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TMI Blog2017 (10) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,00,000/- made by AO as unexplained cash credit u/s. 68. 4. The appellant craves, leave for reserving the right to amend, modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of appeal." 2. The brief facts of the case are that assessee company filed its return of income declaring income of Rs. 3,57,080/-. Notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued and in response thereto the Assessee's A.R. attended the hearing from time to time. The assessee is in the business of real estate and property development and purchase and sale of lands and flats etc. During the year the assessee had received the rental income of Rs. 49,20,000/- which the assessee had declared as income from real estate business. The AO treated the rental income as income from house property u/s. 22 of the Act and has allowed the statutory deduction u/s. 24 of the Act. Further the AO has disallowed all the business and administrative expenses mainly on the ground that the assessee is not in business but in investment. AO further noted that assessee had collected share application of Rs. 68,30,000/- which included share capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Jewellery Business. 6) Minutes of AGM of the Company shows that the assessee had purchased gold for long term investment purposes, relevant portion of Minutes is reproduced as under: (i) Assessee took loans of Rs. 2.94 cr. By mortgaging the property from which it is getting rent out of this loan amount, the assessee has invested in properties and gold. (ii) None of property was sold during the year under reference as well as in previous years from incorporation of company till date. (iii) Interest is being paid every year against the loan taken in invested in the properties and being claimed as business expenditure against the rental income. From the facts of the case it appears that the assessee is not doing any business but claiming business expenditure against rental income. Thus, AO has rightly disallowed all business expenditure and treated rental income as income from house property allowing 30 % of deduction against rental income. Ld. CIT(A) has not rebutted the finding of the AO and deleted the addition arbitrarily which is not justified at all. Grounds of Appeal 3: CIT(A) erred in deleting addition made by the AO u/s 68. Facts 1) Assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence of positive nature to show that the said subscribers had made a genuine investment acted as angel investors, after due diligence or for personal reasons. 2. CIT Vs Ultra Modern Exports (P.) Ltd (40 taxmann.com 458, 220 Taxman 165) (Copy Enclosed) Where Hon'ble Delhi High Court held that where in order to ascertain genuineness of assessee's claim relating to receipt of share application money, Assessing Officer sent notices to share applicants which returned unserved, however, assessee still managed to secure documents such as their income tax returns as well as bank account particulars, in such circumstances, Assessing Officer was justified in drawing adverse inference and adding amount in question to assessee's taxable income under section 68. 3. CIT Vs Frostair (P.) Ltd (26 taxmann.com 11, 210 Taxman 221) (Copy Enclosed) where Hon'ble Delhi High Court held that where details furnished by assessee about share applicants were incorrect, addition under section 68 was proper. 4. CIT Vs N R Portfolio Pvt Ltd (29 taxmann.com 291) (Copy Enclosed) where Hon'ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewellery business and as such the income of the assessee is to be assessed as business income. Moreover, if the action of the AO is confirmed the assessee will be claiming additional deduction u/s 24 @ 30% in addition to the business and administrative expenses as the assessee is in the real estate business and the income of the assessee will be assessed lower than the returned income. In view of the above, we are of the view that that there is no proper justification for changing the head of income which will result in reduction of return income and accordingly the Ld. CIT(A) has rightly directed the AO to assess the rental income as business income as claimed by the assessee, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground no. 1 raised by the Revenue. This view is fortified by the decision of the Hon'ble Supreme Court of India in the case of Chennai Properties & Investments Ltd. vs. CIT reported [2015] 56 taxmann.com 456 (SC) wherein, it has been observed that "Section 28(i), read with section 22, of the Income Tax Act, 1961 - Business income - chargeable as (letting out of properties) - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to make the selective addition of share capital of two shareholders out of the 07 shareholders without any valid reasons. It was also submitted that all the share capital has been received from other assessees having valid PAN numbers and having filed their I.T returns in their respective cases. We note that in this case the share capital money has been received through the banking channel and all the details and confirmations of the parties were submitted before the AO but the AO has selectively made the addition of Rs. 30,00,000/- in the case of two share holders only without any valid reasons, which is not permissible under the law. We further note that no material evidence has been collected against the assessee for making the selective addition of the two shareholders of the share capital of Rs. 30,00,000/-only out of total share capital of Rs. 68,30,000/- and accordingly the addition made by the AO was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the same and reject the ground no. 3 raised by the revenue. 6. We further find that the case laws cited by the Ld. DR are not applicable in the present case being distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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