and not were not in existence . Grounds which were not in existence when the return was filed or when the assessment order was made fall within the second category viz. where the ground became available on account of change of circumstances or law. [Emphasis Supplied by me] The Hon'ble Bombay High Court has looked into the judgment given in the case of Goetze (India) Limited v. Commissioner of Income-tax, [2006] 157 Taxman 1 (SC) in Central-I v. Pruthvi Brokers Shareholders (P.) Ltd. (supra) and explained that- It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction .....

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..... respect of the additional business income offered for tax as a result of search and seizure. The claim was not made along with the return filed under section 153A. However, the same was made during the course of assessment proceedings. There is nothing in the assessment order to show as to why the claim was rejected. In all probabilities, the claim was rejected because deduction was disallowed to the appellant in respect of the original claim itself. As a matter of principle, the additional claim in respect of business income declared during the course of search and seizure is not insulated from the provisions of section 80IA(4) and an assessee is entitled to make the claim as long as it remains the business income of an assessee who is entitled to make the claim under this section. Recently, the Honourable Bombay high Court in the case of CIT(Central-II v/s Sheth Developers Pvt. Ltd. in ITA No.3724 of 2010 dated 27/07/2012 have held in the context of assessment of undisclosed income in Chapter XIVB of the Income-tax Act that where the total income / loss for the block period has to be computed in accordance with the provisions of the said Act and the same would include Chapter VIA .....

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..... wed for the revised undisclosed business income. This contention cannot be accepted because both the cheque payments of ₹ 1.5 crore made by the appellant and 50% of ₹ 2 crores written against alphabets AB are a part of the documents seized from Shri Bhat s residence and are a part of the payment of speed money to various persons. The documents also indicate that these entries are reversed only when cash payments are made. Hence, there is no discrepancy in the figures adopted by the assessing officer. (iii) Claim of deduction u/s.80IA(1)(4) be allowed in case additions made on account of unexplained expenditure are confirmed in appellate proceedings. This claim is already allowed. 89. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 90. The Ld. Departmental Representative strongly opposed the order of the CIT(A). He submitted that the assessee is only a works contractor and not a developer as per Explanation below 80IA(13), therefore, deduction u/s.80IA(4) should not have been granted by the CIT(A). 91. As regards the allowance of deduction u/s.80IA(4) amounting to ₹ 2,80,04,066/- out of the additional income declared .....

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..... y World Bank the relevant authorities forwarded the proposal to World Bank. World Bank however did not accept the proposal but they suggested that M/s. Patel Engineering Company Ltd., may employ the assessee company as sub contractor. It was at the suggestion of World Bank that the assessee companies name was included as a sub contractor instead of forming of a joint venture. The project authorities including World Bank have approved and certified the assessee as sub-contractor for the above said work after thorough scrutiny and detail description of the work to be undertaken by the assessee company. The assessee company name is included in Main contract Agreement entered into between the employer and PEC as sub contractor for Koyna Project Works by Project Authorities. In fact the Government of Maharashtra has entered in Tripartite Agreement with the assessee company and PEC. Works completion certificate has been issued in favour of the assessee company for the execution of the Work. Power of Attorney is given by Prime Contractor to Sub Contractor and accepted and exceeded by Project Authorities. 12. The fact that the assessee has a tripartite agreement with the relevant author .....

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..... never entered into any contract with the State Government and the assessee-company was nothing but a colourable device to evade tax. It is a settled position of law that the company is a juristic entity and it should be considered independent from the shareholders or the directors. The action of the assigning and the work of construction undertaken by the assessee was recognised by the State Government and a tripartite agreement was executed between the assessee A and the State Government through which the State Government had recognised that the assessee had stepped into the shoes of A and notified authorising the assessee to collect the toll tax for a particular period. Since the assessee company had rectified all act and deeds of its promoter U ' and owned all the assets and liabilities of its promoter through an agreement of assignment executed between the assessee and A after obtaining approval from the State Government, the assessee should be deemed to have undertaken the construction work since 1-4-1995. Since the Government had provided this deduction in order to encourage economic growth of the country, the plenitude of exemption should not be whittled down, by .....

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..... d by the assessee though in the name of Joint Venture. The Joint Venture is nothing but the venture of the assessee company and the other person not being a party after withdrawing the question of Joint Venture does not arise. The Venture was fully carried out by the assessee and it was entirely executed by the assessee company. Taking the substance of the transaction, the assessee are entitled to all the profits in respect of the contract executed by them, hence the assessee would certainly be entitled to deduction under the provisions of 80IA as they have fulfilled all the other conditions. This view get strength from decision in the case of ITAT, Indore Bench, in case of Ayush Ajay Constructions Ltd. (supra). Thus, while giving effect to the opinion of Third Member u/s.255(4) of the Act, we take view in conformity with order of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra) available at this time though contrary to the opinion expressed by the Third Member. So in view of above discussion, following the ratio of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra), the Assessing Officer is directed to allow deduction u/s.80IA(4) of the Ac .....

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..... enue by relying upon the decision of Third Member Bench of the Tribunal in the case of B.T. Patil Sons Belgam Construction (P) Ltd vs. ACIT 126 TTJ (Mum) (TM) 577. The Hon ble High Court has observed that it is not in dispute that the said decision of the Tribunal in the case of B.T. Patil Sons (supra) has been recalled by the Tribunal by order dated 18.2.2011 as evident from the order passed by the Tribunal in ITA No.766/PN/2009 dated 8.6.2011. The Hon ble High Court has accordingly quashed and set aside the impugned order of the Tribunal dated 24.2.2010 passed in ITA No.433/PU/2003 relating to AY 2003-04, and has restored the matter to the file of the Tribunal for fresh decision. 8. Having gone through the cited decisions by the learned AR we find that an identical issue has been decided in favour of the assessee by Hon ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd Ors (supra). Relevant Para Nos. 22 23 of the said decision of Hon ble High Court is being reproduced here under for a ready reference. 22. Another submission which was urged on behalf of the Revenue is that under cl. (iii) of sub-sec. (4A) of sec. 80-IA, one of the conditions impo .....

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..... ars in question to which this batch of appeals relates would be governed by the same principle. The subsequent amendment of sec. 80-IA(4A) of the Act to clarify that the provision would apply to an enterprise engaged in (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining an infrastructure facility was reflective of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by Finance Act of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to sec. 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature. 9. We find from the decision of Hon ble Bombay High Court in aforesaid case of CIT vs. ABG Heavy Industries Ltd Ors (supra) that even in the case before the Hon ble High Court, the assessee acted as a contractor for Government agency, was held eligible for the purposes of claim of deduction u/s 80-IA(4) of the Income Tax Act. As per the said decision of the .....

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..... sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We find the assessee in the instant case filed his return of income u/s.139(1) on 31-10-2007. The search took place on 06-10-2009. At the time of search the assessment for the impugned assessment year was not completed. The assessee filed the return of income in response to notice u/s.153A on 24-06-2010 disclosing total income of ₹ 12,80,97,695/- after claiming deduction of ₹ 5,36,44,728/- u/s.80IA(4) of the I.T. Act. The AO disallowed the claim of deduction u/s.80IA(4) on the ground that the same was not claimed in the original return filed u/s.139(1) of the I.T. Act. Relying on the provisions of section 80AC and 80IA (5) the AO disallowed the claim made by the assessee in the return filed in response to notice u/s.153A. We find the Ld.CIT(A) upheld the above action of the AO. We find the Pune Bench of the Tribunal in the case of B.G. Shirke Construction Technology Pvt. Ltd. (Supra) had an occasion to decide such an issue. The relevant observation of the Tribunal from para 9 onwards read as under : 9. We have carefully considered the rival submissions. In this ca .....

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..... material, books of accounts, other documents found in the course of search but not produced in the course of original assessment or any undisclosed income or property discovered in the course of search. At the time of hearing, the Ld. Counsel for assessee fairly conceded the position that impugned claim relating to exclusion of income on account of retention money does not fall in the aforesaid category and thus, it is beyond the scope and ambit of an assessment envisaged u/s 153A(1)(b) of the Act for assessment years 2003-04 and 2006-07. Therefore, on this point itself, we uphold the stand of the Revenue for assessment years 2003-04 and 2006-07 in denying assessee's claim for excluding income on account of retention money. 11. Accordingly, the appeals of the assessee for assessment years 2003-04 and 2006-07 are dismissed. 12. Now, in so far as the assessments for assessment years 2007-08 and 2008- 09 are concerned, the original assessments were pending on the date of initiation of search, and the same stand abated in terms of the second proviso to section 153A(1) of the Act. Following the reasoning laid down in the case of All Cargo Global Logistics Ltd. (supra), in so f .....

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..... ment years 2007-08 and 2008-09, Assessing Officer not only acquires jurisdiction to make additions based on the incriminating material but also retains the original jurisdiction, as explained by the Special Bench of Tribunal in the case All Cargo Global Logistics Ltd. (supra). Thus, the ensuing assessments u/s 153A(1)(b)of the Act for assessment years 2007-08 and 2008- 09 would enable the Assessing Officer to consider the impugned claim which has been justifiably made by the assessee. Considering the entirety of circumstances and in law, we, therefore, hold that in so far as the assessments for the assessment years A.Y. 2003-04, 2006-07, 2007-08 2008-09 2007-08 and 2008-09 are concerned, the income-tax authorities erred in not entertaining the impugned claim of the assessee merely because it was made in the course of an assessment u/s 153A(1)(b) of the Act and was not made in the returns of income originally filed u/s 139(1) of the Act. 14. For the assessment years 2007-08 and 2008-09, another objection raised by the Revenue is to the effect that the claim was not made in the return of income filed in response to notice issued u/s 153A(1)(a) of the Act, but was submitted by wa .....

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..... ssee is well-reasoned, inasmuch as the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) does not impinge on the powers of the appellate authorities to entertain a fresh claim which was hitherto not preferred by the assessee in the return of income. In fact, the Hon'ble Delhi High Court in the case of CIT v. Jai Parabolic Springs Ltd. 306 ITR 42 (Del) supports the proposition that the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) was limited to the power of the Assessing Officer to entertain claim for deduction otherwise than by a revised return and does not put fetters on such powers of the appellate authorities. 16. On the basis of aforesaid, it is sought to be made out that the claim of the assessee ought to have been entertained by the lower authorities and decided on its merits. 17. On the other hand, the learned Departmental Representative appearing for the Revenue has contended that the lower authorities were justified in not entertaining the impugned claim as it was a fresh claim made only during the assessment proceedings and not in the return of income. 18. We have carefully considered .....

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..... laws have also been cited, including that of the Hon'ble Jurisdictional High Court of Bombay in Associated Cables (P) Ltd. (supra) in support of the said proposition. Of course, the claim was not reflected in the actual computation of income in the absence of its quantification. During the course of assessment proceedings, assessee not only quantified its claim year-wise but also explained the factual matrix of the claim based on the relevant clauses of the contracts with various contractees/customers, as is evident from copy of assessee's communication to the Assessing Officer placed in the Paper Book at pages 3-6. In this factual background, can it be said that the assessee made a fresh claim during the assessment proceedings so as to fall within the purview of the ratio laid down by the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra)? In our view, the fact situation in the present case is qualitatively different than that considered by the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra). Ostensibly, the assessee company made a claim for excluding income on account of retention money in the return of income itself, though the qua .....

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..... the lower authorities. 53. Since the assessment for the impugned assessment year was pending on the data of search, therefore, respectfully following the decision of the coordinate bench of the tribunal cited (supra) we hold that the CIT(A) was not justified in rejecting the claim made u/s.80IA(4) of the I.T Act merely because the assessee had not made the claim in the original return. We accordingly set aside the order of the CIT(A) on this issue and the grounds raised by the assesse are allowed. 131. Identical issue has also been decided by the Hon ble Bombay High Court in the case of Sheth Developers (P) Ltd.(Supra) wherein the Hon ble Bombay High Court following the decision in the case of Prithvi Brokers and Shareholders (P) Ltd. reported in 23 taxmann.com 23 has held that assessee can make a fresh claim before the appellate authorities even if the claim was not made in the return of income filed before the Assessing Officer. Therefore, the issue regarding a new claim is also decided in favour of the assessee. 132. Now coming to the allowability of deduction u/s.80IA(4) on the additional income declared during the course of search is concerned we find the same issu .....

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..... t of the fact that the disallowance which was effected by the Assessing Officer has not, the Court is informed, been challenged by the assessee. As a matter of fact the question of law which is formulated by the Revenue proceeds on the basis that the assessed income was enhanced due to the disallowance of the employer's as well as the employees' contribution towards Provident Fund /ESIC and the only question which is canvassed on behalf of the Revenue is whether on that basis the Tribunal was justified in directing the Assessing Officer to grant the exemption under Section 10A. On this position, in the present case it cannot be disputed that the net consequence of the disallowance of the employer's and the employee's contribution is that the business profits have to that extent been enhanced. There was, as we have already noted, an add back by the Assessing Officer to the income. All profits of the 4 (2009) 319 ITR 306 unit of the assessee have been derived from manufacturing activity. The salaries paid by the assessee, it has not been disputed, relate to the manufacturing activity. The disallowance of the Provident Fund/ ESIC payments has been made because of the s .....

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..... ai and Thane. On 21/2/2002, the Income Tax Department carried out search operation under Section 132 of the said Act covering the residential and business premises belonging to the respondentassessee s group. During the course of the search proceedings the respondent s Director declared the undisclosed income of the group at ₹ 7.00 crores for the block period. However, in the return filed for the block period 1/4/1995 to 21/1/2002, the respondent showed its undisclosed income at ₹ 3.50 crores. The Assessing officer while assessing the respondent for the block period by order dated 30/4/2004 computed the undisclosed income for the block period at ₹ 7.68 crores. (b) In appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as the CIT(A) ) the respondent contended that the undisclosed income was declared at ₹ 7.00 crores only because at the time of making the statement the Director of respondent was unaware that deduction under Section 80IB would be available in respect of respondent s housing projects. The CIT(A) by order dated 17/8/2004 found on facts that the respondent was entitled to benefit of Section 80IB of the said Act. Fur .....

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..... nt while computing the tax payable under Chapter XIVB of the said Act for the block period 1/4/1995 to 21/2/2002. 8. As against the above, Mr. Pardiwala, Senior Counsel for the respondent states that the decision of the Gujrat High Court in the matter of Fakir Mohmed Haji Hasan (supra) is inapplicable to the present facts. In the present facts no question of application of Section 68, 69 and 69A 69B and 69C of the said Act arises as the same has not been invoked by the appellant- revenue. Further the amount of undisclosed income was neither in the nature of unexplained investment nor unexplained money, expenses or investment which were not fully disclosed. It is an admitted position between the parties as reflected even in the order the Assessing officer that undisclosed income was in fact received by the respondent in the course of carrying on its business activities as a builder. The same was returned by the respondent as income arising from profits and gains of business or profession and the same was accepted by the department. It was further submitted that the Tribunal was correct in holding that in view of the retrospective amendment to the Explanation to Section 158BB(1) o .....

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..... d in accordance with the provisions of the said Act and the same would include Chapter VI-A of the said Act. Section 80IB of the said Act is a part of Chapter VIA of the Act. In view of the above, while computing the undisclosed income for the block period the respondent-assessee is entitled to claim deduction from its income under Section 80IB of the Act. In fact, to the same effect is the decision of the Madras High Court in the matter of Anbu Textiles (supra). 11. The further case of the appellant-revenue that in view of section 69A of the said Act the benefit of deduction under Chapter VIA of the said Act would not be available to the respondent-assessee is not well founded. In the present facts it is not the case of the revenue that the money found in possession of the respondent assessee could not be explained and/or its source could not be explained to the satisfaction of the Assessing Officer. In the present case undisclosed income found in the form of cash was explained as having been acquired while carrying on business as a builder and this explanation was accepted by the Assessing officer by having assessed the undisclosed income for the block period as income from pr .....

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..... on ble Bombay High Court in the case of Sheth Developers (P) Ltd. (supra), the claim of the assessee is justified. 18. In-fact, once it is factually explicit that the additional income in question is derived from the housing project, The Crest at Pimple Saudagar, Pune, which is eligible for section 80IB(10) benefits, such an income merely goes to enhance the business income derived from the eligible housing project and shall be entitled for section 80IB(10) benefits, even as per the ratio of the judgment of the Hon ble Bombay High Court in the case of Gem Plus Jewellery India Ltd. (supra). 19. In the result, on the basis of the aforesaid legal position and the material and evidence on record, assessee is eligible for deduction u/s 80IB(10) of the Act in relation to impugned additional income offered in a statement u/s 132(4) of the Act in the course of search and subsequently declared in the return filed in response to notice u/s 153A(1)(a) of the Act. In the result, appeal of the assessee for assessment year 2008-09 is allowed. 136. In view of the above decisions cited (Supra) , the assessee, in our opinion is also entitled to deduction u/s.80IA(4) on the additional .....

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..... ical reconciliation is very important in these matters related to cash payments. The appellant submits that no opportunity of the hearing was given by the AO with regard to these presumptions. 1.3 Ld. CIT(A) was not justified in concurring with the finding of the AO rejecting the evidence in the form of loose papers seized at the office premises of the appellant holding on mere ipse dixit that such evidence is fabricated. 1.4 Ld. CIT(A) erred in confirming the presumption made by AO in shifting the undisclosed in come to earlier years on the basis of evidence seized from a third party. 98. After hearing both the sides we find the above grounds by the assessee are identical to grounds of appeal No. 1 to 1.4 in ITA No.228/PN/2013 for A.Y. 2007-08 filed by the assessee. We have already decided the issue and the grounds raised by the assessee have been dismissed. Following the same reasonings the above grounds by the assessee are dismissed. 99. The Ld. Counsel for the assessee did not press ground of appeal No.2 for which the Ld. Departmental Representative has no objection. Accordingly, this ground is dismissed as not pressed . 100. Ground of appeal No.3 by the asses .....

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..... evidence and were arbitrary and hence should be deleted. 105. However, the CIT(A) was not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : 97. I have carefully considered the submissions of the appellant. As noted earlier, these expenses are recorded in pages 1 to 5 and 7 of the Bhat documents. The total amount of unaccounted expenses as per the assessing officer is ₹ 94,17,652/- out of which 50% i.e. ₹ 46,19,076/- has been added in various assessment years as mentioned above. The issue of evidentiary value of papers seized from Shri D A Bhat's residence and its reliability in computing the unexplained income of the appellant has been dealt with in paragraphs 29 and 33 (supra). During the course of appellate proceedings the assessee pointed out : (i) In the absence of dates against the entries shown in these papers it was not possible for them to verify the entries with the entries in the books of account. Hence, it was put that theoretical entries could pertain to a period even prior to 01/04/2002. ii. Expenses on pages 4 and 5 on projects were not actually incurred. iii. The appellant doe .....

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..... ismissed. 108. Ground of appeal No.5 being general in nature is dismissed. ITA No.453/PN/2013 (A.Y. 2008-09) (By Revenue) : 109. Ground of appeal No.1 by the Revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on diversion of funds for non business purposes of ₹ 10,33,466/- 110. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.2 in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been dismissed. Following the same reasoning this ground by the revenue is dismissed. 111. Ground of appeal No.2 by the Revenue reads as under : 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on investment in non business activities of ₹ 8,125/-. 112. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.3 in ITA No.452/PN/2013 filed by the revenue. We have already dec .....

