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2016 (7) TMI 730 - ITAT DELHI

2016 (7) TMI 730 - ITAT DELHI - TMI - Increasing sales consideration on account of dumb documents found - Held that:- Addition on similar allegation in the hands of the purchaser payer has been deleted by the ld. CIT(A) and the order of the ld. CIT(A) has also been upheld by the ITAT, Allahabad and there is no further appeal by the Revenue. Therefore, similar issue attained finality in favour of the purchaser Shri Pradeep Kumar Baranwal and thus the allegation has no legs to stand that there was .....

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onstructed by the assessee Company, then similar addition in the hands of the seller payee cannot be held as sustainable. Consequently, addition made by the AO and upheld by the ld. CIT(A) is dismissed. - Decided in favour of assessee - Addition under the head ‘other sources’ - whether there is no inextricable link between the FDs and the business of the assessee, therefore, the interest income earned from therefrom should be taxed under the head ‘income from other sources’? - Held that:- Th .....

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ping margin money towards it business obligation, then it has to be held that there is inextricable link between the fixed deposits and business obligation of keeping margin money. Hence the interest income has to be treated as business income and not income from other sources. - Decided in favour of assessee - Income under the head business income - profitability calculation - Held that:- AO assessed income from business viz calculation of profitability on project completion basis at ₹ .....

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ith the order of the ld. CIT(A). - Decided against revenue - ITA Nos. 997 & 998/Del /2013, ITA No. 588/Del /2013 - Dated:- 31-5-2016 - Shri Chandra Mohan Garg, Judicial Member, And Shri O. P. Kant, Accountant Member For the Assessee : Shri Kapil Goel, Adv For the Department : Shri P. DAM Kanunjna, Sr. DR ORDER Per Chandra Mohan Garg, Judicial Member The above cross appeals pertain to same assessee involving similar issues and were heard together. Hence, these are being taken for disposal for t .....

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and as upheld by the Commissioner of Income-tax (Appeals) - II, New Delhi [hereinafter referred to as "the CIT(A)] v:de order 12th December, 2012 is void ab initio. That on the facts and circumstances of the case, the CIT(A) erred in holding that: a. The AO was right in exercising jurisdiction u/s 148 of the Act. b. The AO has not passed his order u/s 147 in violation of the settled law and pivotal facts that existed on the date of assessment order. 3. That on the facts and circumstances of .....

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d. CIT(A) grossly erred in upholding the addition to the tune of ₹ 2,87,028/- under the head other sources . 6. That on the facts and circumstances of the case the ld. CIT(A) erred in holding that there is no inextricable link between the FDs and the business of the appellant. 4. On a specific query raised by the Bench, the ld. Counsel for the assessee submitted that if the Bench is satisfied with the contention of the assessee on merits, then the assessee is not serious about Ground Nos. .....

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und at the premises of Shri Pradeep Kumar Baranwal. The ld. AR vehemently contended that the ld. CIT(A) erred in exercising jurisdiction u/s 251 of the Income-tax Act, 1961 ['the Act' for short] to enhance income of the assessee by ₹ 4,18,472/- on account of dumb papers. The ld. AR further submitted that confirmation in the form of an affidavit of Shri Pradeep Kumar Baranwal has been filed, according to which, total consideration was only ₹ 30 lakhs which was paid by draft. T .....

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p Kumar Baranwal in support of the contention that no cash transaction has taken place in respect of sale of shop No. 123, measuring 916 sq. Ft located on ground floor of the Mall at Site IV UPSIDC, Greater Noida. The ld. AR also drew our attention towards assessee s paper book page 57 to 67 and submitted that the ld. CIT(A), Varanasi, for A.Y 2008-09, has deleted similar addition in the hands of the purchaser payer. Therefore, addition in the hands of the present payee seller cannot be held a s .....

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t accounted by the assessee and the same was rightly taxed u/s 28 of the Act treating the amount as concealed income of the assessee. However, the ld. DR could not bring on record before us any other order of the higher authority to show that the order of the ld. CIT(A), Varanasi dated 21.6.2011, which has been upheld by the ITAT, Allahabad dated 12.12.2012 for A.Y 2008-09 similar addition in the hands of the payer/purchaser Shri Pradeep Kumar Baranwal, has been deleted. In the absence of any co .....

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income of the assessee and the same deserves to be taxed u/s 28 of the Act. In view of the above, we decline to uphold the action of the AO and impugned order wherein the addition made by the AO has been upheld and thus we demolish the same as and when it has been adjudicated by the ld. CIT(A), Varanasi that no over and above cash payment was made by Shri Pradeep Kumar Baranwal towards purchase of shop No. 123 in the Mall constructed by the assessee Company, then similar addition in the hands of .....

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of ₹ 4,18,742/- cannot be held as sustainable in the hands of the assessee. 8. The ld. DR supported the first appellate order and contended that the assessee has received additional sum of ₹ 418742/- at the time of giving possession of shop No. 123 to Shri Pradeep Kumar Baranwal and books of account do not reflect the said sum. Therefore, addition of the said amount was correctly made to the undisclosed income of the assessee and ld. CIT(A) was not justified in making enhancement. 9. .....

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850/- for A.Y 2008-09 made by the AO in the hands of Shri Pradeep Kumar Baranwal, who was purchaser payee of shop No. 123 in the Mall of the assessee company, then no addition can be made in the hands of the present assessee as alleged recipient of over and above cash payment alleged by the AO and enhanced by the ld. CIT(A). We cannot ignore the fact that the order of the ld. CIT(A), Varanasi in the case of Shri Pradeep Kumar Baranwal has been upheld by the ITAT Allahabad Bench vide order dated .....

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dition to the tune of ₹ 2,87,028/- under the head other sources . The ld. AR also pointed out that the ld. CIT(A) erred in holding that there is no inextricable link between the FDs and the business of the assessee, therefore, the interest income earned from therefrom should be taxed under the head income from other sources . 12. The ld. AR vehemently pointed out that in respect of treatment of interest as income from other sources given by the AO, it was explained before the authorities b .....

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ld. CIT(A) in para 11.2 of the impugned order and submitted that the ld. CIT(A) chose to utilise its FDs towards its obligations of keeping margin money for bank guarantee and instead of providing some other collateral for retaining requisite amount with the bank the assessee chose to utilise its FD to fulfil the said obligation. Therefore, there was inextricable link between the interest earned from FDs and business of the assessee. Replying to the above, the ld. DR supported the action of the .....

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there is no dispute regarding this fact that the assessee earned interest income of ₹ 2,87,028/- from the FD kept with the bank. But the controversy remained that whether the income earned therefrom has to be treated as business income or as income from other sources. The AO held that there was no link between the interest income earned from FDs and business operations of the assessee and same view was taken by the ld. CIT(A) while confirming the addition. Per contra, from the facts noted .....

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hen the assessee chose to utilise its fixed deposits towards its obligation of keeping margin money towards it business obligation, then it has to be held that there is inextricable link between the fixed deposits and business obligation of keeping margin money. Hence the interest income has to be treated as business income and not income from other sources. Consequently, Ground Nos. 5 and 6 of the assessee for A.Y 2008-08 are allowed. Assessee s Appeal ITA No. 998/Del/2013 Revenue s Appeal ITA .....

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tax (Appeals) - II, New Delhi [hereinafter referred to as "the CIT(A)] vide order 26th November, 2012 is void ob initio. 2. That on the facts and circumstances of the case, the CIT (A) erred in holding that there is no inextricable link between the FDs and the business of the appellant to the entire tune of ₹ 3,04,939/-. 3. That on the facts and in circumstances of the case, the CIT(A) erred in holding that the Appellant failed to substantiate the claim as referred in Ground 2. 15. Gr .....

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ner of Income Tax (Appeals) erred in law and on facts of the case in Ignoring the fact that if income of ₹ 1,37,10,343/- was reduced under the head business income, the assessee s total income will be reduced to a figure lower than the income returned by the assessee. 16. Briefly stated, the facts giving rise to these cross appeals are that the AO passed the assessment order u/s 143(3) of the Act on 20.2.2011 at ₹ 32,10,308/- as against the returned income of ₹ 28,88,200/- by m .....

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l as the Revenue, challenging the part relief granted to the assessee, have filed these cross appeals with the grounds as reproduced hereinabove. 17. Apropos Ground Nos 1, 2 and 3, the ld. AR submitted that the order of ht AO as upheld by the ld. CIT(A) is void ab initio as the ld. CIT(A) has erred in holding that there is no inextricable link between the fixed deposits and business of the assessee to the entire tune of ₹ 3,04,939/-. But the ld. CIT(A) held that these are two distinct and .....

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are quite similar to the present A.Y 2009-10 as the AO made addition on the same allegations which was upheld by the ld. CIT(A) by observing similar findings. Since by the earlier part of the assessee for A.Y 2008-09 we have allowed the ground of the assessee pertaining to the treatment of interest income accrued to the assessee from the fixed deposits kept in the bank, therefore, in the similar set of facts and circumstances of the case, we are of the considered view that our conclusion for A. .....

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e assessment order for A.Y 2008- 09 has not been accepted by the assessee and the same has not reached to the finality. The ld. DR vehemently contended that the ld. CIT(A) was not justified in the facts and circumstances of the case has he ignored the fact that if the income of ₹ 1,37,10,343/- was reduced under the head business income, then the assessee s total income will be reduced to a figure lower than the income returned by the assessee for A.Y 2009-10. 20. Replying to the above, the .....

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he preceding A.Y, the income assessed by the AO under the head business income was ₹ 1,37,10,343/- and interest income from fixed deposit was separately assessed as income from other sources. The ld. AR supporting the first appellate authority submitted that the figures which was to be reduced from the net profit would therefore be income assessed by the AO under the head business income in the preceding year and not the total income assessed by the AO. The ld. AR lastly pointed out that t .....

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cing profit declared in the preceding year at ₹ 87,51,902 from the estimated net profit of ₹ 1,16,40,098. The appellant has claimed that while computing the business income of the year in question, the AO ought to have reduced ₹ 1,39,97,371, the sum assessed by him as the net taxable income in the preceding year and not ₹ 87,51,902 that was declared by it in the return of income. As is evident from the record of the preceding year, the income assessed by the AO under the .....

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