TMI Blog2018 (12) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... and ld. CIT(A) that the transaction of sale of shares is not genuine. Whence, neither the auditor has disputed the sale nor the accounts otherwise show that the sale of shares has not been reflected, then to hold that the entire sale of shares should be added would be erroneous. Thus, the addition of this amount in wake of aforesaid documents can be upheld and same is directed to be deleted. Disallowance being 4/5th of the expenditure claimed - amount incurred in respect of Bus Queue Shelters which has been treated as Deferred Revenue Expenditure by the AO - whether Department can treat a revenue expenditure claimed by the assessee as deferred revenue expenditure to be allowable over a period of time - Held that:- As decided in TAPARIA TOOLS LIMITED VERSUS JOINT COMMISSIONER OF INCOME TAX [2015 (3) TMI 853 - SUPREME COURT] once the assessee has shown it as revenue expenditure, then revenue cannot disallow the same by spreading it over the years and allow only part of it. In any case, this issue stands decided in favour of the assessee in the succeeding years, therefore, respectfully following the order of the Tribunal,we decide this issue in favour of the assessee. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the same reasoning and the finding given in the foregoing paragraph, we direct the Assessing Officer to delete the said addition. Addition on account of share capital/share premium raised by the assessee during the year from two shareholder companies - Held that:- The assessee cannot prove the source of the source and if there was any dubious nature of transaction for routing any unaccounted money then onus was upon the revenue to prove it. Even at the remand stage also, no inquiry whatsoever has been made by the Assessing Officer to prove that assessee’s own accounted money has been routed through these companies. Even if during the year, these companies did not have any revenue from operations, but if it is an investment company which has funds available with it in the form of share capital and share application money which has been made for the purpose of investment in other group companies, then it cannot be held that their source is not proved or these companies did not have any creditworthiness. Thus, in this case, nature and the source of the credit has been fully explained and without there being any contrary material brought on record by the department the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of Bus Queue Shelters (BQS), by treating the same as Deferred-Revenue in nature vide Para No. 4 of the assessment order in an envisaged manner without considering facts of the case and documents submitted by the appellant and without any cogent evidence. 4. On facts in law, the CIT (A) has grossly erred in holding the addition of ₹ 27,297/- by the LD AO on account of disallowance of expenditure in respect of charges for late filing of Service tax return vide Para No. 5 of the assessment order in an envisaged manner without considering facts of the case and documents submitted by the appellant and without any cogent evidence. 5. On facts in law, the CIT (A) has grossly erred in holding the addition of ₹ 1,47,647/- by the LD AO on account of disallowance of expenditure in respect of Bihar Project Expenses vide Para No. 6 of the Assessment Order in an envisaged manner without considering facts of the case and documents submitted by the appellant and without any cogent evidence. 6. On facts in law, the CIT (A) has grossly erred in holding the addition being disallowance of ₹ 28,94,472/- as notional interest on the amount of loans an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .14A read with Rule 8D. Accordingly, the same is dismissed as not pressed. We will take up rest of the grounds as raised by the assessee before us. 4. The brief facts of the case are that assessee is engaged in the business of advertising in electronic media with various regional new channels and also provides whole range of services including Ad campaign, design, creative and strategy incubation and development, advertisement in print and electronic media. In so far as the addition of ₹ 1,20,56,085/- on account of sale of shares, the Assessing Officer from the perusal of the annual account and report of auditors noted that transaction of sales of shares for ₹ 1,20,56,085/- and profit of ₹ 28,88,976/- earned thereon are not properly reflected in the affairs and in the profits of the company. The relevant extract of the auditors reads as under: Except for the transaction of Sale of Shares booked in the Profit loss account for a sum of ₹ 1,20,56,085/-. It has been explained to us that the said shares have been sold by the Broker but the payment has not been made to the company. Demand Account statements have not been provided for verification. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard-10% 51,56,001.20 3 Bill outward 10% [Other than Channel) 1,05,56,423.04 4 Bill Outward 12% 1,65,23,566.77 5 Bill Outward (12%) Other Than Channel 2,34,66,498.33 6 Bill Outward 1.8% 2 8,13,47,797.12 7 Bill Outward BBY 1,63,52,171.94 8 Bill Outward Bby 1.8 7,49,98,083.51 9 Production Sale 16,500.00 10 Profit on Sale of Shares 28,88,975.07 11 Sales CST 2% (Against Form-C) 7,14,480.00 12 Sales of Shares - Deliveries 91,67,109.93 13 S ales Other 20,06,12,563.00 14 Sales-VAT 12.5% 73, 45,424.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee once again would be absurd. It is not the case of the Assessing Officer and ld. CIT(A) that the transaction of sale of shares is not genuine. Whence, neither the auditor has disputed the sale nor the accounts otherwise show that the sale of shares has not been reflected, then to hold that the entire sale of shares should be added would be erroneous. In any case, the assessee has filed various documents to demonstrate the sale of shares which are as under:- No. 1 Copy of profit and loss account of M/s Rastriya Advertising Agency 2 Copy of stock summary as on 1.4.2008 3 Quantity wise details of sale of shares (stock summary opening stock as on 01.04.2008 sale summary for the period 01.04.2008 to 31.03.2009) 4 Copy of ledger account of sales of shares-Deliveries in the books of M/s Rashtriya Advertising Agency for the period 1.4.2008 to 31.3.2009 5 Copy of ledger account of profit on sale of shares in the books of M/s Rashtriya Advertising Agency for the period 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ordinary rule is to be applied, namely, revenue expenditure incurred in a particular year is to be allowed in that year. Thus, if the assessee claims that expenditure in that year, the IT Department cannot deny the same. However, in those cases where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of 'Matching Concept' is satisfied, which upto now has been restricted to the cases of debentures. 19. In the instant case, as noticed above, the assessee did not want spread over of this expenditure over a period of five years as in the return filed by it, it had claimed the entire interest paid upfront as deductible expenditure in the same year. In such a situation, when this course of action was permissible in law to the assessee as it was in consonance with the provisions of the Act which permit the assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was given in the books of account cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. It has been held repeatedly by this Court that ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 17. In so far as disallowance of ₹ 1,47,647/- on account of expenditure in respect of Bihar Project Expenses, the Assessing Officer has denied the claim on the ground that assessee could not prove the expenses nor any nexus with business activity was submitted. This finding has been upheld by the ld. CIT(A) also on the ground that assessee had been unable to produce any evidence of proof of expenditure incurred by the assessee. 18. Even before us, the assessee has only furnished details and ledger account but no evidences of such expenses have been filed to show that the same has been incurred for the purpose of business. Accordingly, the action of the authorities below is upheld. Thus, this ground is dismissed. 19. In ground no.6, the assessee has challenged the addition of ₹ 28,94,472/- on account of notional interest on the amount of loans and advances of ₹ 4,82,41,209/- given to the following parties:- Sr. No. Name of party Amount (Rs.) i) Vandance Poddar 2,00,00,000 ii) Prabhatam Aviation (P) Ltd. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ways there that these funds must have given out of surplus funds This proposition has been upheld by catena of judgment like, CIT vs. Bharti Televentures Ltd., reported in 331 ITR 502 (Del); CIT vs. Reliance Utilities and Power Ltd., 313 ITR 340 (Bom); CIT vs. HB Stock Holdings Ltd, 184 Taxman 352 (Del). Apart from that learned counsel has brought on record that identical claim has been accepted by the Department right from Assessment Year 2010-11 to 2014-15 and no disallowance was ever made. In view of the aforesaid facts, we do not find any reason to sustain such a disallowance of notional interest and same is directed to be deleted. 25. Similarly with regard to disallowance of sum of ₹ 16,65,000/- on account of notional interest on investment of ₹ 1,38,75,013/- in a joint venture with a purpose to develop a residential plot belonging to Director the company, Shri Dinesh Gupta, learned Assessing Officer noted that Shri Dinesh Gupta has interest of more than 20% in the company, and therefore, this is an interest-bearing fund diverted to him. Accordingly,he disallowed interest on this amount, amounting to ₹ 16,65,000/- 26. Before us, learned counsel reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any was not showing any income, and therefore, it did not have any capacity to makesuch a huge investment in the share capital. * Secondly, the subscriber company did not have any profitmaking apparatus and has merely rotated the money through its bank account. * He relied upon the decision of Hon'ble Delhi High Court in the case of N. Tarika Properties Pvt. Ltd., ITA No.2080/2010. * The bank statement of M/s. Prabhatam shows transfer entries in its account on the day in which the cheque has been forwarded to the assessee company and the balance sheet for the year ending 31st March, 2009 shows that it had current liabilities of ₹ 8.25 crore. After analyzing these facts he held that assessee has used its own unaccounted money to get in the form of share capital from these companies. 32. Before us, ld. counsel for the assessee submitted that assessee has discharge the prima facieonus by filing following documents in the case of M/s. Prabhatam Investment: - i. Copy of confirmation of purchase of shares dated 20.12.2011. ii) Copy of bank statement of M/s Prabhatam Investments Ltd. iii) Payments details of M/s Prabhatam Advertising (P) Ltd. in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egating to ₹ 93.75 crore which was far excess the investment made in share capital with the assessee company and he also drew our attention to the balance sheet of the said company which gives the following state of affairs as on 31.03.2009 and as on 31.03.2008 proving the net worth of the said company. Net Worth of the company PARTICULAR As on As on 31.3.2009 31.3.2009 Share Capital 20,000,000 20,000,000 Share Application 91,75,39,475 69,24,43,000 Loan Fund Secured Loan -- 12,96,77,774 Unsecured Loan 5,00,000 4,75,000 Grand Total 93,80,39,475 84,25,95,774 Application of Funds Fixed Assets Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have been given by him in his written synopsis. 35. On the other hand, ld. DR strongly relied upon the order of the ld. CIT(A) and submitted that ld. CIT(A) has threadbare discuss the financial status of these companies and also demonstrated as to how these companies were not generating any revenue but were routing money from their accounts for the purpose of investment. 36. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us. From the stage of the Assessing Officer, addition has been made on the ground that the assessee could not file confirmation, balance sheet or income tax return of these companies. However, before the ld. CIT(A) all the evidences were filed as noted above which were also sent to the AO to submit his remand report.However, ld. CIT(A) has merely gone by the fact that these companies were not having substantial income and in their balance sheet there were having huge liabilities and therefore,these companies have been used as a conduit for routing the assessee s own unaccounted money. First of all, it is not in dispute that the money received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been fully explained and without there being any contrary material brought on record by the department the addition cannot be sustained u/s 68; and consequently, same is directed to be deleted. 37. Lastly, coming to the issue of disallowance of ₹ 27,57,000/- made u/s.40a(ia), the facts in brief are that, assessee has raised loan from NBFC and has paid interest of ₹ 27,57,000/- which was claimed as an expenditure. However, the assessee has not deducted TDS on such a payment. 38. Before us the ld. counsel though admitted that TDS has not been deducted but now in view of 3rd proviso to section 40(a)(ia), brought by the Finance Act, 2014, w.e.f. 2014-2015, the disallowance if at all which could be made, would be 30% of the expenditure claimed, and therefore, the disallowance if at all should be restricted to 30%. Such a proviso has to be given retrospective effect in view of various decisions, like in the case of CIT vs. Ansal Land Mark Township which was in respect of 2nd proviso to Section 40a(ia). He submitted that same principle would apply here also. 39. Accordingly, we direct the Assessing Officer that disallowance should be restricted to 30% in view of the ..... 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