The ITO, Ward-9(2), Ahmedabad V. Jaimin Mafatlal Patel, Ahmedabad

ITA 737/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85670 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: S N DIVETIA
• Keywords: Sale consideration of property below Jantri Value; Business income; Depreciation; Business expenditure; Additional evidence; Fair market value; Tax effect
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFO RE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 736/ AHD/ 20 1 3 & C.O. NO. 133/AHD/2013 (A SSESSMENT YEAR: 2009 - 10) INCOME TAX OFFICER, WARD - 9(2), AHMEDABAD V/S MAFATLAL P. PATEL 34/A, MADHUVRUND SOCIETY(SWEEPARK), SWATANTRA PLOT, NR. WATER TANK, GHATLODIA, AHMEADABAD PAN NO. ABCPP 1896J (APPELLANT) (RESPONDENT) MAFATLAL P. PATEL 34/A, MADHUVRUND SOCIETY(SWEEPARK),SWATANTRA PLOT, NR. WATER TANK, GHATLODIA, AHMEADABAD V/S INCOME TAX OFFICER, WARD - 9(2), AHMEDABAD (APPELLANT) (RESPONDENT) ITA NO. 737/AHD/2013 (ASSESSMENT YEAR 2009 - 10) INCOME TAX OFFICER, WARD - 9(2), AHMEDABAD V/S JAIMIN MAFATLAL PATEL 34/A, MADHUVRUND SOCIETY(SWEEPARK), SWATANTRA PLOT, NR. WATER TANK, GHATLO DIA, AHMEADABAD PAN NO. AHGPP 4430N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.K. SINGH, SR. D.R. RESPONDENT BY : SHRI S.N. DIVETIA, A.R. ( )/ ORDER ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 2 DATE OF HEARING : 03 - 02 - 2015 DATE OF PRONOUNCE MENT : 19 - 02 - 2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 2 APPEALS FILED BY THE REVENUE AND THE C.O OF THE ASSESSEE ARE AGAINST THE ORDER OF CIT (A) - XV, AHMEDABAD DATED 24.12.2012 FOR A.Y. 2009 - 10 . 2. BEFORE US, BOTH THE PARTIES SUBMITTED THAT TH OUGH THE APPEALS ARE OF THE 2 DIFFERENT ASSESSEES , BUT THE FACTS AND CIRCUMSTANCES OF BOTH THE CASES AR E SIMILAR EXCEPT FOR THE ASSESSEE AND AMOUNTS AND THEREFORE THE SUBMISSIONS ARE ALSO COMMON FOR ALL THE APPEALS AND THEREFORE ALL THE APPEALS CAN BE HEA RD TOGETHER. WE THEREFORE PROCEED TO DISPOSE OF ALL THE APPEALS TOGETHER BY WAY OF A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND THUS PROCEED WITH THE FACTS IN THE CASE OF MAFATLAL P. PATEL (IN ITA NO. 736/AHD/2013 ) AND C.O. NO. 133/AHD/2013 . 3. THE R ELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF LAND AND SHARES. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 31.10.2009 DECLARING TOTAL INCOME OF RS.11,74,204/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 30.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS. 2,27,67,920/ - . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 24.12.2012 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) , REVENUE IS ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 3 NOW IN APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED A C.O. THE GROUNDS RAISED BY REVENUE READS AS UNDER: - 1. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS' IN ACCEPTING THE 'SAMJUTI KARAR' AS VALID TRANSFER DOCUMENT. 1A THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FA CTS IN DELETING THE ADDITION MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF 100% PROFIT IN DOCUMENT PRICE OF LAND SOLD AS AGAINST 25% OFFERED BY ASSESSEE. 2. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.6,70,519/ - MADE ON ACCOUNT OF INTEREST EXPENSES. 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4.IT IS THE REFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD MAY BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. ON THE OTHER HAND THE GROUNDS RAISED BY ASSESSEE IN C.O READS AS UNDER: - 1. THE LD. CIT(A) - XV, AHMEDAB AD HAS ERRED IN LAW AND ON FACTS IN DISALLOWING THE LOSS ON SALE OF LAND OF RS. 2,60,130/ - CLAIMED BY THE APPELLANT. 6. SINCE THE GROUND NO. 1 AND 2 OF REVENUE S APPEAL AND THE GROUND RAISED BY C.O ARE INTERCONNECTED BOTH ARE CONSIDERED TOGETHER. 7. ON THE BA SIS OF AIR INFORMATION RECEIVED , A.O NOTICED THAT ASSESSEE HAD SOLD LAND OF RS. 6.65 CRORE TO MANAV NESVI INFRASTRUCTURE PVT. LTD. ON THE BASIS OF PURCHASE AND SALE DEED OF THE LAND , IT WAS NOTICED THAT THE LAND WAS PURCHASED BY SHRI MAFATLAL PATEL WITH OT HER CO - O W N ERS WHEREIN THE SHARE OF SHR I MAFATLAL PATEL WAS 25%. O N SALE OF THE AFORESAID LAND, IT WAS NOTICED THAT ASSESSEE HAD OFFERED PROFITS TO TAX OF ONLY 6.25% SHARE IN THOSE LANDS. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ENTIRE 25% SHARE OF SALE OF LAND WAS NOT OFFERED TO TAX TO WHICH ASSESSEE INTERALIA SUBMITTED THAT HE HAD ENTERED INTO SAM JUTI KARAR ON 01.08.2007 AMONGST SHRI RAJENDRA MAFATLAL PATEL, JAIMIN MAFATLAL PATEL AND SMT. KASHIBEN MAFATLAL PATEL WHEREIN THE 25% OF THE LAND OWNED BY THE ASSESSEE WAS TRANSFERRED AMONGST THE 3 PERSONS A T 6.25% SHARE EACH. A.O WAS OF THE VIEW THAT THROUGH SAMJUTI ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 4 KARAR ENTERED BY THE ASSESSEE NOT BEING A LEGAL DOCUMENT , THE RIGHTS COULD NOT HAVE BEEN TRANSFERRED AND THEREFORE THE A.O WAS OF THE VIEW THAT IT CANNOT BE RECOGNIZED FOR TRANSFERRING THE SHARE IN RESPECT OF IMMOVABLE PROPERTY. HE WAS FURTHER OF THE VIEW THAT THE TRANSFER WAS NOT A VALID TRANSFER BUT WAS ONLY ENTERED BY THE ASSESSEE TO REDUCE THE TAX BURDEN AND WAS THEREFORE AN AFTERTHOUGHT AND WAS FOR DIVISION OF INCOME TO EVADE THE TAX. HE THEREFORE CONSIDERED THE SAMJUTI KARAR TO BE IN VALID. HE THEREAFTER MADE A REFERENCE TO DVO TO ASCERTAIN THE MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE, A.O NOTED THAT DVO IN HIS REPORT HAS WORK ED OUT THE FAIR MARKET VALUE OF THE LAND ON THE DATE OF SALE TO