TMI Blog2017 (11) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... ther held that the Assessing Officer is not conducted any enquiry to disbelieve these documents furnished by the assessee, but simply arrive at the conclusion that these expenses are not genuine. In view of this we find no infirmity in the order of the Ld. CIT (A) in deleting the above addition Addition u/s 14A - Held that:- The assessee explained that assessee has invested a sum of ₹ 5.5 crore in fixed deposits received for which the loan was the source of the funds FDR was encashed on 11/01/2007 and invested in principle floating-rate mutual fund on which the assessee has received dividend. Therefore, with respect to this amount. There is a direct nexus of amount borrowed for the purpose of earning exempt income. Hence the interest were doubted in the table given at page No. 3 of the assessment order at serial No. 5 in investment in mutual fund was made from 1/11/2007, which was encased on 26/3/2007 for 5.5 crores and interest is working out thereon of rupees 1142945/– related to 74 days. In view of this, interest disallowance under rule 8D (2) (i) is required to be upheld. With respect to the other investment where the interest expenditure of ₹ 1 943289/–. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For The Assessee : Shri Arvind Kumar, Adv ORDER PER BENCH 1. This is the batch of 11 appeals pertaining to the same assessee from assessment year 2002 03 to assessment year 2009 10 and similar issues are also involved in these appeals, therefore, these are disposed of by this common order assessment year wise. Assessment year 2002 03 ITA number 2703/DEL/2010 (by AO) ITA No. 116/DEL/2013 (by assessee) 2. ITA number 2703/DEL/2010 is filed by Assessing Officer against the order of the Ld. Commissioner of Income Tax (Appeals) III, New Delhi dated 03/03/2010. 3. The revenue has raised the following grounds of appeal in ITA No. 2703 /DEL/2010:- 1. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in deleting the addition of ₹ 70,00,000/- made by the AO u/s 68 of the IT Act? 2. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on fact in deleting the addition of ₹ 35,000/- made by the AO u/s 68 of the IT Act on account of commission paid to obtain accommodation entries ? 3. Whether on the facts and in the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer issued show cause notice to the assessee on 31/10/2007 to produce all the above company‟s respective persons from whom the loan is taken, with requisite details to prove the identity and creditworthiness of the depositors as well as the genuineness of the transactions. The Ld. Assessing Officer further deputed the inspector for making necessary enquiries at the addresses of these companies, but it was reported by the inspector that no such company existed at the given address. Therefore, the Ld. Assessing Officer treated the sum of ₹ 20 Lacs received from ENPOL private limited, ₹ 25 Lacs received from IKA processors and distributors‟ private limited and ₹ 25 Lacs received from Junoon capital services private limited as income of the assessee under section 68 of the Income Tax Act. The Ld. Assessing Officer over and above these ₹ 70 lakhs made an addition of ₹ 35,000/ on account of commission paid for obtaining these accommodation entries by the assessee. Consequently, the assessment under section 153A of the Income Tax Act, 1961 was passed on 26/12/2007 by the Ld. Deputy Commissioner of Income Tax, Central Circle, 23, New Delhi dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) and contested that as there is no incriminating evidence found during the course of the search, the addition cannot be made. The Ld. departmental representative did not object to the proposition of the Ld. authorized representative. With respect to the delay in filing of the cross objection. Hence, in the interest of justice, being legal issue, we condone the delay as sufficient cause is shown. 8. The Ld. authorized representative submitted that impugned assessment year involved in assessment year 2002-03 for which the return of income was filed by the assessee on 28/10/2002 and such return was processed and assessed under section 143(1) of the Income Tax Act. He further submitted that search took place on Vikas Surya Group‟ on 1/9/2005. He further submitted that in any case, the time-limit for issue of notice under section 143(2) for the Assessment Year 2002 03 expired on 30/9/2003. Therefore, as on the date of the search these assessment was not pending. He further submitted that if the assessment is not pending on the date of the search, then, addition in the hands of the assessee i.e. the person searched can be made only if incriminating documents are unearthed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements have been utilized by the Assessing Officer. he further submitted that even during assessment proceedings assessee was not given copies of these statements which are annexed by AO to the assessment order. 9. The Ld. Departmental Representative vehemently contested the claim of the Ld. Authorized Representative stating that during the course of investigation carried out by the investigation wing statement of these 2 persons were recorded where they have stated that they are in the business of providing accommodation entries. He further submitted that the statement of these 2 persons clearly shows that they are not engaged in any financing business etc but they are the accommodation entry providers. He further stated that Assessing Officer was having the incriminating evidence of the statement of these 2 persons even prior to the search. He further on the merits submitted that the assessee has failed to submit the identity, creditworthiness of the lenders as well as genuineness of the transaction as according to the inspector these companies do not exist at the place the addresses given by the assessee. With respect to the creditworthiness he submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r scrutiny. It follows that if an assessee, after furnishing the return of income does not receive a notice under section 143(2) from the Department within the aforesaid period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return. 