Shri Harish Govindlal Shah, Vadodara V. The Income Tax Officer, Ward-2(3), Baroda

ITA 3544/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3914 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH PATHAK
• Keywords: Cost of acquisition

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] ] ] ] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.3544/AHD/2016 ( / ASSESSMENT YEAR : 2011-12) SHRI HARISH GOVINDLAL SHAH, C/O. G. C. SHAH & CO., GF, GALAV CHAMBERS SYAJIGUNJ, VADODARA. / VS. ITO, WARD 2(3), BARODA ./ ./ PAN/GIR NO. : AJOPS 2361 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, A.R. / RESPONDENT BY : SHRI OM PRAKASH PATHAK, SR.D.R. / DATE OF HEARING 11/07/2018 !'# / DATE OF PRONOUNCEMENT 03/10/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)5, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/5-146 /2014-15 DATED 06.09.2016 ARISING IN THE MATTER OF ASSESSMENT ORDE R PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 03.03.2014 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS) -5, VADODARA PRESENTS THIS APPEAL AGAINST THE SAME ON THE FOLLOWING AMONGST OT HER GROUNDS. 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE A.O. MADE AN ADDITION ON ACCOUNT OF UNDERSTA TEMENT OF CLOSING STOCK VALUED AT RS.22,92,608/- AS AGAINST THE CORRE CTLY VALUED BY THE ASSESSEE AT RS.15,29,005/-BY EXCLUDING THE COST OF LAND BEING OWNER OF LAND AND THEREFORE THE SAME HAS NOT BEEN CONSIDERED FOR THE PURPOSE OF STOCK VALUATION. THUS THE ADDITION CONFIRMED BY CIT (A) OF RS.12,92,608/- [RS.2292608 - RS. 1000000 (EARLIER T AKEN BY THE ASSESSEE) ] ARE ABSOLUTELY INCORRECT, UNJUSTIFIABLE AND UNLAWFUL. THE SAME MAY KINDLY BE DELETED. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. OF RS.90,000/- OUT OF STAFF SALARY EXPENSE. IT IS SUBMITTED THAT THE COMPLETE DETAILS REGARDING SERVICES RENDERED FOR EXPENDITURE CLAIMED TOWARDS SALARY PAI D TO MR. MIHIR SHAH HAVE BEEN FILED AND ON RECORD. THEREFORE THE A CTION OF THE LOWER AUTHORITIES DOUBTING THE GENUINENESS OF TRANSACTION WITHOUT ANY BASE OR EVIDENCE IS TOTALLY INCORRECT AND ILLEGAL. IT MAY H ELD SO NOW AND THE ABOVE DISALLOWANCE KINDLY BE DELETED. 3. THE LEARNED CIT(A) HAS ERRED IN CONFIRMIN G THE ADDITION MADE BY A.O. OF RS.90,780/- TOWARDS HOUSING LOAN INTEREST C LAIMED U/S 24 OF THE IT. ACT. IT IS SUBMITTED THAT THE FLAT NO. 401 WAS SELF OCCUPIED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND TH EREFORE THE INTEREST ON HOUSING LOAN HAS BEEN CORRECTLY CLAIMED U/S 24(B ) OF I.T.ACT. HOWEVER LD. CIT(A) HAS NOT APPRECIATED THE FACTS AN D EVIDENCES AVAILABLE ON RECORDS AND CONFIRMED THE ABOVE ADDITI ON WHICH IS TOTALLY UNJUSTIFIABLE AND AGAINST THE LAW. THEREFORE THE IN CORRECT ADDITION OF RS.90,780/- DESERVES TO BE DELETED. 4. THE ORDER PASSED BY THE LEARNED C.I.T. (A PPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 5. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 3 - 3. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT L D CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE ADDITI ON OF RS.12,92,608/- ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION AN D DEVELOPER UNDER THE NAME AND STYLE OF GOVIND KRUPA RESIDENCY. THE ASSES SEE DURING THE YEAR HAS COMPLETED ONE OF ITS PROJECT AT A TOTAL COST OF RS.1,50,11,771/- ONLY. THE ASSESSEE IN THIS PROJECT CONSTRUCTED FOUR STORY BUILDING MEASURING CONSTRUCTION AREA OF 698.53 SQ METERS. THE ENTIRE C ONSTRUCTED AREA WAS SOLD BY THE ASSESSEE DURING THE YEAR EXCEPT 106.68 SQ METERS, WHICH WAS SHOWN AS CLOSING STOCK AS ON 31.03.2011 AT RS.10,00 ,000/- ONLY. 4.1 HOWEVER, THE AO DISAGREED WITH THE VALUATION OF CLOSING STOCK SHOWN BY THE ASSESSEE. AS PER THE AO THERE SHOULD H AVE BEEN CLOSING STOCK VALUATION AT RS. 22,92,608/- ONLY FOR 106.68 SQUARE METERS. ACCORDINGLY, THE AO PROPOSED TO MAKE ADDITION OF RS .12,92,608/- ONLY ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK BY I SSUING NOTICE DATED 19.02.2014. 4.2 THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED THAT THE TOTAL VALUE OF THE CONSTRUCTION COST IS OF RS. 1,00,11,771/- EXCLU DING THE VALUE OF THE LAND. AS PER THE ASSESSEE, THE VALUE OF THE LAND I S OF RS. 3,15,510/- ONLY. HOWEVER, THE ASSESSEE WHILE WORKING OUT THE PROJECT COST HAS TAKEN THE ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 4 - VALUE OF LAND AT RS. 50,00,000/- WHICH IS REPRESENT ING THE INDEXED COST OF LAND. THUS, THE ASSESSEE SUBMITTED THAT THE VALUE O F THE CLOSING STOCK FOR 106.68 SQ MTR COMES AT RS.15,29,005/- ONLY. THEREFO RE, THE ADDITION OF RS. 5,29,005/- CAN BE MADE ON ACCOUNT OF UNDER VALU ATION OF CLOSING STOCK. 4.3 HOWEVER, THE AO DISREGARDED THE CONTENTIONS OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS UNDERSTATED ITS CLO SING STOCK BY RS.12,92,608/- ONLY AND ADDED BACK TO THE TOTAL INC OME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CI T(A). THE ASSESSEE BEFORE THE LD CIT(A) SUBMITTED THAT THE PR OJECT WAS CONSTRUCTED BY HIM ON HIS OWN LAND. THEREFORE THE VALUE OF THE LAND SHOULD NOT BE INCLUDED WHILE VALUING THE CLOSING STOCK. HOWEVER, THE LD CIT(A) DISREGARDED THE CONTENTIONS OF THE ASSESSEE AND CON FIRMED THE ORDER OF AO BY OBSERVING AS UNDER: IT APPEARS THAT THERE IS ABSOLUTELY NO BASIS FOR T HIS VALUATION OF THE CLOSING STOCK BY THE ASSESSEE. HIS ARGUMENTS THAT H E HAD NOT INCLUDED THE COST OF THE LAND IN THE CLOSING STOCK BECAUSE T HE SAME BELONGED TO HIM, IS AGAINST ACCOUNTING PRINCIPLES. THE PROPORTI ONATE COST OF THE LAND HAS TO BE INCLUDED IN THE VALUATION OF THE CLOSING STOCK, WHICH IS EXACTLY WHAT HAS BEEN DONE BY THE ASSESSING OFFICER. THE AS SESSEE HAS NOT RAISED ANY OBJECTIONS TO THE CORRECTNESS OF THE VAL UATION OF THE CLOSING STOCK WITH COST OF LAND FACTORED IN THE VALUATION. HE HAS ONLY OBJECTED TO SUCH CALCULATION, IF THE COST OF LAND IS EXCLUDED F ROM THE VALUATION. AS A RESULT, I REFUSE WITH THE ORDER OF THE ASSESSING OF FICER IN THIS REGARD. THE ASSESSEE FAILS ON THIS GROUND OF APPEAL. 5.1 BEING AGGRIEVED BY THE ORDER OF LD CIT(A) THE A SSESSEE IS IN APPEAL BEFORE US. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 5 - 6. THE LD AR BEFORE US FILED A PAPER BOOK WHICH IS RUNNING FROM PAGES 1-47 AND FILED A PROJECT COST INCURRED BY THE ASSESSEE FOR RS. 1,00,11,771/- WHICH IS PLACED ON PAGE 03 OF THE PAP ER BOOK. THE RELEVANT EXTRACT OF THE PROJECT COST IS EXTRACTED B ELOW: PROJECT REPORT FOR GOVINDKRUPA RESIDENCY INDEX COST OF LAND 5000000.00 SALES F.Y. 2010-2011 15242111.00 PURCHASE F.Y 2009-2019 4458165.00 W.I.P (CLOSING STOCK) 1000000.00 DIRECT EXP. F.Y. 2009-10 641935.00 PURCHASE F.Y. 2010 - 2011 3753804.00 DIRECT EXP. F.Y. 2010-2011 1157867.00 15011771.00 16242111.00 NET PROFIT 1230340.00 16242111.00 16242111.00 6.1 ON THE BASIS OF THE ABOVE, THE LD AR SUBMITTED THAT THE ASSESSEE HAS SHOWN INDEX COST OF LAND WHILE WORKING OUT THE PROJECT COST. IN FACT, THE ASSESSEE HAS ACTUALLY INCURRED A COST ONLY RS. 3,15,510/- ON THE LAND WHICH HAVE BEEN CONSIDERED FOR THE PURPOSE OF CALCU LATION OF THE CLOSING STOCK AS ON 31.03.2011. THE LD AR IN SUPPORT OF HIS CLAIM DREW OUR ATTENTION ON THE REGISTERED DOCUMENTS OF THE PROPER TY SHOWING THE PURCHASE COST AT RS. 3,15,510/- ONLY. THE REGISTERE D DOCUMENTS ARE PLACED ON PAGES 4-14 OF THE PAPER BOOK. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 6 - 7. ON THE OTHER HAND, LD DR VEHEMENTLY SUPPORTED TH E ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT CASE, THE DISPU TE RELATES TO THE VALUATION OF CLOSING STOCK. THE ASSESSEE HAS SHOWN TOTAL CONSTRUCTION COST OF PROJECT AT RS.1,50,11,771/- ON THE CONSTRUCTION AN AREA MEASURING 698.53 SQ. METERS. THE ENTIRE AREA WAS SOLD BY THE ASSESSEE DURING THE YEAR EXCEPT 106.68 SQ METERS. IT WAS SHOWN AS CLOSI NG STOCK IN THE BOOKS OF THE ASSESSEE. THE AO ACCORDINGLY WORKED OUT THE PROPORTIONATE COST OF AREA SHOWN AS STOCK IN TRADE WHICH WORKS OUT TO RS. 22,92,608/- ONLY. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS SHOWN CLO SING STOCK AT RS.10,00,000/- ONLY. ACCORDINGLY, THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS SHOWN UNDER VALUATION OF CLOSING STOCK BY RS.12,92,608/- ONLY WHICH WAS ADDED BACK TO THE TOTAL INCOME OF T HE ASSESSEE. THE VIEW TAKEN BY THE AO WAS SUBSEQUENTLY CONFIRMED BY THE L D CIT(A). 8.1 FROM THE DETAILS FILED BY THE ASSESSEE PLACED O N PAGE 3 OF THE PAPER BOOK, WE NOTE THAT THE ASSESSEE HAS TAKEN INDEX COS T OF LAND WHILE DETERMINING THE PROJECT COST. AS SUCH, THE ASSESSEE HAS SHOWN INDEX COST OF LAND AT RS.50,00,000/- ONLY WHEREAS, ITS ACTUAL COST IS OF RS.3,15,510/- ONLY AS EVIDENT FROM THE REGISTERED DOCUMENTS OF TH E LAND PLACED ON PAGES 4 TO 14 OF THE PAPER BOOK. THUS, IN OUR CONSI DERED VIEW, THE AO SHOULD HAVE TAKEN THE ACTUAL COST OF LAND WHILE DET ERMINING THE CLOSING STOCK AS ON 31.03.2011 IN RESPECT OF 106.68 SQ METE RS. OF CONSTRUCTED ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 7 - AREA. BEFORE US THE LD DR HAS NOT ADVANCED ANY ARGU MENT CONTRARY TO THE ARGUMENTS ADVANCED BY THE LD COUNSEL FOR THE ASSESS EE. THEREFORE, WE DIRECT THE AO TO TAKE INTO CONSIDERATION, THE ACTUA L LAND COST AS SHOWN BY THE ASSESSEE IN HIS PROPERTY DOCUMENTS AND WORKED O UT THE CLOSING STOCK ACCORDINGLY. THUS THE GROUND OF APPEAL OF THE ASSES SEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT LD CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO FOR RS.9 0,000/- FOR THE STAFF SALARY EXPENSES. 