DCIT, New Delhi V. M/s Buniyad Builders (P) Ltd., Noida

ITA 3454/DEL/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3388 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Keywords: Business income; Share purchase agreement
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3454/DEL./2011 (ASSESSMENT YEAR : 2007-08) ITO, CENTRAL CIRCLE 14, VS. M/S. BUNIYAD BUILDERS ( P) LTD., NEW DELHI. B 5, VISHAL CHAMBERS, SECTOR 18, NOIDA (U.P.). (PAN : AAACB7348H) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 07.02.2018 DATE OF ORDER : 19.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, INCOME-TAX OFFICER, CENTRAL CIRCLE 1 4, NEW DELHI, BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 29.04.2011 PASSED BY LD. CIT(A PPEALS)-III, NEW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON THE GR OUNDS INTER ALIA THAT :- 1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,80,00,000/- MADE BY T HE ASSESSING OFFICER U/S.68 OF THE INCOME TAX ACT,1961 ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN. ITA NO.3454/DEL./2011 2 2 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,50,00,000/- MADE BY T HE ASSESSING OFFICER U/S. 68 OF THE INCOME TAX ACT, 19 61 ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. 3 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.60,000/- MADE BY TH E ASSESSING OFFICER OUT OF ADMINISTRATIVE AND EMPLOYE ES EXPENSES ON ACCOUNT OF PROPORTIONATE EXPENSES INCURRED IN RELATION TO RENTED PROPERTY. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF REAL ESTATE CONSULTANCY DERIVING COMMISSION INCOME FROM BUSINESS, INCOME FROM OTHER SOURCES AND RENTAL INCOME. AO MA DE ADDITION OF RS.2,80,00,000/- ON ACCOUNT OF UNSECURED LOAN ON FAILURE OF THE ASSESSEE COMPANY TO PRODUCE HIS CREDITORS TO VERIFY THE GENUINENESS OF THE UNSECURED LOANS. AO ALSO MADE A DDITION OF RS.1,50,00,000/- ON ACCOUNT OF UNEXPLAINED SHARE AP PLICATION MONEY UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 RECEIVED FROM ONE SHRI VINOD KHANNA. AO ALSO MADE ADDITION OF RS .60,000/- OUT OF ADMINISTRATIVE AND EMPLOYEES EXPENSES ON ACCOUNT OF PROPORTIONATE EXPENSES INCURRED IN RELATION TO RENT ED PROPERTY. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS BY AL LOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. ITA NO.3454/DEL./2011 3 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEED ED TO DECIDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. D R AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 6. SO FAR AS QUESTION OF UNSECURED LOAN OF RS.2,80, 00,000/- AVAILED OF BY THE ASSESSEE COMPANY FORM M/S. AOV PR OPERTIES PVT. LTD. IS CONCERNED, THE ASSESSEE COMPANY HAS FURNISH ED BANK ACCOUNT, THE AUDITED BALANCE SHEET OF THE CREDITOR SHOWING BALANCE OF RS.1,30,00,000/- AS ON 31.03.2007 AND COPY OF RE TURN OF INCOME AND CONFIRMATION LETTER FROM M/S. AOV PROPERTIES LT D.. ALL THESE DOCUMENTS HAVE BEEN PERUSED BY THE AO DURING REMAND REPORT. THE ASSESSEE COMPANY ALSO PROVED ON RECORD THAT THE SOURCE OF THE AFORESAID CREDIT ADVANCED TO THE ASSESSEE COMPANY I S A LOAN AVAILED OF BY M/S. AOV PROPERTIES LTD. FROM HDFC BANK WHICH FACT HAS ALSO NOT BEEN DISPUTED BY THE