TMI Blog2021 (10) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices on CDPL from time to time and received the payment after deduction of tax at source. M/s CDPL confirmed the transactions in response to notice u/s 133(6). All these facts as well as documentary evidences bolster the claim of the assessee that it has provided management services to M/s CDPL. Merely because there were deficiency in the agreement would not invalidate the agreement since both the parties have acted on the terms of the agreement for which sufficient documentary evidences have been filed by the assessee before lower authorities. Therefore, the lower authorities, in our considered opinion, were not justified in doubting the business receipts of the assessee and assess the same as Income from other sources as unexplained income. We order so. Ground No.1 of the appeal stand allowed. Assessment of interest income - Allowable Business Income or not? - We find that the funds have been advanced by the assessee to its wholly owned subsidiary for the purpose of business. The project being carried out by M/s CDPL was in line with the main object of the assessee. It could also be seen that the loans have been funded out of the proceeds of the debentures issued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) erred in confirming AO's order, in treating the interest income amounting to ₹ 217.87 Lacs and related interest expenses amounting to ₹ 220.02 Lacs under Income from other sources as against profits gains from business or profession. 3) Disallowance of salary, depreciation other expenses. The Ld. CIT(A) erred in confirming AO's order in disallowing salary, depreciation other expenses amounting to ₹ 144 Lacs. As evident, the assessee is aggrieved by the fact that business receipts interest income were assessed under the head Income from other sources and consequently, business expenses were disallowed. 1.4 The Ld. AR, drawing attention to various documents as placed in the paper-book, advanced arguments to assail the stand of lower authorities. The synopsis of submissions has also been filed which has duly been considered by us. The Ld. DR, on the other hand, supported the orders of lower authorities and submitted that impugned order would not require any interference on our part. 1.5 We have carefully heard the rival submissions and perused relevant material on record. We have also deliberated upon various judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng details, copy of appointment letter and job agreement with salary details etc. was also furnished as demanded by Ld. AO. Mr. Peter Young was stated to be key person who undertook / executed the job on behalf of the assessee. 2.3 The attention was drawn to assessee s main object as mentioned in the Memorandum of Association. The main object would, inter-alia, include to carry on the business of developing real estate for the purpose of commercial, industrial or residential use and other immovable properties and act as realtors, builders, contractors, designers, architects, consultants, developers, construction managers of all types of real estate development. Pursuant to main objects, the assessee acquired M/s CDPL who was the owner of a mall in the name of Pride Mall. The assessee also filed documents in support of the fact that various expenditures were incurred for business purposes only and therefore, the same were allowable deduction. The perusal of financial statements would show that the assessee had earned fees of ₹ 145 Lacs along with interest income of ₹ 217.87 Lacs as received from M/s CDPL @10% on loans granted by the assessee. As against the same, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces could be furnished by the assessee with respect to various claims and therefore, the action of Ld. AO was confirmed. Aggrieved, the assessee is in further appeal before us. Our findings Adjudication 4.1 Upon perusal of orders of lower authorities as well as documents on record, it could be gathered that the main object of the assessee (as per Memorandum of Association; Page nos. 103 to 154 of Paper Book) was, inert-alia, to develop real estate for the purpose of commercial, industrial or residential use and other immovable properties and act as realtors, builders, contractors, designers, architects, consultants, developers, construction managers of all types of real estate development. Pursuant to the main objects, the assessee acquired M/s CDPL who became 100% subsidiary of the assessee. M/s CDPL was engaged in developing a mall i.e. Pride Mall at Pune. For the same, the assessee was appointed for providing development management services w.e.f. 01/09/2011 in respect of the said project and an agreement was entered into with CDPL (page nos. 99 to 102 of Paper Book). To render the services, the assessee had employed Mr. Peter Young who was stated to have expert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.4 The appeal stand allowed in terms of our above order. Cross-Appeals for AY 2013-14 5. Facts as well as issues are substantially the same in this year. While framing assessment u/s 143(3) on 11/03/2016, Ld. AO assessed the business receipts as well as interest income as Income from other sources and disallowed various business expenses claimed by the assessee. The Ld. CIT(A) confirmed the stand of Ld. AO except to the extent that Ld. AO was directed to allow all expenditure which was necessary to earn the income from other sources. Aggrieved, the assessee as well as the revenue is in further appeal before us. 6. Facts being pari-materia the same as in AY 2012-13, our adjudication as contained therein shall mutatis mutandis apply to this year also. In other words, business receipts as well as interest income would be assessable as Business Income. The deduction of business expenditure shall be allowed to the assessee subject to verification by Ld. AO. The assessee s appeal stand allowed. The revenue s appeal stand dismissed. Conclusion 7. Both the appeals of the assessee stand allowed whereas the appeal of revenue stand dismissed. Order pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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