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2016 (6) TMI 1083 - ITAT PUNE

2016 (6) TMI 1083 - ITAT PUNE - TMI - Agricultural income - source and proof of undisclosed income - Held that:- We find the assessee before the CIT(A) has explained that it is owning 27 Acres of land. It is also a fact that during A.Y. 2007-08 the AO in the order passed u/s.143(3) has accepted the agricultural income of ₹ 5,24,332/-. Similarly, in A.Y. 2008-09, the agricultural income of ₹ 5,56,528/- has been accepted in the order passed u/s.143(1). However, it is also a fact that i .....

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tural income declared by the assessee cannot be accepted. At the same time, the disallowance of ₹ 1 lakh made by the AO appears to be on the higher side. Considering the totality of the facts of the case, disallowance of ₹ 50,000/- out of the agricultural income declared by the assessee in our opinion will meet the ends of justice. - Disallowance u/s 14A - Held that:- Following the above decision the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. (2014 (8) TMI 119 - BOM .....

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sions of the jurisdictional High Court cited (Supra) we hold that no disallowance of interest u/s.14A is required. So far as the administrative expenses is concerned, we find the AO has disallowed ₹ 30,475/- which has been upheld by the CIT(A). Although it is the submission of the Ld. Counsel for the assessee that no expenditure has been incurred, however, the same cannot be accepted in toto. It cannot be said that no expenditure has been incurred for supervising and monitoring the investm .....

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written off in the books is infact business loss. The assessee has to prove that he has taken reasonable steps for recovery of the same and was unsuccessful and nothing can be recovered from the party for which he has written off the same as business loss. However, from the submission made by the assessee, it does not appear that the assessee has conclusively proved that the amount has been written off after taking reasonable steps for recovery of the same. Before the AO the assessee has not ma .....

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these amounts are in the nature of business loss - ITA No.2176/PN/2013 - Dated:- 3-6-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Pramod Shingte For The Revenue : Shri Hitendra Ninawe ORDER PER R.K.PANDA, AM : This appeal filed by the assessee is directed against the order dated 28-11-2013 of the CIT(A)-I, Nashik relating to the Assessment Year 2010-11. 2. Ground of appeal No.1 by the assessee reads as under : 1. On the basis of facts and in the circumstances of .....

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. He therefore asked the assessee to explain the details in respect of the agricultural income earned and produce the documentary evidence in respect of his claim. The assessee submitted the copies of 7/12 extracts of the land. It was submitted that the land is very fertile and assessee used to cultivate rich crops like Mango and Soyabean. Since the assessee could not produce any documentary evidence such as details of income, expenses, bills and vouchers etc. the AO treated an amount of ₹ .....

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) also was not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : 5.2 I have carefully considered the facts of the case, the assessment order and oral as well as written submissions on behalf of the appellant. The AO has treated the part of the agricultural income amounting to ₹ 1,00,000/- as income from other sources and added the same to the total income of the appellant for the reasons that the bills, vouchers in respect of agric .....

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aid details are not maintained by him. Moreover, the appellant has also not contested the similar addition made in the assessment of immediately preceding year. Therefore, the addition made by the AO of ₹ 1,00,000/- by treating the agricultural income to the extent of ₹ 1,00,000/- as income from other sources is hereby confirmed. This ground of appeal is dismissed. 5. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 6. The Ld. Counsel for the assessee refe .....

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st the said disallowance. In the current year, the assessee had shown agricultural income of ₹ 4,52,530/- out of which the AO had disallowed an amount of ₹ 1 lakh for not being able to prove the agricultural income. He submitted that since the assessee is not maintaining any books of accounts and not keeping any records for the income and expenditure, therefore, it was not possible to substantiate the same with documentary evidence. However, considering the extent of agricultural lan .....

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documentary evidence, therefore, disallowance of ₹ 1 lakh under the facts and circumstances of the case is justified. 8. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the assessee has declared agricultural income of ₹ 4,52,530/- in the return of income out of which the AO disallowed an amount of ₹ 1 lakh treating the same as income from other sources on the groun .....

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he AO in the order passed u/s.143(3) has accepted the agricultural income of ₹ 5,24,332/-. Similarly, in A.Y. 2008-09, the agricultural income of ₹ 5,56,528/- has been accepted in the order passed u/s.143(1). However, it is also a fact that in A.Y. 2009-10 as against ₹ 4,37,498/- declared by the assessee as agricultural income, the AO had disallowed an amount of ₹ 1 lakh and the assessee has not challenged the same. We further find for the impugned assessment year althoug .....

