TMI Blog2018 (3) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... cancelled by the assessee and in fact the assessee got the possession of the said premises in the year 2016. Under these circumstances bona-fide of the assessee could not be doubted and more so there is no incriminating material on record to prove/show that said drafts were cancelled later on or the said booking was cancelled. Assessee on the other hand made statement before the bench that the assessee got the premises in 2016 after building was completed by M/s. Deal-Well Developers. The contentions of Revenue that since construction of the building did not started before 2013 and hence the said payment cannot be allowed as application of accumulated funds can also not be accepted and is a fallacious argument as the spaces / flats/floors in commercial/residential building has two elements namely building as well proportionate land underneath the said space/floors/flats. The purchaser has to pay for not only the constructed area but also towards the proportionate land underneath said flats/floor/space. We are inclined to accept the contentions of the assessee based on the material on record and the appeal of the assessee stood allowed and the benefit of an application of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 10 years and assessee submitted the details as under:- Assessment year of accumulation Amount accumulated Amount utilized till end of Yr under assessment Purpose of Accumulation Purpose of utilization Balance Amt Unutilized 2001-02 NIL - Construction/Repairs of Bldg. - 1700000 2002-03 Nil - Construction/Repairs of Bldg. - 1700000 2003-04 2800000 Nil Construction/Repairs of Bldg. And addition to fixed assets - 4500000 2004-05 5200000 2500000 Construction/Repairs of Bldg. And addition to fixed assets Building Fixed Assets 7200000 2005-06 5150000 2000000 Construction/Repairs of Bldg. And addition to fixed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the AO. The AO observed from the receipt of payment as well from the bank statement that the assessee has paid this amount of ₹ 1 crore to the builder in the form of Demand Draft which has been debited in the assessee bank account on 30.03.2011. The AO was of view that the assessee should have made the payment by way of cheque instead of Demand Draft. The assessee replied that it is the assessee s discretion to make payment by demand draft. The AO observed that the assessee has got the debit to his account instantly by getting the demand draft issued from his bank before 31-03-2011 which as per AO lead to conclusion that the amount was not utilised before 31-03-2011. The AO issued notices u/s. 133(6) dated 20.01.2014 to the builder which was duly served . The builder was asked to submit the details of the transaction made with the assessee during the FY 2010-11 and to produce certain documents to substantiate the transaction with the assessee . In response to the notice u/s. 133(6), the builder submitted reply dated 24.11.2014, as under:- M/s. Deal Well Developers have entered into the agreement with M/s. Navodaya Kannada Seva Sangh in the FY 2011-12(AY 2012-13). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. 5. Since the bank has already debited the payments to our bank account on or before 31.03.2011 the amount is deemed to have been applied during the year as the money has gone out of the account. 6. Assessee has made payments by drafts to the builder by the end of March 2011 and the said drafts were cleared in the first of April 2011. Thereof, builder has recorded the receipts in April 2011 upon clearance of the drafts in his books which falls in FY 2011-12. 7. In view of the above explanations we request you treat the utilization of ₹ 1,18,07,699/- during the FY 2010-11, as having been spent by the assessee during FY 2010-11 as the money has actually gone out of the bank account of the assessee and therefore, it should be treated as utilized for the purpose. 8. Moreover, assessee is a charitable institution running an academic school, a charitable activity brightening the lives of thousands of students and therefore, we appeal to your goodselves to be reasonable and considerate with regard to the assessee favourably. The AO rejected the contention of the assessee as merely debiting the amount in the bank statement is not an application of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e this building to be built by the Builder Deep-well was adjacent to the school already run by the assessee and was a viable proposal for the assessee to expand its school keeping in view increased demand from students in the vicinity. It was submitted that Demand Draft were honoured and duly cleared and they got credited in the builders account in the month of April 2011 itself although the AO is stating that the said demand drafts got credited in builder account in August 2011. It was submitted that ultimately in 2016, the three floor along with terrace were given to the assessee by the builder Deal Well Developers. The assessee also produced its audited account which is placed in paper book to show that advances were paid towards school premises as is appearing in the assessee audited books of accounts of ₹ 1 crore. The Ld. DR on the other hand relied upon the order of the authorities below and also submitted that notices u/s. 133(6) were issued to the builder and inspector was deputed to visit the builder. It was submitted that builder had confirmed that during financial year 2010-11, no payment was received from the assessee by the Builder while it is only in the financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Building Fixed Assets 10350000 2006-07 2300000 400000 Construction/Repairs of Bldg. And addition to fixed assets Building Fixed Assets 12250000 2007-08 2300000 140000 Construction/Repairs of Bldg. And addition to fixed assets Building Fixed Assets 14410000 2008-09 2600000 430000 Construction/Repairs of Bldg. and addition to fixed assets Building Fixed Assets 16580000 2009-10 NIL 840000 Construction/Repairs of Bldg. And addition to fixed assets Building Fixed Assets 15740000 2010-11 NIL NIL NA NA 15740000 2011-12 2715000 1,18,02,699 Construction/Repairs of Bldg. And addition to fixed assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viable to book the space in the building consisting of three floor and open terrace which building is adjacent to the assessee s existing school and was found to be most suitable by the assessee for expanding its existing school keeping in view increased demand from the students in the area. The builder had issued the receipt on 05.04.2011 confirming the booking of the space while the MOU was entered in the month of October 2011. It is also not uncommon that the acquisition of property entails certain lengthy formalities and the persons rush to block the space/property before it is booked by others . It is not the case of the revenue that these demand drafts were subsequently cancelled at the behest of the assessee and also it is also not the case of the Revenue that the said commercial space was ultimately cancelled by the assessee and in fact the assessee got the possession of the said premises in the year 2016. Under these circumstances bona-fide of the assessee could not be doubted and more so there is no incriminating material on record to prove/show that said drafts were cancelled later on or the said booking was cancelled. The Ld. Counsel for the assessee on the other hand m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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