BE RS. 9,30,00,000/ - HE WAS THEREFORE OF THE VIEW THAT ASSESSEE HAS UNDER VALUED THE SALE PRICE TO THE EXTENT OF RS. 2,65,87,800/ - . HE THEREAFTER WORKED OUT THE SHARE OF ASSESSEE ON THE BASIS OF THE SALE CONSIDERATION AMOUNT DETERMINED BY THE DVO AND AFTER GIVING T HE CREDIT FOR THE AMOUNT SHOWN BY THE ASSESSEE , CONSIDERED THE DIFFERENCE AMOUNT OF RS. 2,06,63,064/ - AS INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE M ATTER BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: - 5.1.2 ON THE BASIS OF ABOVE DISCUSSION AND CONSIDERATION OF FACTS FOLLOWING CONCLUSION CAN BE DRAWN: (A) THE A.O.'S CONTENTION THAT FAMILY AGREEMENT (SAMJUTI KARAR) DT. 01/08/07 IS A PART OF PLANNING IS NOT SUBSTANTIATED. THE A.O. FAILED TO HIGHLIGHT THE EVASION OF TAX THROUGH SUCH PLANNING. (B) APPELLANT AS WELL AS OTHER FAMILY MEMBERS ARE IN THE BUSIN ESS OF REAL - ESTATE I.E. PURCHASE & SALE OF LAND APART FROM OTHER BUSINESS AND THE INCOME DERIVED FROM SALE OF LAND IS TAKEN UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION. 1 OTHERWISE ALSO, CONSIDERING THE FACT THAT TIME PERIOD BETWEEN PURCHASE & SALE IS LESS THAN 3 YEARS AND APPELLANT GOT CONVERTED THE AGRICULTURAL LAND TO NON AGRICULTURAL LAND, THE SAME IS SUFFICIENT INTENTION FOR BUSINESS ACTIVITY AKIN TO ADVENTURE IN THE NATURE OF BUSINESS & TRADE. THE A.O. GOT CONFUSED WITH THE BUSINESS INCOME AND CA PITAL GAIN PROVISIONS. THIS IS BECAUSE, IN THE CASE OF SHORT TERM CAPITAL GAIN, THE TAX RATE IS SOME AS THAT FOR BUSINESS INCOME. THE APPELLANT HAS NEITHER CLAIMED ANY INDEXATION NOR A.O. GRANTED THE SAME. (C) THE A.O'S REFERENCE TO D.V.O. THOUGH WITHIN HIS POWERS AND JURISDICTION BUT FOR WRONG PURPOSE. THE A.O. REFERRED IT TO DETER MINE THE COST OF INVESTMENT AS PER THE PROVISIONS PUT THE D.V.O. SUBMITTED THE VALUATION AS ON DATE OF SALE AND A.O. HAS TAKEN IT AS FAIR MARKET VALUE OF THE SALE. IN THE CAS E OF TRADING, SUCH VALUE CAN ONLY BE ATTRIBUTED AS NOTIONAL AND CANNOT BE TAKEN AS SALE CONSIDERATION AS TAKEN BY A.O. AS FAR AS PURCHASE PRICE IS CONCERNED THERE IS NO DISPUTE FROM THE SIDE OF A.O. THE APPELLANT NEITHER CONSIDERED THE PURCHASES OF LAND AS IN VESTMENT, NOR TREATED THE SAME AS INVESTMENT. IT IS THEREFORE, WITHOUT ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 5 CONSIDERING THE OBJECTION OF APPELLANT AGAINST SUCH VALUATION PROCEDURE, AMOUNT AND OTHER VERACITY, ITS REFERENCE ITSELF IS NOT JUSTIFIED CONSIDERING THE FACT OF THE CASE. (D) IF THE CONTENTION OF A.O. IS ACCEPTED THAT THE FAMILY AGREEMENT (SAMJUTI KARAR) IS A PLANNING OR AN AFTERTHOUGHT, THEN, THE CASE BECOME AS THAT OF PURCHASE OF LAND BY APPELLANT MAINLY IN F.Y. 06 - 07 RELEVANT TO A.Y. 07 - 08, THE APPELLANT SOLD 3/4 TH OF SUCH LAN D TO HIS FAMILY MEMBER