DCIT, Nashik V. Shri Vilas Kedu Birari, Nashik

ITA 1491/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80012 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: C D UPASANI
• Keywords: Capital asset; Notional interest; Commercial expediency
• Section: 43B; 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 149 1 /PN/20 1 2 ASSESSMENT YEAR : 200 9 - 10 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1, NASHIK VS. SHRI VILAS KEDU BIRARI, 8, SHUBHAM PARK, NEW PANDIT COLONY, NASHIK (APPELLANT) (RESPONDENT) PAN NO. AFBPB1178E APPELLANT BY: SHRI P.L. PATHADE RESPONDENT BY: SHRI C.D. UPASANI DATE OF HEARING : 07 - 05 - 2014 DATE OF PRO NOUNCEMENT : 21 - 07 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL , THE REVENUE HAS CHALLENGED T HE IMPUGNED ORDER OF THE LD. CIT(A) - I, NASHIK DATED 25 - 04 - 2012 FOR THE A.Y. 200 9 - 10. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS IN THE APPEA L: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 5,21,723/ - WHICH WAS MADE ON ACCOUNT OF NON PAYMENT OF EMPLOYEES CONTRIBUTION OF PF WITHIN DUE DATE AS PRESCRIBED IN THE INC OME TAX ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.280,071/ - WHICH WAS MADE ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE FOR NON BUSINESS PURPOS E. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 6,68,168/ - MADE ON ACCOUNT OF INTEREST EXPENSES USED FOR PERSONAL INVESTMENTS. 2 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A CIVIL ENGINEER AND UNDERTAK ES CIVIL CONTRACTS IN THE PRIVATE SECTOR. THE ASSESSEE CARRYING ON HIS BUSINESS UNDER THE NAME AND STYLE OF M/S. HARSH CONSTRUCTIONS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 200 9 - 10 DECLARING TOTAL INCOME OF RS. 2,15,98,340/ - AND AGRICULTURAL INCOME OF RS.1,99,970/ - . THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME - TAX ACT. 3. IN RESPECT OF GROUND NO. 1, AS OBSERVED BY THE ASSESSING OFFICER , THE ASSESSEE HAS DEBITED THE EMPLOYEES CONTRIBUTION TO THE PROFIT AND LOSS ACCOUNT TOWARDS PF AMOUNTING TO RS.5,21,723/ - WHICH WAS NOT PAID WITHIN DUE DATE S AS STIPULATED U/S. 36(1)(VA) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER HAS R EPRODUCED THE MONTH WISE DETAILS LIKE MONTH, AMOUNT OF EMPLOYEES CONTRIBUTION, DUE DATE OF PAYMENT, ACTUAL DATE OF PAYMENT AND DELAY IN DEPOSITING THE AMOUNT ETC. THE ASSESSEE TOOK THE PLEA THAT EVEN THERE IS A DELAY IN DEPOSITING THE AMOUNT IN THE GOVT. ACCOUNT BUT AS ALL THE AMOUNT S FOR THE MONTH OF APRIL, 2008 TO JANUARY, 2009 ARE PAID BEFORE THE END OF THE FINANCIAL YEAR AND CONTRIBUTIONS FOR THE MONTH OF FEBRUARY, 2009 TO MARCH, 2009 ARE PAID ON 08 - 04 - 2009 AND 16 - 06 - 2009 RESPECTIVELY WHICH ARE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME , IN VIEW OF THE AMENDMENT MADE BY THE FINANCE ACT, 2003, OMITTING SECOND PROVISO TO SEC. 43B NO DISALLOWANCE CAN BE MADE. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND MADE THE DISALLOWANC E TO THE EXTENT OF RS.5,21,723/ - WHICH RESULTED INTO THE ADDITION TO THE ASSESSEES TOTAL INCOME. THE LD. CIT(A) DELETED THE SAID ADDITION. 