AO. COPY OF THE AUDI TED BALANCE SHEET, INCOME-TAX RETURN, CONFIRMATION OF ADVANCE G IVEN TO THE ITA NO.3454/DEL./2011 4 ASSESSEE AND COPY OF SANCTION LETTER QUA TERM LOAN ADVANCED BY VIJAYA BANK, BANK STATEMENT OF HDFC BANK, ALONG WIT H REPAYMENT SCHEDULE PERTAINING TO M/S. AOV PROPERTIE S LTD. IS AVAILABLE AT PAGES 52 TO 78 OF THE PAPER BOOK. MOR EOVER, OUT OF THE AMOUNT OF RS.2,80,00,000/-, RS.1,50,00,000/- HAS AL READY BEEN RETURNED DURING THE YEAR UNDER ASSESSMENT AND AS SU CH, THE ENTIRE AMOUNT OF RS.2,80,00,000/- STOOD EXPLAINED. SO, IN THESE CIRCUMSTANCES, CIT (A) HAS RIGHTLY DELETED THE ADDI TION, HENCE GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 7. AO HAS MADE ADDITION OF RS.1,50,00,000/- QUA THE ADVANCES MADE BY SHRI VINOD KHANNA ON ACCOUNT OF SHARE APPLI CATION MONEY. UNDISPUTEDLY, AFORESAID VINOD KHANNA IS AN NRI SETTLED IN UK FOR THE LAST MORE THAN THREE DECADES AND AS S UCH, HE WAS NOT PRODUCED BEFORE AO BUT HIS CONFIRMATION AND COPY OF BANK ACCOUNT HAS BEEN FILED DURING ASSESSMENT PROCEEDING S. ASSESSEE COMPANY FILED COPY OF SHARE APPLICATION FORM DULY S IGNED BY VINOD KHANNA, HIS PAN AND COPY OF BANK STATEMENT OF SBI, CONFIRMATION OF INVESTOR IS AVAILABLE AT PAGES 46 T O 49, SHARE PURCHASE AGREEMENT WITH VINOD KHANNA, COPY OF SHARE CERTIFICATE ISSUED BY THE ASSESSEE COMPANY TO VINOD KHANNA ARE AVAILABLE AT ITA NO.3454/DEL./2011 5 PAGES 97 TO 100. IT IS ALSO PROVED ON RECORD THAT THE ENTIRE PAYMENT OF RS.1,50,00,000/- HAS BEEN MADE BY WAY OF CHEQUE NO.056780 DRAWN AT STATE BANK OF INDIA, PERSONNEL BRANCH, NEW DELHI. 8. IN THE BACKDROP OF THE AFORESAID DOCUMENTS, CIT (A) HAS RIGHTLY COME TO THE CONCLUSION THAT IDENTITY OF THE SHARE APPLICANT, NAMELY, VINOD KHANNA HAS BEEN ESTABLISHED THROUGH P AN CARD, COPY OF CONFIRMATION LETTER AND COPY OF BANK STATEM ENT AND MOREOVER AMOUNT OF RS.1,50,00,000/- HAS BEEN PAID T HROUGH BANKING CHANNEL AND THEREBY DELETED THE ADDITION. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED B Y THE LD. CIT (A), GROUND NO.2 IS ALSO DETERMINED AGAINST THE REVENUE. GROUND NO.3 9. AO MADE ADDITION OF RS.60,000/- BEING DISALLOWAN CE OUT OF ADMINISTRATIVE EXPENSES INCURRED BY THE ASSESSEE AN D CHARGED TO ITS PROFIT AND LOSS ACCOUNT AGAINST ITS BUSINESS INCOME . AO HAS MADE THE ADDITION BY TAKING A VIEW THAT SINCE THE PROPER TY OWNED BY THE ASSESSEE COMPANY WAS PARTLY IN ITS USE FOR BUSINESS AND IS PARTLY ON RENT, THE EXPENSES PROPORTIONATE TO THE PROPERTY ON RENT CANNOT BE ALLOWED AGAINST RENTAL INCOME. WHEN THE AO HAS NOT DENIED THAT PART OF THE PROPERTY IS IN BUSINESS USE OF THE ASSE SSEE AND THE OTHER PART BEING LET OUT ON RENT, THERE CANNOT BE A GROUN D FOR BIFURCATING ITA NO.3454/DEL./2011 6 THE AMOUNT OF THE RENTAL PART OF THE PROPERTY, IT B EING A BUSINESS DECISION. MOREOVER THE AO HAS MADE DISALLOWANCE ON AD HOC AND ESTIMATE BASIS, WHICH IS OTHERWISE NOT SUSTAINABLE. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED B Y THE LD. CIT (A), HENCE GROUND NO.3 IS ALSO DETERMINED AGAINST THE RE VENUE. 10. RESULTANTLY, THE PRESENT APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-III, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.