TMI Blog2018 (7) TMI 2154X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation by Ld.AO regarding the date of purchase of vehicle being 31.03.2009 establishes that vehicle could not have been used during the relevant F.Y. This very fact has been ignored by Ld.CIT(A). Assessee has also not proved before Ld.CIT(A) the utilization of vehicle during the relevant F.Y. for justifying the claim of depreciation. We, therefore, reverse the findings of Ld.CIT(A) which is not based upon the facts of the present case. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- CIT(A) restricted disallowance u/s 14A r.w. Rule 8D at ₹ 25,000/- without any basis. We direct Ld.AO to re-compute disallowance u/s 14A r.w. Rule 8D having regard to various decisions of Hon ble Delhi High Court in the case of CIT vs. Holecim India P.Ltd. HOLCIM INDIA P. LTD. [ 2014 (9) TMI 434 - DELHI HIGH COURT] as well as the decision of Apex Court in the case of Maxapp Investment Ltd.[ 2018 (3) TMI 805 - SUPREME COURT] . Addition being loss on share trading and termed as speculation loss - HELD THAT:- Assessee admits to the fact that trading in shares was undertaken by assessee during the year under consideration for the first time and it has been able to show that it was an invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed by Ld. CIT(A). Merely accepting bald statements of assessee without any supportive evidences cannot be accepted. It is observed that assessee has not been able to substantiate generation of cash, neither during assessment stage nor before Ld.CIT(A) , because of which surrender was made during survey proceedings.We direct Ld.AO to compute peak of entries in the slip pads seized containing details of cash transactions. Additions are based on seized documents - HELD THAT:- We do not find any infirmity in Ld. AO in making this addition as nothing else has been submitted by assessee before Ld. CIT (A) which would require any further verification. Addition on account of unexplained expenditure - HELD THAT:- Assessee has not discharged its onus of proving these documents to be dumb documents. Ld.AO is directed to investigate and enquire from the books of accounts of the assessee regarding the regular customers of assessee and transactions written off in respect of the same. Assessee shall assist Ld.AO in order to verify the relevant details by providing necessary information/producing evidences in support of its write-off. - ITA No. 2297/Del/2014 - - - Dated:- 24- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- made by the AO on account of unexplained expenditure? 9. Whether on the facts and circumstances of the case in law, the Ld. CIT{A) erred in deleting the addition of ₹ 9,00,000/- made by the AO on account of unexplained cash credit? 10. Whether on the facts and circumstances of the case in law, the Ld. CIT{A} erred in deleting the addition of ₹ 68,37,283/- made by the AO on account of Disallowance being unexplained cash credit being transaction contained on page no. 36 37 of Annexure A-3 ? 11. Whether on the facts and circumstances of the case in law, the Ld. CIT{A} erred in deleting the addition of ₹ 7,18,678/- made by the AO on account of Disallowance being unexplained cash credit being transaction contained on page no. 84 of Annexure A- 1 ? 12. That the order of the Ld. CIT{A} is erroneous and is not tenable on facts and in law. 13. That the grounds of appeal are without prejudice to each other. 14. That the appellant craves leave to add, alter, amend or forgo any ground{s) of appeal either before or at the time of hearing of the appeal. It is observed that present appeal has been pending disposal since 2016. From the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects at TDI at Kundali and others. Based upon materials available with Ld.AO found during survey, statements recorded of Directors and surrender of income made by assessee, Ld.AO made various additions totaling to ₹ 10,98,72,864/-, and granting depreciation etc. computed total income at ₹ 13,15,05,840/-. 3. Aggrieved by the additions made by Ld.AO, assessee preferred appeal before Ld.CIT(A). Ld.CIT(A) partly deleted additions. 4. Aggrieved by the order of Ld.CIT(A), Revenue is in appeal before us now. 5. Ld.CIT, D.R. submitted as under: Ground No. 1 The issue has been dealt with by the AO on page 5 para 13 of the assessment order. The AO mentions the said amount as the ROC fee paid which is a capital expenditure and the Revenue relies on the decision of the High Court in the case of Hindustan Insecticide Ltd. reported in 250 ITR 338. The CIT(A) has dealt with the issue on page 6 wherein he has allowed 1/5th of the said expenditure without giving any reasoning. The order of the CIT(A) observing that the assessee had claimed only ₹ 10,390/- and not ₹ 50,226/- is subject to verification by the AO as this fact is not verifiable. 5.1. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle could not have been used during the relevant F.Y. This very fact has been ignored by Ld.CIT(A). Assessee has also not proved before Ld.CIT(A) the utilization of vehicle during the relevant F.Y. for justifying the claim of depreciation. We, therefore, reverse the findings of Ld.CIT(A) which is not based upon the facts of the present case. Accordingly this ground raised by Revenue stands allowed. 7. Ground No.3 This issue has been dealt on page 10 para 18 of the assessment order. The assessee did have exempt dividend income. The CIT(A) has dealt with the issue on page 14 wherein he has reduced the disallowance to an estimated amount of ₹ 25,000/- which is not permissible under rule 8D. The revenue also relies on the decision of the Apex Court in the case of Maxapp Investment Ltd. 91 taxmann.com 154. 7.1. We have perused the submissions advanced by Ld.CIT, DR on the basis of records placed before us. 7.2. It is observed that Ld.CIT(A) restricted disallowance u/s 14A r.w. Rule 8D at ₹ 25,000/- without any basis. We direct Ld.AO to re-compute disallowance u/s 14A r.w. Rule 8D having regard to various decisions of Hon ble Delhi High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Explanation applies only to a case where there is a speculation business in terms of Explanation 2 to Sec.28 is not mandated by law. The deeming fiction contained in Explanation to Sec.73 is in relation to the entire activity of purchase and sale of shares whether or not they were effected by actual delivery. We therefore, disagree with the observations of Ld.CIT(A) that loss accrued to assessee could be set off against other business income. Accordingly this ground raised by Revenue stands allowed. 9. Ground No.5 The AO has dealt with the issue on page 13 para 22 while the CIT(A) has dealt with the same on page 29 of his order. As per the AO the corresponding properties were purchased as investment and were being shown year after year as investment. The interest on borrowed funds utilized for said investments were apparently capitalized (subject to verification). During the year the assessee converted the said investment into stock in trade and then valued it at market value on the closing date of the year. Apparently the assessee furnished a valuation report at the appellate stage which is an additional evidence. Moreover, on conversion of investment into stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned at all. In this background the AO added the gross amount of ₹ 9.25 crs and reduced the amount of ₹ 3 crs surrendered thereby making an addition of ₹ 6.25 crs. The CIT(A) has given his findings on page 41 of the order. In the preceding purchases the CIT(A) has just reduced the explanation of the assessee and his findings are more brief and cryptic wherein the assessee's explanation was accepted without recording his own satisfaction as to how he was satisfied about the claim of rotation of funds and working of peak. Even the working of peak has not been given in the assessment order. After accepting the assessee's version CIT(A) gave set off of the same against the amount of ₹ 3 crs declared. It is strange that in the same para the CIT(A) has also made an observation that the assessee should have got audit done of the money lending business and it concealed its income which means that even the CIT(A) had not satisfied himself regarding the correctness of peak. Therefore, the Revenue's appeal should be allowed. 10.1. We have perused submissions advanced by Ld.CIT, DR on the basis of records placed before us. On perusal of assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he outset upheld additions on merits, however, he has wrongly given set off of the said amount against the surrendered income of ₹ 3 crore which is actually in respect of a different set of Annexures. We therefore do not find any infirmity in Ld. AO in making this addition as nothing else has been submitted by assessee before Ld. CIT (A) which would require any further verification. Accordingly this ground raised by revenue stands allowed. 12. Ground No. 8 Ld.CIT DR submitted as under: The AO has dealt with the same the corresponding discussion in para 26 and 26.1 on page 22 23 of the assessment order. The assessee claimed that these are outstanding amount recoverable from various debtors and papers constituted a dumb document. The CIT(A) on page 45 46 accepted this contention and gave a relief for the reason that the AO did investigate the matter further with reference to the books of accounts of the assessee. The CIT(A) ignored the observation of AO in para 26.1 that the transactions are not reflected in books of accounts. In any case if nothing reflected amount receivable from debtors, it should have matched with the regular books of accounts for w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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