4. WE HAVE HEARD THE PARTIES. WE FIND THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS 319 ITR 306 (SC) AS WELL AS THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. AIMIL 3 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK LTD. 321 ITR 508 (DEL) . WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 1. 5. THE GROUND NO. 2 IS IN RESPECT OF ADDITION TOWARDS DISALLOWANCE OF INTEREST ON ACCOUNT OF INTEREST FREE ADVANCES. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA NOS. 5 TO 5.5. THE ASSESSING OFFICER HAS OBSE RVED THAT THE ASSESSEE HAS ADVANCED INTEREST FREE LOANS TO THE FOLLOWING 11 P ERSONS : S. NO. NAME OF THE PERSON ADVANCE AMOUNT 1 NISHANT BUILDERS & DEVELOPERS 300000 2 LOAN TO MAHAJAN 300000 3 MANOJ TIBREWALAL (NEW FLAT) 1100000 4 PANDIT BIRARI 51000 5 PITCHA RAVI (LOAN A/C) 200000 6 POORNIMA BHANDARI 895000 7 SHEKHAR DESHPANDE 100000 8 TULJA POULTRY FARM 400000 9 KADLAG 100000 10 DASHRATH DHABALE 25000 11 NITIN DEORE 11000 3482000 6. THE ASSESSEE FILED THE EXPLANATION IN RESPECT OF THE ABOV E ADVANCES. THE ASSESSING OFFICER HAS OBSERVED THAT ALL THE ABOVE LOANS AND ADVANCES HAVE BEEN GIVEN TO FRIENDS AND RELATIVES FOR THEIR PERSONAL NEEDS. IN THE OPINION OF THE ASSESSING OFFICER THE INTEREST TO THE EXTENT OF SAID DISALLOWANCE IS TO BE DISAL LOWED U/S. 36(1)(III) OF THE ACT. THE ASSESSING OFFICER ALSO REFERRED TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF S.A. BUILDERS 288 ITR 1 (SC). THE ASSESSING OFFICER ALSO OBSERVED THAT THERE IS NO COMMERCIAL EXPEDIENCY IN ADVANC ING THE SAID LOANS. THE ASSESSING OFFICER, THEREFORE, WORKED OUT THE INTEREST ATTRIBUTABLE TO SAID AMOUNT S @ 12.5% WHICH WAS THE INTEREST RATE PAID BY THE ASSESSEE TO THE BANK AND MADE THE ADDITION OF RS.2,80,071/ - . THE ASSESSEE CHALLENGED THE SAID DISALLOWANCE BEFOR E THE LD. CIT(A). THE 4 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK LD. CIT(A) DELETED THE ADDITION. THE OPERATIVE PART OF THE FINDING OF THE LD. CIT(A) IS AS UNDER: 6.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER , THE RIVAL SUBMISSIONS AND THE POSITION OF LAW ON THE SUB JECT. IT IS EVIDENT THAT THE ASSESSEE HAS ADVANCED THESE INTEREST FREE LOANS OUT OF HIS OWN FUNDS AND NO BORROWED FUNDS WERE UTILIZED FOR THIS PURPOSE. IT IS ALSO FOUND THAT THE LOAN TAKEN FROM THE BANK WAS UTILIZED FOR THE PURPOSE OF FIXED ASSET AND WORKI NG CAPITAL REQUIREMENT OF THE BUSINESS AND NO PART THEREOF WAS DIVERTED AS INTEREST FREE. FURTHER, OUT OF THE INTEREST FREE ADVANCES OF RS.34,82,000/ - THE MAJOR PART THEREOF I.E. RS.11,00,000/ - WAS PAID TO MANOJ DIBREWAL AS ADVANCE AGAINST PURCHASE OF FLA T. THIS APPEARS VIDE SERIAL NO. 3 OF THE TABLE GIVEN BY THE ASSESSING OFFICER ON PAGE 5 OF THE IMPUGNED ASSESSMENT ORDER. THE ASSESSEE HAS EXPLAINED THAT THE ASSESSING OFFICER HAS ARBITRARILY COMPUTED THE NOTIONAL INTEREST ON THESE ADVANCES DISREGARDING TH E FACTS OF THE CASE. THERE IS A MERIT IN THE SUBMISSIONS OF THE ID. A.R. IN THIS BEHALF. IT HAS BEEN DEMONSTRATED BY THE ASSESSEE THAT NO