IN F.Y. 07 - 08 RELEVANT TO A.Y. 08 - 09 THOUGH ON COST TO COST BASIS AND THEREAFTER APPELLANT AND OTHER FAMILY MEMBERS FINALLY SOLD IT TO M/S MANAV NESVI INFRASTRUCTURE PVT. LTD. IT IS IN THIS REGARD, A.O. HAS NOT INITIATED ANY PROCEEDI NGS FOR EARLIER YEAR, RATHER AFTER CONTENDING THE ALLEGATION, HE PROCEEDED TO ASSESS THE INCOME IN THE HANDS OF APPELLANT ONLY THAT TOO WITH A MISCONCEIVED NOTION OF ADOPTION OF 'FAIR MARKET VALUE' AT THE PLACE OF REAL SALE VALUE. (E) THE REJECTION OF A PPELLANT'S CONTENTION ABOUT THE DOMINION CONTROL OVER THE LAND BY A.O. IS NOT LEGALLY CORRECT. IN THE BUSINESS OF REAL ESTATE ONLY SUCH DEFINITION AS GIVEN U/S 2(47)(V) OF THE ACT AND CONCEPT OF PART PERFORMANCE U/S 53A OF T. P. ACT ARE AVAILABLE. IT IS ON LY IN THE PROVISIONS OF CAPITAL GAIN, OWNER SHIP THROUGH REGISTERED DEED HAS TO BE CONSIDERED. THE REAL ESTATE BUSINESS DO RECOGNIZES PURCHASE & SALE THROUGH 'AGREEMENT TO SALE' (BANA KHAT) OR 'PROPOSAL FOR SALE (BANA CHITTHI) WITH VARIOUS INTERMEDIARY BEF ORE THE FINAL PURCHASER OR UTILIZES. IT IS IN THIS RESPECT, DEEMING PROVISIONS OF SECTION 50C OF THE ACT FOR REPLACEMENT OF SALE CONSIDERATION IN ACTUAL BY THE VALUATION ADOPTED BY STAMP VALUATION AUTHORITY COMES IN TO PLAY. NO SUCH DEEMING PROVISIONS ARE THERE UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION. (F) THE PROFIT OUT OF SALE OF THESE LAND IS DULY REFLECTED BY THE CO OWNERS IN THEIR RESPECTIVE RETURN OF INCOME FOR THEIR RESPECTIVE SHARE. IN ONE OF THE CASE THE DEPARTMENT HAS ACCEPTED THE SAM E. AS FAR AS PURCHASE CONSIDERATION ARE CONCERNED, THE APPELLANT WAS HAVING SUFFICIENT FUND IN THE NAME OF SUCH CO OWNER AT THE TIME OF PURCHASE AS WELL AS AT THE TIME OF APPORTIONING THE MONEY IN THE RESPECTIVE ACCOUNT. IT IS NOT THAT APPELLANT UTILIZED H IS OWN MONEY FOR THE PURCHASES AND LATER ON RECOVERED THE MONEY FROM CO OWNER. THE LAND RECORDS WERE ALSO UPGRADED TO INCLUDE THE NAME OF CO OWNERS. THE 'FAMILY AGREEMENT' (SAMJUTI KARAR) IS IN THE FORM OF A RATIFICATION OF AN ORAL AGREEMENT WHICH IS PERMI SSIBLE IN LAW. IN THE CASE OF PARTNERSHIP ALSO, ORALLY AGREED PARTNERSHIP CAN HE RATIFIED THROUGH A WRITTEN DEED IN SUBSEQUENT REASONABLE PERIOD WITH THE DATE OF SUCH AGREEMENT DULY AS WELL AS REGALLY ACCEPTED BY LAW. (G) THE A.O. TREATED THE ENTIRE SAL E CONSIDERATION (REPLACED BY FAIR MARKET VALUE) AS BUSINESS RECEIPT AS INDICATED BY HIS OBSERVATION AT PARA 4.2*1 OF THE ASSTT. ORDER FOR DEFAULT U/S 44AB OF THE ACT AND INITIATION OF PENALTY U/S 271 B OF THE ACT.' . 