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..... ing the shifting of undisclosed income for the asst. years from 2007-08 to 2010-11 by bringing to tax ₹ 4,25,97,000 for the asst. year under appeal, on the basis of papers seized from Technical Director of Joint Venture partner M/s Mahalakshmi Infra-projects Limited, Pune during the action u/s 132( 4) held on. 24-09-2009 instead of allowing appellant's appeal by accepting undisclosed income offered by it for the asst. year 2009-10 2010-11 on the basis of papers seized from it's own premises during the course of search conducted on 23-10-2009 1.1 Ld. CIT(A) ought to have appreciated the fact that the Joint Venture/consortium agreement between appellant it's partner Mis Mahalakshmi Infra-projects Limited was on work sharing basis not on joint execution basis and as such the control management of the partners over finance administration is independent. 1.2 Ld. CIT(A) also erred in upholding the AO's baseless assertion in para 10.4.2 Page No's 31, 28, 22, 17 of bundles no.1 seized from residence of Shri. D.A. Bhat are infact documents of M/s B.T.Patil Sons Belgaum Construction Pvt. Ltd. These documents were sent to Shri D.A. Bhat for the .....

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..... ound raised by the assessee has been dismissed. Following similar reasonings, this ground by the assessee is dismissed. 127. Ground of appeal No.5 by the assessee reads as under : Ld.CIT(A) erred in confirming interest u/s.234A levied by the Assessing Officer without realizing that after search action u/s.132, provisions of section 139 gets merged with section 153A and the appellant is required to file the return of income within the time limit allowed in the notice u/s.153A and not within the time limit specified in provisions of section 139(1) of the Act. 128. Facts of the case, in brief, are that the assessee during the course of hearing before CIT(A) challenged levy of interest u/s.234A. It was submitted that the search action was conducted on 23-10-2009 and its case was covered under the provisions of section 153A(1). It was submitted that since the return of income was filed within the time limit specified in the notice issued u/s.153A(1)(a), therefore, the same is deemed to have been filed u/s.139(1) of the Act and therefore the assessee is not liable to pay interest u/s.234A of the I.T. Act. 129. However, the CIT(A) was not satisfied with the explanation given .....

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..... r book filed on behalf of the assessee. We have also considered the decisions relied on by the Ld. Counsel for the assessee before us. We find the assessee in the instant case has not filed the original return of income and the assessee in response to notice u/s.153A has filed its return of income on 05-08-2010 declaring loss of ₹ 11,20,68,340/-. The AO completed the assessment u/s.143(3) r.w.s. 153A on a total income of ₹ 14,68,23,916/-. The AO levied interest u/s.234A from 01-11-2010 till the date of order, i.e. 27-12-2011 which has been upheld by the CIT(A). It is the submission of the Ld. Counsel for the assessee that interest u/s.234A is chargeable from the date of expiry of the notice period given u/s.153A to the date of completion of the assessment u/s.143(3) and the AO cannot charge interest from the expiry of due date prescribed u/s.139(1). We find the above issue has been decided in favour of the assessee by the Chennai Bench of the Tribunal in the case of ACIT Vs. V.N. Devadoss (Supra). We find the Tribunal has observed as under : 45. The second common issue raised in all these appeals is regarding levy of interest under section 234A. The case of the Reve .....

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..... in holding that the interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3). This issue is decided in favour of the assessees. 134. Respectfully following the decision cited (supra) we hold that the CIT(A) is not justified in directing the AO to levy interest u/s.234A of the I.T. Act in the instant case. We accordingly set aside the order of the CIT(A) and direct the AO to cancel the interest charged u/s.234A of the I.T. Act. 135. Ground of appeal No.6 by the assessee being general in nature is dismissed. ITA No.454/PN/2013 (A.Y. 2009-10) (By Revenue) : 136. Ground of appeal No. 1 by the revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on diversion of funds for non business purposes of ₹ 10,33,466/- 137. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.2 in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by .....