BORROWED FUNDS WERE GIVEN INTEREST FREE. THE ASSESSEE HAS BUSINESS DEALINGS WITH FOUR OF THESE PERSONS NAMELY PANDIR B IRARI, MAHAJAN, PICHA RAVI AND SHEKHAR DESHPANDE. IT IS VERIFIED FROM THE FACTS THAT THE ASSESSEE HAD SUFFICIENT CREDIT BALANCE IN THE CAPITAL ACCOUNT TO ADVANCE THESE 'INTEREST FREE ADVANCES. IN THIS BACKGROUND, IT IS HELD THAT NO PART OF INTEREST ON BORR OWINGS CAN BE DISALLOWED ON THE GROUND THAT PART OF MONEY BORROWED WAS ADVANCED INTEREST FREE TO THIRD PARTIES. THE ASSESSEES CASE IS SUPPORTED BY THE DECISIONS OF VARIOUS JUDICIAL AUTHORITIES (SUPRA). CONSEQUENTLY, THE ADDITION MADE BY THE AO AMOUNTING TO RS.2,80,081/ - IS UNJUSTIFIED AND IS, THEREFORE, DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. NOW, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL PLACED HIS RELIANCE ON THE DE CISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (BOM) . THE LD. COUNSEL ARGUES THAT THE GROSS TOTAL INCOME OF THE ASSESSEE FOR THE RELEVANT YEAR IS RS.2,17,25,844/ - AND THE ASSESSEE HAS ENO UGH CAPITAL AND RESERVES STANDING TO HIS CREDIT. HE ARGUES THAT THE LEGAL PRINCIPLES LAID DOWN IN THE CASE OF RELIANCE UTILITIES & POWER LTD. 5 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE AS THE ASSESSEE HAS THE CAPITAL TO THE EXTENT OF RS. 3,86,3 6,740/ - AND THE PRESUMPTION IS TO BE DRAWN THAT THE ADVANCES ARE MADE FROM THE ASSESSEES OWN CAPITAL WHICH IS ADMITTEDLY INTEREST FREE. WE FIND THAT THE TOTAL ADVANCES ARE TO THE EXTENT OF RS.34,82,000/ - AND THE ASSESSEES CAPITAL ACCOUNT , A S FILED BEFOR E US AS ON 31 - 03 - 2009 IS TO THE EXTENT OF RS.3,86,36,740/ - . IN OUR OPINION THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SUPRA) . IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SUPRA) IT IS HELD A S UNDER: 10. IF THERE BE INTEREST - FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST - FREE FUNDS AVAILABLE. IN OUR OPINION THE SUPREME COURT IN EAST INDIA PHARMACEUTICAL WORKS LTD. (SUPRA) HAD THE OCCASION TO CONSIDER THE DECISION OF THE CALCUTTA HIGH COURT IN WOOLCOMBERS OF INDIA LTD. (SUPRA) WHERE A SIMILAR ISSUE HAD ARISEN. BEFORE THE SUPREME COURT IT WAS ARGUED THAT IT SH OULD HAVE BEEN PRESUMED THAT IN ESSENCE AND TRUE CHARACTER THE TAXES WERE PAID OUT OF THE PROFITS OF THE RELEVANT YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS AND IN THESE CIRCUMSTANCES THE APPELLANT WAS ENTITLED TO CLAIM THE D EDUCTIONS. THE SUPREME COURT NOTED THAT THE ARGUMENT HAD CONSIDERABLE FORCE, BUT CONSIDERING THE FACT THAT THE CONTENTION HAD NOT BEEN ADVANCED EARLIER IT DID NOT REQUIRE TO BE ANSWERED. IT THEN NOTED THAT IN WOOLCOMBERS CASE (SUPRA) THE CALCUTTA HIGH COU RT HAD COME TO THE CONCLUSION THAT THE PROFITS WERE SUFFICIENT TO MEET THE ADVANCE TAX LIABILITY AND THE PROFITS WERE DEPOSITED IN THE OVERDRAFT ACCOUNT OF THE ASSESSEE AND IN SUCH A CASE IT SHOULD BE PRESUMED THAT THE TAXES WERE PAID OUT OF THE PROFITS OF THE YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS. IT NOTED THAT TO RAISE THE PRESUMPTION, THERE WAS SUFFICIENT MATERIAL AND THE ASSESSEE HAD URGED THE CONTENTION BEFORE THE HIGH COURT. THE PRINCIPLE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST - FREE AND OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST - FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST - FREE FUNDS WERE SUFFICIENT TO MEE T THE INVESTMENTS. IN THIS CASE THIS 6 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK PRESUMPTION IS ESTABLISHED CONSIDERING THE FINDING OF FACT BOTH BY THE CIT(A) AND TRIBUNAL 8. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, SAME IS CONFIRM AN D GROUND NO. 2 IS STAND DISMISS. 9. THE NEXT ISSUE IS THE ADDITION OF RS.6,68,168/ - MADE BY PARTLY DISALLOWING INTEREST EXPENSES ON ACCOUNT OF PERSONAL INVESTMENTS. THE ASSESSING OFFICER DISCUSSED THIS ISSUE IN PARA NOS. 6 TO 6.8. THE ASSESSING OFFICE R HAS OBSERVED THAT AS PER THE BALANCE SHEET THE ASSESSEE HAS MADE LONG TERM INVESTMENTS IN IMMOVABLE PROPERTIES VALUED AT RS.2,12,94,053/ - . THE ASSESSING OFFICER ASKED THE ASSESSEE TO DEMONSTRATE THAT NO INTEREST BEARING FUNDS HAVE BEEN USED FOR INVESTME NTS IN THOSE IMMOVABLE PROPERTIES. THE ASSESSEE EXPLAINED THAT MAJORITY OF HIS INVESTMENTS ARE IN IMMOVABLE PROPERTIES TO THE EXTENT OF RS.2,12,94,053/ - . OUT OF THE SAME ONLY PERSONAL ASSETS IS HIS HOME IN WHICH HE HAS MADE INVESTMENT OF RS.10,37,620/ - A ND BALANCE INVESTMENT S ARE TOWARDS HIS FUTURE BUSINESS PLANS ONLY. IN SUM AND SUBSTANCE THE ASSESSEE TOOK THE PLEA THAT EXCEPT THE INVESTMENT IN THE HOME THE ENTIRE INVESTMENT IS MADE IN THE IMMOVABLE PROPERTY WHICH ARE THE BUSINESS ASSETS FOR FUTURE PLAN S OF CONSTRUCTION OF HIS PROJECTS. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF THE INTEREST BY USING THE FOLLOWING FORMULA: - INTEREST CLAIMED X AMOUNT OF LONG TERM INVESTMENT / TOTAL OF BALANCE SHEET , WHICH WAS WORKED OUT OF RS.6,68,168/ - AND TO THAT EXTENT THE ASSESSING OFFICER MADE THE ADDITION TO THE INCOME OF THE ASSESSEE BY PARTLY DISALLOWING T HE INTEREST CLAIMED BY THE ASSESSEE U/S. 36(1)(III) OF THE ACT. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A). THE LD. CIT(A) DELETED THE ENTIRE AD DITION. THE REASON S GIVEN BY THE LD. CIT(A) FOR DELETING THE ADDITION IS AS UNDER: 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE RIVAL CONTENTIONS. THE ASSESSEE IS A PROPRIETOR OF HARSH CONSTRUCTIONS DOING THE BUSINES S OF CIVIL 7 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK CONTRACTOR. THESE ASSETS WERE ACQUIRED BY THE ASSESSEE IN CONNECTION WITH HIS FUTURE BUSINESS PLANS. FOR ACCOUNTING PURPOSE, THESE ARE KEPT UNDER INVESTMENTS. HOWEVER, THIS ALONE DOES NOT DISENTITLE THEM TO BE A CAPITAL ASSET. THE FORMULA WORKED OUT BY THE ASSESSING OFFICER IS UNJUSTIFIED. THE ASSETS HAVE BEEN ACQUIRED BY THE ASSESSEE BY HIS OWN FUNDS AND NO BUSINESS BORROWINGS HAVE BEEN USED FOR THE PURPOSE. IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. (SUPRA) IN INCOME TAX APPEAL NO. 1398 OF 2008, THE BOMBAY HIGH COURT ON IDENTICAL FACTS HAVE RULED THAT WHEN INVESTMENTS WERE MADE IN THE REGULAR COURSE OF BUSINESS, NO PART OF