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TMI Blog2016 (10) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... ad "business and profession". Subsequently the case was selected under scrutiny through CASS module. Accordingly notices u/s 143(2) & 142(1) of the Act were issued to the assessee. 3. First issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition of Rs. 68,03,07,175/- on account of sale of property. For this, Revenue has raised following effective ground:- "1. That on the facts and circumstances of the case, Ld. CIT(A) erred in law in deleting Rs. 68,03,07,175/- without considering the monetary involvement of the assessee company in the property deal confirmed by the Sub Registrar Office and the ITS details." 4. As per the information gathered by Income Tax Department through ITS on 06.09.2011, the assessee jointly with M/s Neptune Infrastructure (MNI for short) purchased a property on 26.09.2008 for a consideration of Rs. 111,43,65,000/- which was registered at Vadodara Sub-Registrar office. From the same details of ITS, it was found that assessee has sold the property on 21.10.2008 for a sum of Rs. 68,03,07,175/- which was also registered in Vadodara, Sub-Registrar office. The Assessing Officer, during the course of assessment proceedings foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the veracity of such transactions requested the assessee to produce its books of account of MASEL along with bank statement but assessee failed to do so. The AO further submitted that assessee along with its associates MNI has entered into a Memorandum of Understanding (MoU for short) with MASEL for the purchase of impugned property as per the MoU. The assessee was to make the payment of Rs. 68.03 crores to MASEL. Out of the said sum, assessee along with its associates has made the payment of Rs. 39.30 crores. As per assessee, a sum of Rs. 8.05 crores was paid by it and balance of Rs. 30.08 crores was by MNI. From the above, AO submitted that there was a complete denial from the side of assessee for having transactions for sale of impugned property. Now from the above, MoU it is clear that the transaction between assessee and its associates has taken place and therefore the claim of assessee that it did not enter into any transaction is not tenable. The assessee in compliance to remand report submitted that it has not entered into any transactions of sale of impugned property. The assessee along with MNI has advanced the money to MASEL for the purchase of impugned property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the appellant as well as M/s. Neptune Infrastructure became confirming parties. The appellant has submitted that the information in ITS as seller is wrong and incorrect. 11. There was no transaction of sale of any property by the appellant during the sale proceedings on 21.09.2008 except receiving of its investments amounting to Rs. 39.03 crores from the seller. The source of investments by the appellant have already been submitted to the Assessing Officer during the assessment proceedings in assessment year 2008-09 which have been duly verified. The appellant has duly accounted for the money received as confirming parties in the books of accounts and there is no dispute on the same. Therefore, information in the ITS was wrong and incorrect by disclosing the sale of such property by the appellant and M/s. Neptune Infrastructure. It is held that the appellant is only a confirmatory party to the sale of said property and not a seller. The amount of Rs. 39.03 crores received as confirmatory party being the old advance given for purchase of said property has been duly accounted for in the books of accounts. Therefore, the addition of Rs. 68,03,07,175/- made by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned by assessee and its associates MNI. Lastly, he relied on the order of Ld. CIT(A). 7. We have heard rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we find that AO has made the addition of Rs. 68 crores as undisclosed cash credit in the hands of assessee on the ground that assessee has made the sale of the impugned property without recording the same in its books of account. We find that assessee collected the details for the sale of impugned property on the basis of ITS received from Sub Registrar Office of Vadodhara. However, Ld. CIT(A) deleted the addition made by AO by observing that assessee in the instant case was a confirming party and it has not made any sale. The assessee initially advanced the money to MAESL which was returned back to assessee and MNI. Now the question before us arise so as to whether assessee has made any sale of the impugned property without recording the impugned sale in its books of account. From the facts, we find that provision of Sec. 68 of the Act are attracted only in a case where any credit entry found in the books of account of assessee which is not explained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provision of Sec. 36(1)(iii) of the Act. The AO accordingly disallowed the interest expense of Rs. 2,47,91,689/- and added to the total income of assessee. 10. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that it is intending to deal in the property business. Therefore the aforesaid impugned property was purchased which is located at a very prominent area of Vadodara and it has good commercial value if properly utilized. Therefore, the impugned property was purchased with a sole intention of carrying the business of real estate and same was shown as closing stock in its books of account. The assessee further submitted that it has earned business income of Rs. 40,500/- by way of storage charges and same was shown in its books of account under the head "business and profession". Accordingly, Ld. CIT(A) deleted the addition made by AO by observing as under:- "15. I have carefully considered the observations of the Assessing Officer in the assessment order and submissions of the appellant. The appellant has bought the property jointly with M/s Neptune infrastructure for a consideration of Rs. 111,43,65,000/- and the appellant's sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, the appellant is entitled for claiming of expenses incurred as interest in Profit & Loss Account. The said interest expenditure amounting to Rs. 2,47,91,6889/- is held to be allowable u/s 36(1)(iii). In view of this, the addition made by the Assessing Officer amounting to Rs. 2,47,91,689/- is hereby deleted. These grounds of appeal are allowed." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 11. Ld. DR before us vehemently relied on the order of AO and he left the issue to the discretion of the Bench. On the other hand, Ld. AR before us submitted that the impugned property was purchased with the sole intention to venture the real estate business. Ld. AR further submitted that the activity of the property business is duly covered in the main object of the assessee and in support of assessee's claim has submitted the copy of its Memorandum & Articles of Association and drew our attention to its clause (iv) which reads as under:- "4. To carry on the business as dealers, owners and investors in land, building, factories for which purpose to acquire and purchase, take on lease, tenancy or n exchange, hire or by other means obtain ownership and/or op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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