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t of the agricultural income declared by the assessee in our opinion will meet the ends of justice. We hold and direct accordingly. Ground of appeal No.1 by the assessee is accordingly partly allowed. 9. Ground of appeal No.2 by the assessee reads as under : 2. On the basis of facts and in the circumstances of the case, the Commissioner of Income Tax, (Appeals)-I, Nashik is not justified in confirming the disallowance made by the AO of ₹ 2,58,751/ - on account of expenditure in relation to .....

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allowance u/s.14A should not be made. It was submitted by the assessee that the investments in shares/mutual funds are old and the assessee is having sufficient own capital and therefore no disallowance is called for. 11. However, the AO did not accept the plea of the assessee. According to him, the assessee has not maintained any separate accounts by way of which the management and administrative expenditure could be segregated. Further, the assessee had borrowed certain funds on which liabilit .....

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s under : 8.2 I have carefully considered the facts of the case, the assessment order, relevant legal provisions, judicial pronouncements cited and oral as well as written submissions on behalf of the appellant. The AO has invoked the provisions of section 14A read with rule 8D and made the disallowance of ₹ 2,58,751/-. The contention of the AR that the AO should record his dissatisfaction as regards the correctness of the claim of the appellant that he has not incurred any expenditure in .....

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has also not been able to provide details of expenditure directly relating to dividend income. The disallowance would be as per Rule 8D(2) of the I.T. Rules, 1962. The appellant s contention with regard to interest amount adopted by the AO for calculation of disallowance u/s.14A r.w. Rule 8D is also not acceptable in view of the clear provisions given in Rule 8D(2)(i) and (ii). Hence AOs disallowance of ₹ 2,58,751/- is confirmed. This ground of appeal is dismissed. 13. Aggrieved with such .....

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posits are higher than the investment in tax free securities, it would have to be presumed that the investments made by the assessee would be out of the interest free funds available with assessee and no disallowance is warranted u/s.14A. Referring to the decision of Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd. reported in 313 ITR 340 he submitted that the Hon ble High Court in the said decision has held that if there be interest free funds available to an assessee .....

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ance of interest can be made u/s.14A of the I.T. Act. 15. So far as administrative expenses are concerned, he submitted that no part of such administrative expenses is required to be incurred for earning the tax free income. 16. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 17. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also co .....

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held that if there were funds available both interest free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments. Following the above decision the Hon ble Bombay High Court in the case of HDFC Bank Ltd. (Supra) has held that where assessee s capital and free reserves are higher than the investment in tax free securities, i .....

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inistrative expenses is concerned, we find the AO has disallowed ₹ 30,475/- which has been upheld by the CIT(A). Although it is the submission of the Ld. Counsel for the assessee that no expenditure has been incurred, however, the same cannot be accepted in toto. It cannot be said that no expenditure has been incurred for supervising and monitoring the investments made by the assessee. Considering the totality of the facts of the case, disallowance of ₹ 15,000/- in our opinion will m .....

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#39;s claim of deduction u/s. 28 or section 37(1) of the Act. 21. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has shown an amount of ₹ 4,13,218/- towards bad debts. On being confronted the assessee furnished details of such bad debts. The AO noticed from the details that the debts claimed are on account of advances given to the contractors and excess amount paid against the bills of the contractors. Thus, according to the .....

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ten submissions on behalf of the appellant. The appellant s claim of bad debt is not in accordance to the provision of Sec.37(1)(vii) r.w.s.36(2) of the Act. Similarly, appellant s claim of deduction of bad debt u/s.28 or sec.37(1) is also not tenable as amounts claimed as bad debt were advances to the contractors and sub-contractors and not to the suppliers as evident from the Balance Sheet of the appellant. These amounts are not in the nature of expenditure and therefore cannot be allowed u/s. .....

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ertain excess amounts paid to suppliers which the assessee has claimed as bad debt. He submitted that in case the same is not allowed as bad debt, the same can be allowed as business loss. For the above proposition, he relied on the decision of Delhi Bench of the Tribunal in the case of C.B. Richard Ellis Mauritius Ltd. Vs. DCIT reported in 38 SOT 236 and the decision of the Delhi Bench of the Tribunal in the case of Jalpradeep Securities Ltd. Vs. DCIT reported in 4 ITR (Tribunal) 491. 25. The L .....

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aimed are on account of advances given to contractors and excess amount paid against the bills of the contractors. We find the Ld.CIT(A) upheld the action of the AO on the ground that the claim of bad debt by the assessee is not in accordance with the provisions of section 36(1)(vii) r.w.s. 36(2). Similarly, he also rejected the claim of business loss u/s.28 or 37(1) on the ground that these amounts are not in the nature of expenditure and therefore cannot be allowed u/s.37(1) of the Act. It is .....

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