10. THE ASSESSEE DURING THE YEAR HAS PAID SALARY OF RS.90,000/- TO HIS SON SHRI MIHIR SHAH FOR SUPERVISING THE PROJECT. TH E SON OF THE ASSESSEE AT THE RELEVANT TIME WAS ALSO PURSUING ENGINEERING. THE ASSESSEE ALSO CLAIMED A DEDUCTION OF RS. 26,256/- ON ACCOUNT OF I NTEREST ON THE EDUCATION LOAN TAKEN BY SHRI MIHIR SHAH U/S 80E OF THE ACT. ACCORDINGLY, THE AO CALLED UPON THE ASSESSEE FOR JUSTIFICATION O F THE SALARY EXPENSES INCURRED IN THE NAME OF SHRI MIHIR SHAH. 10.1 THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED VID E LETTER DATED 27.02.2014 THAT THE SHRI MIHIR H. SHAH IS AN ENGIN EER AND HAS SUPERVISED THE WORK FROM MARCH, 2010 TO AUGUST, 2010. THEREFOR E HE WAS PAID SALARY FOR THE YEAR UNDER CONSIDERATION @15,000/- P ER MONTH UP TO AUGUST, 2010. SUBSEQUENTLY, THE ASSESSEE HAS TAKEN A LOAN FROM BANK FOR RS.10,00,000/- FOR THE HIGHER STUDIES OF HIS SON SH RI MIHIR H. SHAH. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 8 - ACCORDINGLY, HE HAD GONE ABROAD TO STUDY MBA IN THE MONTH OF SEPTEMBER, 2010. THUS, THE ASSESSEE HAS CLAIMED DED UCTION U/S 80E OF THE ACT FOR RS.26,256/- ONLY. 10.2 HOWEVER, THE AO DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE NATURE OF SERVICES RENDERED BY S HRI MIHIR H. SHAH WAS NOT FURNISHED DURING THE ASSESSMENT PROCEEDINGS. AC CORDINGLY, THE AO MADE THE ADDITION OF RS. 90,000/- TO THE TOTAL INCO ME OF THE ASSESSEE. 11. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD C IT(A). THE ASSESSEE BEFORE THE LD CIT(A) SUBMITTED THAT SHRI M IHIR H. SHAH WAS SUPERVISING THE PROJECT AT GOVIND KRUPA RESIDENCY U P TO AUGUST, 2010 AS A QUALIFIED ENGINEER. 11.1 HOWEVER, THE LD CIT(A) DISREGARDED THE CONTENT IONS OF THE ASSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: 6.3 I HAVE CARE F ULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER, TH E SUBMISSIONS OF THE ASSESSEE, MATERIAL AVAILABLE ON RECORD AND THE JUDI CIAL PRONOUNCEMENTS ON THE SUBJECT. THE ASSESSEE HAS ASSERTED ALL ALONG THAT HIS SON SHRI MIHIR SHAH HAD PROVIDED SERVICES TO HIM BEFORE GOIN G OUT TO PURSUE HIS MBA, BUT THE FACT REMAINS THAT THE ASSESSEE HAS NEV ER FURNISHED ANY EVIDENCE OF THE SERVICES RENDERED BY SHRI MIHIR SHA H EITHER DURING ASSESSMENT PROCEEDINGS OR DURING APPELLATE PROCEEDI NGS. THE ASSESSEE HAS HARPED ON THE FACT THAT HE HAD TAKEN EDUCATION LOAN FOR HIS SON, HAS PAID EMI FOR THE SAME AND THAT NO SALARY WAS PAID A FTER HE WENT ABROAD, BUT ALL THESE FACTS ARE IMMATERIAL TO DECID E THE ALLOWABILITY OF THE SALARY PAID TO SHRI MIHIR SHAH AS DEDUCTION IN THE HANDS OF THE ASSESSEE, FOR THE SIMPLE REASON THAT THE ISSUE HERE IS WHETHER SHRI MIHIR SHAH PROVIDED ANY SERVICES TO THE ASSESSEE AND WHET HER THE SAME IS ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 9 - PROVED WITH SOME EVIDENCE. BASED ON MATERIAL AVAILA BLE ON THE RECORD, THE ANSWER TO BOTH THE QUESTIONS IS NO. THE ASSESSE E HAS MISERABLY FAILED TO FURNISH AN IOTA OF EVIDENCE TO SUPPORT HI S CLAIM THAT SHRI MIHIR SHAH HAD ACTUALLY PROVIDED SUPERVISORY SERVICES AT GOVINDKRUPA RESIDENCY. IN THE CIRCUMSTANCES, I HAVE NO OPTION B UT TO HOLD THAT NO SERVICES WERE PROVIDED BY SHRI MIHIR SHAH AND THE P URPORTED SALARY OF RS. 90,0007- PAID TO HIM BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, CANNOT BE ALLOWED AS AN EXPENSE U/S 40A(2)(B) OF THE ACT. THE ORDER OF THE ASSESSING OFFICER IN THIS REG ARD IS UPHELD. THE ASSESSEE FAILS ON THIS GROUND OF APPEAL. 