TMI Blog2016 (4) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... O to delete the addition - Decided in favour of assessee - ITA. No: 290 & 64/AHD/2012, ITA. No: 291/AHD/2012 - - - Dated:- 26-2-2016 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER SHRI S.S. GODARA, JUDICIAL MEMBER For The Appellant : Shri R.P. Maurya, Sr. D.R. For The Respondent : Shri S.N. Divetia, AR. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA Nos. 290/Ahd/2012 64/Ahd/2012 are cross appeals by the assessee against the very same order of the ld. CIT(A)-III, Ahmedabad dated 16.11.2011 pertaining to A.Y. 2008-09 and ITA No. 291/Ahd/2012 is by another assessee preferred against the order of the ld. CIT(A)-III, Ahmedabad dated 16.11.2011 pertaining to A.Y. 2008-09 and the facts in issues are identical to the facts in issues with ITA No. 290/Ahd/2012. 2. All these appeals were heard together and are disposed of by this common order for the sake of convenience. We first take up ITA No. 64/Ahd/2012 assessee s appeal 3. The sum and substance of the sole grievance of the assessee relates to the disallowance of interest expenses of ₹ 48,74,798/-. 4. While scrutinizing the return of income, the A.O found that the assessee has shown net loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) was convinced with the factual matrix and directed the A.O to delete the addition of ₹ 24,30,996/-. 8. Coming to the addition of ₹ 48,74,798/-, it was explained that the assessee charged lower rate of interest from RJD Impex on the grounds of commercial expediency. It was explained that special concession in charging lower rate of interest was given to RJD Impex because of which the assessee could sell its investment in land at Tragad - Narol and Sarkhej Okab area. It was brought to the notice of the ld. CIT(A) that the assessee is not charging any interest on the deposits and credit balance with the sister concern. After considering the facts and the submissions, the ld. CIT(A) was of the opinion that there is no business nexus of the assessee with sister concern, RJD Impex Pvt. Ltd. and accordingly confirmed the disallowance of interest of ₹ 48,74,79/-. 9. Aggrieved by these two separate findings of the ld. CIT(A), the revenue and the assessee are in appeal before us. Ld. counsel for the assessee drew our attention to the extract of the ledger account of assessee in the books of RJD Impex Pvt. Ltd. and stated that the transactions with RJD Impe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second grievance of the revenue is against the deletion of the disallowance of interest of ₹ 24,30,996/-. 16. A perusal of the factual matrix shows that the proprietary concern of the assessee M/s. Rajeev Enterprise has not used the funds for non-business purposes in fact the funds from Rajeev Enterprise have been diverted to other business activity of the assessee namely trading in land, share and futures and options and financing activities. Since no funds have been diverted from Rajeev Enterprise for nonbusiness purposes of the assessee and in fact the funds have been diverted for other business activity from where substantial income has been earned by the assessee. We, therefore, decline to interfere with the findings of the ld. CIT(A), ground no. 2 is accordingly allowed. 17. Facts relating to ground no. 1 of revenue s appeal show that during the course of the scrutiny assessment proceedings, the A.O found that the assessee has shown land at Adalaj under the head stock-in-trade at ₹ 32,32,825/-. On perusal of the details filed by the assessee, the A.O found that the assessee had purchased the said land from Shri Hemendra Shah vide sale deed no. 12445 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mented price of this land was shown at ₹ 64.65 Lacs. Subsequently, in the month of May, 2008 Shri Gandabhai Makwana came to know about the advertisement of title clearance of the said land in the newspaper. Shri Gandabhai Makwana filed his objection against the title clearance and consequently the sale deed dated 21/9/2007 with Shri Hemendra Shah was cancelled on 21/6/2008. The land was then sold by Shri Gandabhai Makwana to Shri Manibhai V Patel and others (total six co-owners) on 11/8/2008 for total consideration of ₹ 2.10 crores (the documented price of the land was shown at ₹ 53.5 Lacs). In the statement recorded during the course of search on 15/10/2008 Shri Gandabhai Makwana and other family members stated that they had received total consideration of ₹ 2.10 crores including the cash of ₹ 1.57 crores from Shri Manibhai V Patel and others. The amount of ₹ 2.10 crores was stated to have been invested by them in following assets; SN Description Amount (Rs.) 1 LIC Policies 11600000 2 Construction of house ..... X X X X Extracts X X X X X X X X Extracts X X X X
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