20. In Vipan Khanna v. Commissioner of Income Tax (supra), the Punjab and Haryana High Court referred to the same circular and observed that in case where the AO chose to verify the return and frame an assessment he has to issue a notice under Section 143(2) of the Act requiring the Assessee to produce his books of accounts and other material in support of his return. The High Court proceeded to observe: ....Thereafter he can make an assessment under sub-section (3) of section 143 of the Act. Another important change incorporated in sub-section (2) of section 143 of the Act is that the notice under this sub-section cannot be served on an assessee after the expiry of 12 months from the end of the month in which the return is furnished. Therefore, in a case where a return is filed and is processed under section 143(1)(a) of the Act and no notice under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not show any incriminating evidence which is found during the course of the search which even remotely can lead to the above addition made by the Ld. Assessing Officer. In view of this, respectfully following the decision of the Hon‟ble Delhi High Court in case of CIT versus Kabul Chawla (supra), we confirm the finding of the Ld. CIT (A) that addition has been made by the Ld. Assessing Officer without finding any incriminating evidence with respect to the share application money/share capital of ₹ 70 lakhs from 3 companies. In the result cross objection filed by the assessee succeeds. 13. As while deciding the cross objection of the assessee for assessment year 2002 03, We have held that the addition has been made in the hands of the assessee without unearthing any incriminating material during the course of the search carried on the assessee, such addition cannot be made. As no incriminating evidence could be brought to our notice. With respect to the above addition made by the Ld. Assessing Officer on account of share capital/share application money and on commission expenditure, we do not find any infirmity in the order of the Ld. CIT (A) and therefore the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed by the department against the impugned order of ld CIT (A) should be dismissed and his order should be accordingly upheld. 2. On the facts and circumstances of the case and in law, ld CIT(A) ought to have allowed the appeal of the assessee on the further ground that, the assessment originally completed did not abate under second proviso to section 153A and therefore, income originally assessed could not have been disturbed as no incriminating material was found in the search. 18. The brief facts of the case are that assessee is a company who filed its return of income for the impugned assessment year on 30/10/2004 at total income of ₹ 755290/ and the above return was processed and assessed under section 143 (1) of the income tax act. This return of income of the assessee was not picked up for the scrutiny. 19. On 01/09/2005 the search took place on Vikas Surya group‟ and above named assessee company which is part of that particular group therefore, notice under section 153A of the income tax act was issued upon the assessee on 15/06/2006 requiring it to furnish the true and correct return of total income for the aforementioned assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of information available on record, the Ld. Assessing Officer noted that in case of some of the parties on the date of issue of cheques to the assessee company as a capital on the earlier date or before that cash was deposited in their bank account to make available the bank balance with those share applicants. In case of some of the parties, Inspector was deputed to make local enquiry at address furnished by the assessee, he found that these companies are not existing at the given address. In view of the above facts the Ld. Assessing Officer made an addition of ₹ 1.84 crores in the hands of the assessee under section 68 of the Income Tax Act. The Ld. Assessing Officer further made the addition of ₹ 92,000/- in the hands of the assessee holding that the above share application obtained by the assessee is in the form of accommodation entry and the assessee might have incurred an expenditure of commission at the rate of 0.5% of the total amount of the above entries and therefore this amount has been spent by the assessee. Hence, the addition was made. Consequently, the assessment order under section 153A of the Income Tax Act was passed on 26.12.2007 under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the assessee had already filed its return of income on 30/10/2004 and as no notice under section 143 (2) was issued to the assessee on or before 30/9/2005, therefore assessment was not pending at the time of issue of notice under section 153A of the income tax act. He therefore submitted that as no incriminating evidence as recorded in the assessment order or otherwise was found during the course of the search and therefore he contended that in the completed assessment no addition can be made by the Ld. Assessing Officer without finding any incriminating material during the course of search. ACIT V Surya Build well Private Limited 24. The Ld. departmental representative vehemently contested this argument of the Ld. authorized representative