11.2 BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSE SSEE IS IN SECOND APPEAL BEFORE US. 12. THE LD AR BEFORE US SUBMITTED THAT THE SALARY W AS PAID TO THE SONS OF THE ASSESSEE MIHIR H. SHAH AND CHINMAY SHAH AT R S.15,000/- PER MONTH BUT THE AO HAS NOT MADE ANY DISALLOWANCE IN R ESPECT OF THE SALARY PAYMENT MADE TO SHRI CHINMAY SHAH. THE LD AR IN SUP PORT OF HIS CLAIMED FILED COPY OF LEDGER OF THE STAFF SALARY WH ICH IS PLACED ON PAGES 32 TO 35 OF THE PAPER BOOK. 12.1 THE LD. AR ALSO SUBMITTED THAT THE SALARY RECE IVED BY SHRI MIHIR H. SHAH WAS DULY OFFERED TO TAX AS EVIDENT FROM THE INCOME TAX RETURN PLACED ON PAGE 38 OF THE PAPER BOOK. 13. ON THE OTHER HAND, LD DR VEHEMENTLY SUPPORTED T HE ORDER OF AUTHORITIES BELOW. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 10 - 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAS PAID SALARY T O HIS SON NAMELY MIHIR H. SHAH WHICH WAS DISALLOWED BY THE AO ON THE GROUN D THAT NO EVIDENCE WAS FURNISHED ON ACCOUNT OF THE SERVICES RENDERED B Y MIHIR H. SHAH. HOWEVER, WE NOTE THAT THE MIHIR H. SHAH WAS A QUALI FIED ENGINEER AND THIS FACT WAS NOT DISPUTED BY THE LOWER AUTHORITY. WE ALSO NOTE THAT SAME AMOUNT OF SALARY WAS ALSO PAID TO SHRI CHINMAY SHAH ANOTHER SON OF THE ASSESSEE AND NO DISALLOWANCE WAS MADE BY THE AO. TH US, IN OUR CONSIDERED VIEW, THE AO ERRED IN ACCEPTING THE SALA RY OF ONE SON OF THE ASSESSEE AND DISREGARDING THE SALARY OF ANOTHER SON AT THE SAME TIME. ACCORDINGLY, WE NOTE THAT THERE IS A DISPARITY IN T HE ORDER OF THE AO. 14.1 WE ALSO NOTE THAT THE DISALLOWANCE WAS MADE U/ S 40A(2)(B) OF THE ACT ON THE GROUND THAT NO PROVE FOR THE SERVICES RE NDERED BY SHRI MIHIR H SHAH WAS FILED. HOWEVER, THE AO HAS NOT BROUGHT A NY DOCUMENTARY EVIDENCE AND COMPARABLE CASES SUGGESTING THAT THE S ALARY WAS NOT REQUIRED TO BE PAID BY THE ASSESSEE. 14.2 WE ALSO NOTE THAT THE SALARY TO CHINMAY SHAH H AS BEEN ADMITTED BY THE LOWER AUTHORITY, WHO WAS ALSO SON OF THE ASS ESSEE AND SUPERVISING THE PROJECT. IN VIEW OF ABOVE, WE ARE INCLINED TO R EVERSE THE ORDER OF AUTHORITIES BELOW AND DIRECT THE AO TO DELETE THE A DDITION MADE BY HIM FOR RS.90,000/-. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 11 - 15. THE NEXT ISSUE RAISED BY THE ASSESSEE IS THAT L D CIT(A) ERRED IN NOT ALLOWING THE DEDUCTION U/S 24(B) OF THE ACT. 16. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE FAIR LY AGREED THAT THE ISSUE HAS BEEN CORRECTLY DECIDED AGAINST THE ASSESS EE. THEREFORE, WE REJECT THE GROUND OF APPEAL RAISED BY THE ASSESSEE. HENCE WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/10/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/10/2018 PRITI YADAV, SR.PS ITA NO.3544/AHD/2016 SHRI HARISH GOVINDLAL SHAH VS. ITO A.Y. 2011-12 - 12 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-5, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 26/07/2018 (DICTATION-PAD 8 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26/09/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 01/10/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER