TMI Blog2017 (3) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute a starting point of inquiry. They are, however, not to be taken as evidence or material showing any suppression or understatement of the sale price. If on further probe, the assessing Officer was able to unearth any evidence or material on the basis of which actual suppression of the sale price could be found, then the additions made on that basis would be valid. But it is not open to him, merely on the basis of what he perceives to be the market conditions, to make additions to the sale price or the profits, without any evidence of understatement. In our considered opinion, the Assessing Officer has drawn a presumption that all the units booked after 07.10.2009 must have also fetched on money to the assessee. The A.O. has not made any further enquiry to substantiate or justify his presumption. The A.O. has not pointed out a single transaction in the books of accounts as not properly accounted for in the books vis-à-vis the details furnished by the assessee.No doubt, the assessee has made disclosure of additional income of ₹ 9 crores for the conveyance done and bookings done for the period between 01.04.2009 and 06.10.2009 but this by itself cannot prompt the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly or indirectly incurred in relation to the exempt income which is claimed against the income taxable. The A.O. accordingly computed the disallowance u/s. 14A read with Rule 8D and disallowed ₹ 12,80,892/-. 5. The assessee carried the matter before the ld. CIT(A) but without any success. 6. Before us, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. The ld. D.R. strongly supported the findings of the revenue authorities. 7. After giving a thoughtful consideration to the order of the authorities below. We find that there is no dispute that the assessee was having sufficient interest free funds available with it for making the investments in shares. It is equally true that the assessee could not demonstrate the nexus between the interest free funds and the purchases of shares. In our considered opinion and to meet the interest of justice, the disallowance u/s. 14A should be made to the extent of the exempt income claimed by the assessee. We, accordingly, direct the A.O. to restrict the disallowance to the extent of exempt income. Ground no. 1 is partly allowed. 8. Ground no. 2 relates to the addition to the extent of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; sold in October -2009 and over and above that rate adding a sum of ₹ 373.65 per square yard. For calculating the average on money rate the Assessing Officer has considered the average of entire sales hence he cannot take the highest rate for determining the rate of sales of the remaining plots. It is also seen that the average sale rate recorded for the entire plots is ₹ 2,169/- per sq. yard. The highest rate is ₹ 2,813/- per sq. yard in October, 2009 and the lowest rate is ₹ 3,586/- per sq. yard in April, 2009. It is seen that the average rate of. the lands sold during September 2009 is ₹ 24137- per square yard and the average rate in August is ₹ 2420/- per square yard and the average rate in July 2009 is 1600/- per square yard. In view of the above the Assessing Officer is directed to adopt the rate of ₹ 24207- per square yard and. add to this rate a sum of Rs, 373.65 for calculating the on money charged on the lands sold i.e. 19470 sq. yards. The addition works out to ₹ 25,15,654.50 as under: (2793.65X 19470) = 54392365.50- 5,18,76,711=25,15,654.50 . The addition made by the A.O. is hence reduced as indicated above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale price shown except in three cases. The first is under Section 145 of the Act. Where the sale of properties is part of the business of the assessee, the Assessing Officer, if he is of the opinion that the accounts are not correct and complete, may proceed to reject the books of accounts and thereafter make a best judgment assessment of the income in the manner prescribed by Section 144. The second is the case where Section 50C of the Act is invoked on the basis of the prices fixed by the Stamp Valuation Authorities of the State Government. The third is the case of Section 92BA inserted by the Finance Act, 2012 w. e. f. 01.04.2013. This section gives power to the assessing officer to recalculate the profits shown by the assessee in cases of specified domestic transactions where the aggregate of such transaction entered into in the relevant accounting year exceeds a sum of ₹ 5 crores. 20. The power of the assessing Officer to raise valid queries on the basis of the facts or unusual features noticed by him must be conceded. The features noticed by him in the assessees business certainly constitute a starting point of inquiry. They are, however, not to be taken as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01,63,640/-. 27. Ground no. 2 is dismissed qua our detailed discussion given in allowing ground no. 2 of assessee s appeal in ITA No. 693/Ahd/2013 (supra). 28. This leaves with only grievance of the revenue relating to the deletion of the disallowance of ₹ 9,07,942/-. 29. During the course of the scrutiny assessment proceedings, the assessee was asked to explain the interest expenditure claimed u/s. 36(1)(iii) of the Act and to justify the reasonableness of the interest charged on the advances given during the course of its business. After perusing the detailed submissions of the assessee, the A.O. was of the opinion that the assessee has given advances at a rate lower than the average rate of the three assessment years which works out to 14.94% and since the assessee has given interest bearing advances at a rate lesser than 15%, the A.O. worked out the disallowance at ₹ 9,07,942/-. 30. Assessee carried the matter before the ld. CIT(A) and reiterated its contention. 31. After considering the facts and the submissions and the two decisions of the Hon ble Supreme Court in the case of Munjal Sales Corporation 298 ITR 298 and S. A. Builers Ltd. 288 ITR 1, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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