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..... wing the same reasoning these grounds by the revenue are dismissed. 144. Grounds of appeal No.5 and 6 by the revenue being general in nature are dismissed. ITA No.231/PN/2013 (A.Y. 2010-11) (By Assessee) : 145. Grounds of appeal No.1 to 1.4 by the assessee are as under : 1.0 On the facts and in law, Ld. CIT(A), Kolhapur eared in confirming the shifting of undisclosed income for the asst. years from 2007-08 to 2010-11 by bringing to tax ₹ 69,60,650 for the asst. year under appeal, on the basis of papers seized from Technical Director of Joint Venture partner M/s Mahalakshmi Infra-projects Limited, Pune during the action u/s 132( 4) held on. 24-09-2009 instead of allowing appellant's appeal by accepting undisclosed income offered by it for the asst. year 2009-10 2010-11 on the basis of papers seized from it's own premises during the course of search conducted on 23-10-2009 1.1 Ld. CIT(A) ought to have appreciated the fact that the Joint Venture/consortium agreement between appellant it's partner M/s Mahalakshmi Infra-projects Limited was on work sharing basis not on joint execution basis and as such the control management of the partners .....

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..... s of evidence seized from premises of technical director of Mahalakshmi Infra-projects during the course of assessment proceedings stating that those were not considered during the course of search. 151. After hearing both the sides we find the above ground is identical to ground of appeal No.5 in ITA No. ITA No.228/PN/2013 for A.Y.2007-08 filed by the assessee. We have already decided the issue and the ground raised by the assessee has been allowed. Following the same reasonings this ground by the assessee is dismissed. 152. Ground of appeal No.6 by the assessee being general in nature is dismissed. ITA No.455/PN/2013 (A.Y. 2010-11) (By Revenue) : 153. Ground of appeal No. 1 by the revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made u/s.69B on account of difference in valuation to the tune of ₹ 26,02,596/-. 154. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.1 in ITA No.451/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been dismissed. Following .....

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..... amounting to ₹ 4.95 crores as projected unexplained expenses relating to Ghodzari project of ₹ 21,91,82,000/- already admitted as additional income. The AO rejected the above contention stating that the speed money payments were already made as reflected in the documents seized at Shri Bhat's residence. Further, he had already held that the document seized at the assessee's premises was fabricated. Therefore, he held that since the unaccounted funds were already utilized, these could not be the source of cash found during search. Based on the above observation the AO brought to tax the amount of ₹ 4,95,00,000/- in the assessment year 2010-11. 163. Before CIT(A) it was submitted that the cash found at its premises as well as in bank stood explained as the same was reflected in the source and application statement while working undisclosed income of ₹ 21,91,82,000/- in its hands. It was pointed out that the AO had already taxed the entire Ghodzari Project expenses and taxing cash found had resulted in double addition of the said amount. 164. Based on the arguments advanced by the assessee the Ld.CIT(A) restored the issue to the file of the AO with c .....

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..... /- to the total income of the assessee on the ground that since the speed money payments were already made and the assessee has not made any declaration of amount over and above the money already expended out, therefore, the source of this money remains unexplained. We find before CIT(A) the assessee gave a chart showing the source and application of money while working out the disclosure of undisclosed income of ₹ 21.95 crores. It was explained by the asessee before CIT(A) that sufficient amount of cash was available which was sufficient to explain the source of ₹ 4.95 crorees found at its premises and locker. Based on these submissions and the cash flow statement the CIT(A) directed the AO to prepare the source and application statement in respect of the undisclosed income in the form of inflation of construction expenses and additions made and if any surplus remains after comparing the source and application of income, then to apportion the same towards excess cash found during the course of search. He has directed the AO to tax the unexplained cash found if any surplus is not available. The above reasoned finding of the CIT(A) in our opinion does not call for any in .....

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