5.3.5 GROUND NO. 3.1 IS REL ATED TO A.O'S CONTENTION THAT APPELLANT WAS HAVING 25% SHARE IN LAND AT VILLAGE SUGHAD AND REJECTING THE 'SAMJUTI KARAR' AND THEREBY APPELLANT'S SHARE OF ONLY 6.25% AS DISCUSSED IN DETAIL AT PARA 5.1 & 5.2, THE A.O'S SUCH CONTENTION WAS FOUND TO UNJUSTIFIE D AND NOT SUSTAINABLE IN LAW. IT IS THEREFORE, THE A.O IS DIRECTED TO CONSIDER THE 'SAMJUTI KARAR' AS RATIFICATION OF AN AGREEMENT WITH ALL ITS LEGAL PREPOSITION AND CONSIDER THE SHARE OF APPELLANT IN LAND AT VILLAGE SUGHAD AT 6.25% ONLY. THE APPELLANT'S GROUND IS THEREFORE ALLOWED. 8. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) , REVENUE IS NOW IN APPEAL BEFORE US. 9. BEFORE US, LD. D.R. TOOK US THROUGH THE VARIOUS FINDINGS AND OBSERVATIONS MADE BY THE A.O AND SUPPORTED HIS ORDER. THE LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND POINTED TO THE FINDINGS OF LD. CIT(A) AND THUS SUPPORTED HIS ORDER. ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 6 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) AFTER PERUSING THE VARIOUS DOC UMENTS AND THE SUBMISSIONS OF THE ASSESSEE AND BY DETAILED ORDER HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND INTERALIA HAS ALSO NOTED THAT THE A.O HAS FAILED TO SUBSTANTIATE THE STAND THAT THE SAMJUTI KARAR WAS A PART OF PLANNING FOR EVASION OF T AX. HE ALSO NOTED THAT THE PROFIT OUT OF THE SALE OF THE LAND WAS DULY REFLECTED BY THE CO - OWNERS IN THE RESPECTIVE RETURN OF INCOME AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. HE HAS FURTHER NOTED THAT THE LAND RECORDS WERE ALSO UPGRADED TO INCLUDE THE NAME OF THE CO - OWNERS AND THE SAMJUTI KARAR WAS IN THE FORM OF RATIFICATION OF AN EARLY AGREEMENT WHICH IS PERMISSIBLE IN LAW. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A), WE THEREFORE FIND NO RE ASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE AND THE GROUND RAISED BY ASSESSEE IN THE C.O ARE DISMISSED. GROUND NO. 2 IS WITH RESPECT TO DELETING THE DISALLOWANCE OF RS. 6,70,519/ - ON ACCOUNT OF INTEREST EXPENSES . 11. ON PER USING THE PROFIT AND LOSS ACCOUNT, A.O NOTICED THAT ASSESSEE HAS CLAIMED INTEREST EXPENSE OF RS. 6,70,519/ - . THE ASSESSEE WAS ASKED TO PROVIDE THE NEXUS WITH EVIDENCE TO PROVE THAT THE INTEREST BEARING FUNDS HAVE BEEN UTILIZED TO EARN THE BUSINESS INCOME. A.O NOTED THAT ASSESSEE HAS NOT PROVED BY FURNISHING ANY EVIDENCE THAT THE AMOUNT BORROWED WAS UTILIZED TO EARN BUSINESS INCOME. HE ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 7 CIT (A). LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: - 5.3.11 THE GROUND NO. 6.1 IS RELATED TO DISALLOWANCE OF INTEREST EXPENSES IN THE ABSENCE OF APPELLANT'S PROPER EXPLANATION TO A.O,, WHO HELD THAT 'THERE WERE NO EVIDENCES WI TH REGARD TO UTILIZATION OF THE AMOUNT TO EARN BUSINESS INCOME HAS BEEN FURNISHED' AND RELYING ON DECISION IN THE CASE OF B & H SESECHRON PTV. LTD. VS. CIT (SUPRA) DISALLOWED THE SAME. THE A.O. OBSERVED THAT IN THE ABSENCE OF ANY DETAIL SHOWING