INTEREST CAN BE DISALLOWED WHEN THE FUND IS UTILIZED FOR THE PURPOSE OF BUSINESS. THUS INVESTMENTS MADE BY THE A SSESSEE ARE FOUND TO BE WITH A VIEW TO BUILD LONG TERM BUSINESS PROSPECTS. THE HON'BLE HIGH COURT, THEREFORE, HELD THAT IF INTEREST FREE FUNDS ARE AVAILABLE TO ASSESSEE, SUFFICIENT TO MEET ITS INVESTMENT, AT THE SAME TIME, THE ASSESSEE HAS RAISED LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST FREE FUNDS AVAILABLE. IN THE PRESENT CASE, TFYE ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS OF ITS OWN FOR MAKING THESE INVESTMENTS. THIS JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT, THEREFORE, SUPP ORTS THE ASSESSEE'S CASE. IN VIEW OF THE ABOVE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.6,68,168/ - IS UNJUSTIFIED AND IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 10. WE HAVE HEARD THE PART IES ON THIS ISSUE. THE LD. COUNSEL SUBMITS THAT THE ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE MADE THE INVESTMENTS IN THE IMMOVABLE PROPERTIES WHICH ARE HELD FOR FUTURE BUSINESS PLANS. HE SUBMITS THAT INVESTMENTS IN THE IMMOVABLE P ROPERTIES ARE IN THE NATURE OF PLOT OF LANDS AS THE ASSESSEE IS PLANNING TO START THE CONSTRUCTION ACTIVITIES. HE ALSO ARGUES THAT EVEN PRESUMING THE INVESTMENTS ARE HAVING NO NEXUS WITH PRESENT BUSINESS BUT IN THIS CASE ALSO THE ASSESSEE HAS SUFFICIENT C APITAL OF HIS OWN AND HENCE, THE PRESUMPTION IS THAT SAID INVESTMENTS ARE FROM HIS OWN FUNDS AS HELD BY THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SUPRA). HE PLEADED FOR CONFIRMING THE ORDER OF THE LD. CIT(A). 8 ITA NO. 149 1 /PN/2012, SHRI VILAS KEDU BIRARI, NASHIK 11. WE F IND THAT THE ASSESSEE HAS MADE THE INVESTMENTS IN THE IMMOVABLE PROPERTIES AS EXPLAINED BY THE LD. AR WHICH ARE IN THE NATURE OF PLOTS OF LANDS. ADMITTEDLY , PRESENTLY THE ASSESSEE IS NOT CARRYING OUT ANY CONSTRUCTION ACTIVITY AS SUCH . I T IS CLAIMED B EFORE US THAT THE SAID INVESTMENTS ARE MADE FROM THE POINT OF VIEW TO FUTURE PLANS OF THE ASSESSEE TO ENTER INTO REAL ESTATE MARKET HENCE, THE SAID ARGUMENT OF THE ASSESSEE CANNOT BE ACCEPTED THAT INVESTMENTS TO THE EXTENT OF RS.2,17,25,844/ - ARE HAVING TH E DIRECT NEXUS WITH THE PRESENT BUSINESS OF THE ASSESSEE BUT AT THE SAME TIME ALTERNATE PLEA OF THE ASSESSEE HAS TO BE ACCEPTED AS THE ASSESSEE IS SUFFICIENT CAPITAL TO THE EXTENT OF RS.3,86,36,740/ - . H ENCE, THE LEGAL PRINCIPLES IN THE CASE OF RELIANCE UT ILITIES & POWER LTD. (SUPRA) ARE APPLICABLE TO THE ASSESSEES CASE BY DRAWING THE PRESUMPTION THAT THE SAID INVESTMENTS IN THE IMMOVABLE PROPERTIES ARE OUT OF THE ASSESSEES OWN FUNDS IN THE NATURE OF CAPITAL. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. C IT(A) ON THIS REASONING. ACCORDINGLY, GROUND NO. 3 IS DISMISSED. 1 2. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 - 07 - 201 4 SD/ - SD/ - ( G . S . PAN NU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 21 ST JULY, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I , NASHIK 4 THE CIT - I, NASHIK 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE