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TMI Blog2025 (5) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... icer completed the assessment u/s 143(3) of the IT Act determining total income at Rs. 54,83,58,570/- as against the income returned by the assessee at Rs. 1,51,62,226/-. The above assessed income includes following additions on account of :- (a) Disallowance u/s 40A(3) of Rs. 5,12,194/-, (b) Interest income of Rs. 53,32,948/- which remained to be added back by the assessee, (c) Disallowance of agricultural income of Rs. 6,00,000/-, (d) Disallowance of other expenses of Rs. 35,00,000/-, (e) Deemed dividend u/s 2(22)(e) of Rs. 49,59,14,779/- and (f) Disallowance of deduction claimed u/s 80IA of Rs. 2,73,36,424/- 3. In first appeal, after considering the reply of the assessee, Ld. CIT(A) reduced the addition made u/s 68 of the IT Act on account of agricultural income of Rs. 6,00,000/- to Rs. 3,00,000/-, Ld. CIT(A) also reduced the addition made on account of other expenses of Rs. 35,00,000/- to Rs. 20,00,000/-. However, the addition of Rs. 5,12,194/- made u/s 40A(3) and assessee's claim of deduction of Rs. 2,73,36,424/- u/s 80IA was confirmed by Ld. CIT(A). It is this order against which the assessee is in appeal before this Tribunal. However, Ld. CIT(A) also deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer on the ground that the assessee has not furnished prescribed audit report in Form 10CCB. In this regard, Ld. AR submitted that form 10CCB was filed during assessment proceedings and the same was neither considered by the Assessing Officer nor by Ld. CIT(A), however while inspection of the assessment case records by the assessee, it was found that Form 10CCB was already filed by the assessee. In support of this contention, Ld. AR furnished an affidavit duly sworn in by Mr. Premnath Madhavrao Fakire, the Chief Financial Officer of the assessee company. In this affidavit, it was stated that the original assessment case records were summoned from the Assessing Officer on the directions of the Tribunal and after inspecting the same it was found by the assessee that Form 10CCB was available in the case record, which was filed by the assessee during the course of assessment proceedings and the same was forming part of the original assessment records. Ld. AR submitted that the Chief Financial Officer in his affidavit also stated that the agreements/tender documents were submitted to the Assessing Officer in hard copy as well as in Pen Drive and despite that the Assessing Officer pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sworn in by the Chief Financial Officer of the assessee company stating that Form 10CCB was filed during the course of assessment proceedings and the same is still available in the original assessment case records. It is also the contention of the assessee that this fact was revealed when the assessee sought permission of inspection of original assessment case records which was called at the direction of this Tribunal. We find in the affidavit that the assessee also claimed that the relevant agreements/documents were also handed over to the Assessing Officer physically as well as in Pen Drive. Considering the totality of the facts and without going into the merits of the case, we deem it appropriate to set-aside the order passed by Ld. CIT(A) with regard to ground no.4 only i.e. in respect of disallowance of deduction claimed by the assessee u/s 80IA of the IT Act and remand the matter back to him with a direction to decide this limited issue only, afresh, as per fact and law, after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A) in this regard and produce additional documents/evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the amount of loan advanced Rs. 60,45,43,526/- by M/s Patil Construction & Infrastructure Ltd. to the assessee company i.e. M/s M.B. Patil Construction Pvt. Ltd. will be treated as deemed dividend u/s 2(22)(e) of the IT Act.. However, section 2(22)(e) limits the amount of deemed dividend to the extent of accumulated profits of the lender company (i.e. M/s. Patil Construction & Infrastructure Ltd. Since the accumulated profits in audit report of M/s. Patil Construction & Infrastructure Ltd. was Rs. 49,59,14,779/- accordingly deemed dividend in the hands of the assessee company M/s M. B. Patil Construction Pvt. Ltd. was restricted to Rs. 49,59,14,779/- and the same amount is added back to the total income of the assessee company as deemed dividend u/s 2(22)(e) of the IT Act by the Assessing Officer. 14. In first appeal, after considering the reply of the assessee, Ld. CIT(A) deleted the above addition. It is this order against which revenue is in appeal before this Tribunal. 15. Ld. DR appearing from the side of the revenue submitted before us that the order passed by Ld. CIT(A) is unjustified. LD DR further placed reliance on latest decision passed by Hon'ble Apex court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition for deemed dividend u/s 2(22)(e) of the IT Act back to the file of Ld. CIT(A) who shall examine the facts in the light of above judgement of Hon'ble Apex Court in the case of Gopal And Sons (HUF) (supra) and shall also conduct necessary enquiry to examine about the application of alleged funds received by the company. Before parting, we also notice that one of the ground raised by Ld. Counsel for the assessee is that the transaction between the two companies i.e. one which gave the alleged some and one which received the alleged sum are in the nature of business transactions, however, as to whether the company which has given the loan is into lending business or not, this aspect also needs to be considered by Ld. CIT(A) while carrying out the proceedings of examination of the issue of addition for deemed dividend u/s 2(22)(e) of the IT Act. Needless to mention, a proper and fair opportunity shall be granted and the issue to be decided in accordance with law. Thus, the ground no.1 raised by the Revenue is allowed for statistical purposes. 18. In ground no.2, the Revenue has challenged the order of Ld. CIT(A) wherein relief of Rs. 3,00,000/- was allowed to the assessee in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. Brief facts are that during the course of assessment proceedings the appellant failed to furnish details regarding "other expenses" debited at Rs 3,60,27,497/-. The AO noted that in comparison to marginal rise in the turnover, the rise in the expenses claimed under the head "other expenses" had gone up by 32%. For the failure to justify the reasonableness and business nature of such expenses, the AO made adhoc disallowance at Rs 35,00,000/- which was around 9.7% of total expenses. During appellate proceedings the appellant contended that turnover of its contract business was around Rs 92 crores and contracts were executed in different parts of Maharashtra and Karnataka. At the remote sites supervisors/ site engineers fail to maintain precise documentation. For these reasons adhoc disallowances to the range of Rs 5,00,000/- to Rs. 8,00,000/- were made during AYs 2006-07 to 2008-09. In similar circumstances in the case of sister concern M/s Patil Industries out of expenses debited of Rs 4.27 crores, the disallowance was upheld to the tune of Rs 24,30,095/-. It was requested that disallowance may be confined to reasonable amount. In the facts and circumstances it would meet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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