stating that according to the provisions of section 153A of the income tax Act, pendency of the assessment is required to be seen at the time of initiation of the search under section 132 of the income tax act and not at the time of issue of notice under section 153A of the income tax act. He therefore submitted that as the search took place on 01/09/2005 by which date the last date by which the notice under section 143(2) should ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not existing at the given address and before giving money to the assessee on the previous day or on some earlier occasion they have deposited cash in their bank accounts to generate bank balance to give it is resemblance of genuineness of the transaction and their creditworthiness before issue of the cheques. He further submitted that the Ld. CIT(A) has also not looked into the whole transaction with a view to examine a fact that these are not the normal transactions, but the transactions with entry operators. He further submitted that the statement of the parties which is referred to by the Ld. Assessing Officer in his order are the entry operators and therefore the Ld. CIT (A) has erroneously referred to them as general statements. He relied upon the several decisions as under i. Navodaya Castles private limited versus CIT 2015 TIOL 314 . S. C IT 367 ITR 306 (2014) (DEL) ii. CIT versus M, A. F Academy private limited 361 ITR 258 (2014) (Delhi) iii. Rick Lunsford trade and investment limited versus CIT 2016 TIOL 207 -SC IT and 385 ITR 399 (2016) (Kolkata) iv. CIT versus Nipun builders and developers private limited (2013) 350 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which do not say anything about the transaction entered into by the assessee. He extensively referred to the statement recorded by the investigation wing which is attached to the assessment order stating that these statements do not relate to assessee at all. Further, he submitted that merely because the cash has been deposited by these companies before issue of the cheques to the assessee company share capital it does not become a non-genuine transaction. Therefore, he submitted that Ld. CIT (A) has correctly deleted the addition as assessee has discharged the onus of the issue of the share capital as provided under section 68 of the Income Tax Act. 28. We have carefully considered the rival contentions and also perused the orders of the lower authorities. Admittedly, the assessee has issued shares in the name of 16 companies during the year for ₹ 1.84 crores. Before the Assessing Officer the assessee has submitted the preliminary details such as share application forms, minutes of the board resolution authorizing the companies to make the application for the shares, copy of the certificate of incorporation copy of the permanent account number and the assessment detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order of those 16 companies and also compared the names of that company which are given by the entry operator vide a statement dated 22/9/2003, which is annexed as part of the assessment order. On comparison of the names of the companies out of the 16 company. We could only find the name of the company which is mentioned at serial No. 11 at page No. 2 of the assessment order and we could not find all other 15 companies in that particular list. Therefore it is also not apparent that how the Assessing Officer has stated that these companies from which the assessee has obtained the share application money are connected with the entry operators who statement has been recorded by the investigation wing of the income tax Department. Coming to the order of the Ld. CIT (A) he has also accepted the version of the assessee despite there being the statement of the entry operators and without examining the fact whether this entry operator is related to all these companies or not, has deleted the addition. It should have been the concern of the Ld. CIT (A) to verify the genuineness of the transaction of these companies for issue of share capital. Furthermore, the Ld. CIT (A) has merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 3 and 4 are also related to the same issue and are consequential with respect to the addition of ₹ 92,000/ , we direct the Ld. Assessing Officer to examine the addition only after deciding the ground No. 1 of the appeal afresh. In view of this ground No. 2 4 of the appeal of the revenue are dismissed. 30. In the result appeal of the revenue is allowed for statistical purposes. 31. Now we come to ITA No. 2121/Del/2012 for assessment year 2004 05 which is filed by the revenue against the order of the Ld. CIT(A) XXXIII, New Delhi dated 24/2/2012 passed in appeal No. 613/10 11/413 against the order of the Ld. Assessing Officer passed under section 153A, read with section 143 (3) of the Income Tax Act, 1961 on 31/12/2010 passed in pursuance of searches seizure operation carried out on the assessee on 19 01 2009. 32. The revenue has raised the following grounds of appeal in ITA No. 2121/Del/2012 for the Assessment Year: 2004-05:- 1. On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in deleting the disallowance of ₹ 14,38,008/- made by the Assessing Officer on account of payments made to various suppliers/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 92,000/- on account of the commission on the same. Consequently, assessment under section 153A/143 (3) of the Act was passed on 31/12/2010 determining total income of the assessee of ₹ 20685298/ . Assessee being aggrieved with the order of the Ld. Assessing Officer preferred an appeal before the Ld. CIT(A). 34. Before the Ld. CIT (A) assessee submitted that whole addition of ₹ 1438008/ has been made by ld Assessing Officer for the only reason mentioned in show cause notice dated 16/12/2010. the Ld. Assessing Officer made some enquiry, in some other case in respect of M/s Spiral Aluminum and Glass which was not founded the address mentioned in the bill. Therefore, on the same ground he issued a show cause notice to the appellant. The Ld. CIT(A) held that assessee has not purchased any material from M/s Spiral Aluminum and Glass. He further held that all the bills shows the name, address and phone number of the contractor or suppliers, description of the goods supplied and nature of services rendered along with the rates and measurement etc. According to him, it goes to show that the transaction with these parties have been made in the normal course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case. Therefore, if any addition is required to be made during the course of framing of the assessment under section 153A of the Income Tax Act, it should have been made on the basis of the incriminating material found during the course of the search. With respect to the addition made by the Ld. Assessing Officer of disallowing the expenditure of purchases and work done by the assessee through contractor was not based on any incriminating material CIT(A) has recorded in his order that no adverse material has been brought on record by the Ld. Assessing Officer for making this disallowance. No such material has also been brought before us. Therefore, apparently respectfully following the decision of the Hon‟ble Delhi High Court in case of CIT versus Kabul Chawla (supra), in the concluded/completed assessment, no addition can be made in absence of incriminating material hence, this issue itself the addition deserves to be deleted. 37. Even otherwise on the merits of the case, the Ld. Assessing Officer has made the disallowance stating that spiral aluminum and glass was not found at the given address and therefore this disallowance has been made. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) and now we have set aside the whole issue back to the file of the Assessing Officer. In view of this ground No. 2, 3 and 4 of the appeal of the revenue are dismissed. 40. In view of this, the appeal of the revenue in ITA No. 2121/Del/2012 for assessment year 2004 05 is dismissed. A Y 2005-06 ITA No. 2122/Del/2012 (by revenue) 41. This appeal is filed by the revenue against the order of the Ld. CIT (Appeals) XXXIII, New Delhi dated 24/2/2012 in appeal No. 614/10 11/414 wherein the disallowance of ₹ 7416612/- made by the Assessing Officer on account of payment made to various suppliers and contractors is deleted. 42. The revenue has raised the following grounds of appeal in ITA No. 2122/Del/2012 for the Assessment Year: 2005-06:- 1. On the facts and circumstances of the case, the ld CIT (A) has erred in law and on facts in deleting the disallowance of ₹ 7416612/- made by the Assessing Officer on account of payments made to various suppliers/ contractors as the assessee had failed to prove the genuineness of these expenses. 2. The order of the ld CIT(A) is erroneous and is not tenable on facts and in law. 43. Briefly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material found during the course of search in the case of the assessee as these assessment is completed assessment. He further submitted that this is the 2nd assessment under section 153A of the income tax act in the hands of the assessee and in both the assessment proceedings, as well as in both the search, no incriminating documents with respect to this addition/disallowances was found. He therefore contested that this addition cannot be made in the hands of the assessee for this reason. On the merits of the issue, he submitted that the assessee is carrying on its business and therefore the payments have been made to these parties for the purpose of the work carried on by these parties and material supplied by them. They are all assessed to income tax; they are also subject to tax deduction at source on payment by the assessee and are regularly supplying material to the assessee. He further stated that payments have also been made through account payee cheque. He further stated that identical issue arose in the assessment year 2004-05; there also the Ld. CIT(A) has deleted the disallowance. 45. We have carefully considered the rival contention and also perused the orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 3986752/- made by the Assessing Officer on account of payments made to various suppliers/ contractors as the assessee had failed to prove the genuineness of these expenses. 2. The order of the ld CIT(A) is erroneous and is not tenable on facts and in law. 49. Parties before us submitted that the facts relating to this appeal is identical to the ITA No. 2122/Del/2012 for assessment year 2005-06. They further submitted that their argument also remains the same. The Ld. Authorized Representative further contended that in the present case the assessment is passed under section 153A of the Act on the basis of search carried out on 19/01/2009 wherein the addition of ₹ 3986752/ has been made to the income already assessed under section 153A for order dated 26/12/2007 of ₹ 9299570/ . He further submitted that the present assessment is also a completed assessment and not pending at the time of initiation of the search. Therefore, if any addition is required to be made should have been made on the basis of the incriminating documents found during the search otherwise not. He vehemently sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the addition of ₹ 3 086234/ under section 14 A of the act ignoring the fact that there is no requisite satisfaction of the Ld. Assessing Officer about the claim of the assessee, having regard to the accounts of the assessee. 54. The brief facts of the case, is that assessee is a company which is showing income from business, capital gain and house property as well as income from other sources. The assessee is a builder and real estate developer and involved in the development of a shopping complex in New Delhi. It was engaged in the construction work at Rohini, Delhi. Originally for assessment year 2007-08, assessee filed its return of income on 31/10/2007, which was subsequently revised on 21/12/2007 ₹ 426593900/-. The return of income was duly processed on 28/4/2008 under section 143 (1) of the income tax act. 55. Search and seizure operation was carried out on 19/01/2009 on the company and consequent to that assessment under section 153A of the Income Tax Act was initiated by issue of notice on 27/11/2009. In respect to the said notice the assessee filed the return of income declaring income of ₹ 26593900/ on 18/12/2009. 56. During the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee being aggrieved with the order of the Ld. Assessing Officer preferred an appeal before the Ld. CIT (A). The Ld. CIT(A) deleted the addition on account of the disallowance of contract expenses payment. However, confirmed the disallowance under section 14 A as well as lease agreement expenditure. On the disallowance deleted revenue is in appeal and on disallowance confirmed assessee has filed the cross objection. 57. The Ld. departmental representative with respect to the appeal of the revenue has reiterated the same argument which was stated by the Ld. Assessing Officer in its assessment order. He further submitted that the identical issue is covered in the earlier years case of the assessee. Therefore, they may also be considered. With respect to the disallowance under section 14 A, on cross objection of the assessee, he submitted that assessee has himself stated that the interest expenditure is disallowable and therefore the addition has been correctly confirmed by the Ld. CIT (A). With respect to the lease agreement charges he stated that these are not deductible expenditure either under income from house property as well as under the computation of income under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disallowance was with respect to the addition on account of lease agreement charges of ₹ 1 020912/ . For none of disallowances Assessing made are based on any incriminating material found during the course of the search. None was produced before us by the Ld. departmental representative. In view of these facts, we cannot uphold any disallowance, as they are not emerging out of incriminating documents found during the course of the search. Hence, all these disallowances/additions made by the Ld. Assessing Officer deserve to be deleted. 60. However, for completeness of the issues involved, we also deal with the various disallowances made by the Ld. Assessing Officer on merit, 61. The disallowances made by the Ld. Assessing Officer with respect to the material purchased by the assessee from 6 parties amounting to ₹ 3900954/ for the reason that on the bills submitted by these parties they have not quoted the TIN numbers. Therefore, the Ld. Assessing Officer has doubted the genuineness of these payments. We have already dealt with this issue in appeal for earlier years. In that order where we have confirmed the order of the Ld. CIT (A) in deleting those addition as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is noted that assessee has given interest-free advances to some of the parties and has also borrowed the loan from banks of 19.38 crores on which interest expenses of ₹ 66.98 lakhs have been paid. On examination of the details it was noted that assessee has invested in the floating rate mutual funds on which assessee has received a dividend amount of ₹ 2 133682 and therefore as the dividend income is exempt disallowance is required to be made on account of section 14 A for earning such exempt income. The assessee explained that assessee has invested a sum of ₹ 5.5 crore in fixed deposits received for which the loan was the source of the funds FDR was encashed on 11/01/2007 and invested in principle floating-rate mutual fund on which the assessee has received dividend. Therefore, with respect to this amount. There is a direct nexus of amount borrowed for the purpose of earning exempt income. Hence the interest were doubted in the table given at page No. 3 of the assessment order at serial No. 5 in investment in mutual fund was made from 1/11/2007, which was encased on 26/3/2007 for 5.5 crores and interest is working out thereon of rupees 1142945/ related to 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Taxman 248 (SC). We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. In view of this we direct the Ld. Assessing Officer to delete the disallowance of interest under section 14 A of ₹ 3 086234/-, except sum of ₹ 1142945/ . In the result ground No. 3 of the cross objection of the assessee is partly allowed. 64. Coming to the other disallowance of ₹ 102 0912/ on account of lease agreement charges. The brief facts relating to this issue is that the appellant and developed and promoted the shopping mall namely Vikas Surya shopping mall at Rohini, New Delhi. Development promotion and selling of the space in the mall is quite different when compared to other commercial properties when the promote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee prior to the entering into the renting agreement with the assessee. He further explained that most of the shopping mall is our 1st populated by putting the parties on the long grant and leaves by the developers so that these properties can be sold by the assessee. Based on the rent multiplier basis for on the basis of the higher selling price based on the cash flow generated by the developers. He further stated that it is none of the intention of the assessee to hire the property on rental basis to somebody and earn rental income. He further stated that if the properties are rented out in the maul speak the big brands and other big showrooms, then the other properties of the maul are also sold at higher rates and considerably quickly. This saves time in selling the properties, as well as also on the higher rate of the other properties. He submitted that the claim of the assessee and this expenditure is required to be deducted under the computation of the income as profits and gains of the business of the assessee under section 37 (1) of the income tax act, as it does not relate to the rental income but it relates to the overall project of the assessee. Therefore h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure which falls for the deduction under the head of income from house property at the claim of the assessee is that for the purpose of computation of total income of the assessee under the head business and profits and gains of this real estate development, such expenditure are required to be granted as deduction. To understand the claim of the assessee. It is necessary for the revenue authorities to understand the business of the assessee and whether such expenditure as Surrey false on the assessee is a businessman or not is required to be examined. In the present case, the revenue authorities below have failed to understand this particular aspect of the business of the assessee. This expenditure of the assessee is required to be examined from the test laid down for deduction of such expenditure under section 37 (1) of the income tax act. The expenditure incurred by the assessee is a. not of the expenditure described under section 32 to section 36, b. this has been incurred by the assessee during the accounting year, c. it is in respect of business which was carried on by the assessee and the profits of which are to be computed and assessed and are incurred after the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease agreement charges of ₹ 1 020912/ as deductible business expenditure under the head of profits and gains of business and profession. In the result ground No. 1 and 2 of the CO of the assessee is allowed. 68. Though we have held that disallowance under section 14 A of the income tax act is partly sustainable vide ground No. 3 of the cross objection of the assessee and ground No. 1 and 2 of the cross objection of the assessee are allowed. While dealing with the cross objection filed by the assessee, however, on the issue of addition and disallowance made by the Ld. Assessing Officer in case of completed assessment. We have held that there is no evidence much less incriminating evidence found during the course of the search. Hence, even otherwise none of the addition/disallowances made by the Ld. Assessing Officer challenged either in the appeal of the revenue or in the cross objections of the assessee are sustainable. 69. In the result the CO No. 96/del/2014 for assessment year 2007 08 of the assessee is partly allowed. 70. In the result appeal of the revenue in ITA number 2706/del/2013 is dismissed and cross objection No. 96/del/2014 for assessment year 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As the Ld. CIT appeal has sustained on account of lease agreement charges of ₹ 614328/- and brokerage for leasing of ₹ 2063565/ . Therefore, assessee has filed cross objection. 77. The assessee has raised the following grounds of appeal in CO No. 97/Del/2014 for Assessment Year 2008-09:- 1. Under the facts and circumstances of the case and in law Ld. CIT (A) erred in confirming the addition of 20,63,565/- for brokerage expenses and ₹ 6,14,328 for lease agreement charges, totaling to ₹ 26,77,893/-, being expenses paid for putting the properties, being stock in trade, on rent for enhancing market value and marketability of the properties. 2. Under the facts and circumstances of the case and in law Ld. CIT (A) erred in disallowing lease agreement charges and brokerage expenditure ignoring the fact that they were business expenditure as the concerned properties were stock in trade and income on their sale has been declared and accepted by the Department as business income. 78. Both the parties before us stated that the issue involved in the cross objections filed by the assessee in the above appeal are squarely covered by cross objection pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the about disallowance by giving the cogent reasons and we do not find any infirmity therein. None has been pointed out by the Ld. departmental representative. Hence, ground No. 1 of the appeal of the revenue in ITA No. 27 12/del/2013 is deleted. 83. In view of this, the appeal in ITA No. 2712/del/2013 for assessment year 2009-10 of the revenue is dismissed 84. The assessee has raised the following grounds of appeal in CO No. 97/Del/2014 for Assessment Year 2009-10:- 1. Under the facts and circumstances of the case and in law Ld. CIT (A) erred in confirming the addition of ₹ 7,23,204/- for brokerage expenses and ₹ 60,475/- for lease agreement charges totaling to ₹ 7,83,679/- being expenses paid for putting the properties, being stock in trade, on rent for enhancing market value and marketability of the properties. 2. Under the facts and circumstances of the case and in law Ld. CIT (A) erred in disallowing lease agreement charges and brokerage expenditure ignoring the fact that they were business expenditure as the concerned properties were stock in trade and income on their sale has been declared and accepted by the Department as business income. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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