NEXUS BETWE EN INTEREST BEARING FUNDS UTILIZED FOR NON INTEREST BEARING ADVANCES TO SISTER CONCERN, THE INTEREST SO PAID IS DISALLOWABLE. THE A.O. TOTALLY OVER LOOKED THE APPELLANT'S EXPLANATION THAT IN THE COMPUTATION OF INCOME, RS. 6,70,519/ - WERE ADDED BACK, UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION' AND THE SAME IS TAKEN TO THE HEAD 'INCOME FROM OTHER SOURCES' WHERE AS AGAINST INTEREST INCOME OF RS. 5,41,933/ - , DEDUCTION OF INTEREST OF RS. 941789 INCLUDING THIS AMOUNT OF RS. 6,70,5197 - WAS CLAIMED. I AM IN CLINED TO ACCEPT THE CONTENTION OF THE APPELLANT THAT A.O. TOTALLY OVERLOOK THE FACTS IN THIS REGARD AND HAS NOT PROPERLY APPRECIATED THE FACTS. THE APPELLANT HAS NOT ASKED SAID DEDUCTION FROM BUSINESS INCOME. FURTHER, THE APPELLANT HAS SUFFICIENT FUND (NO N INTEREST BEARING) AND THE ADVANCES FORM SUCH FUNDS WERE NOT CONSIDERED BY A.O. THE DISALLOWANCES WERE MADE IN A MECHANICAL MANNER. THE APPELLANT HAS GIVEN DETAIL OF INTEREST PAYMENT OF RS. 6,70,519/ - (PAGE 117 TO 126 OF PAPER BOOK) IN A TABULAR FORM AS W ELL AS INDIVIDUAL LEDGER ACCOUNT. IN THE WRITTEN SUBMISSION THE APPELLANT GIVEN THE DETAILS OF LOAN & ADVANCES OF RS. 44,72,947/ - AND ITS BUSINESS OR OTHERWISE NEED, THIS INCLUDE ADVANCES TAKEN FOR PURCHASES OF LAND HENCE THOUGH NOT CLAIMED UNDER 'BUSINESS HEAD' BUT THE SAME IS FOR THE PURPOSE OF BUSINESS. A MAJOR ADVANCE OF RS. 20,43,279/ - WAS GIVEN TO APPELLANT'S PROP, CONCERN M/S HARIKRUPA BUILDERS FROM WHERE INCOME IS SHOWN SEPARATELY, IT IS ALSO CONTENDED THAT APPELLANT WAS HAVING INTEREST FREE FUND OF RS. 27,04,982/ - THROUGH WHICH LOAN & ADVANCES GIVEN TO FAMILY MEMBERS & RELATIVE ON WHICH NO INTEREST IS CHARGED. THE APPELLANT RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION (SUPRA) AND RELIANCE UTILITIES AND POWER LTD. (S UPRA) OF HON'BLE BOMBAY HIGH COURT. CONSIDERING ALL THESE FACTS AND THE VERIFIED FACT THAT APPELLANT AS A CONSISTENT PRACTICE AGGREGATING THE INTEREST INCOME AS WELL AS INTEREST EXPENSES DESPITE BEING THE SAME ARE ALLOWABLE AS BUSINESS EXPENSES, BROUGHT UN DER THE HEAD 'INCOME FROM OTHER SOURCES', SUCH DISALLOWANCES OF INTEREST BY A.O. IS NOT JUSTIFIED. THE A.O. IS DIRECTED TO ALLOW THE SAME AND DELETE THE ADDITION OF RS. 6,40,519/ - SO MADE. THE APPELLANT GETS RELIEF ACCORDINGLY. 12. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) , REVENUE IS NOW IN APPEAL BEFORE US. ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 8 13. BEFORE US, LD. D.R. POINTED TO THE FINDINGS OF A.O WHEREIN THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCE TO PROVE THE EVIDENCES OF UTILIZATION OF FUNDS FOR THE PURPOSE OF BUSINESS AND WHICH ASSESS EE HAD FAILED TO FURNISH. HE THEREFORE SUBMITTED THAT IN SUCH CIRCUMSTANCES, THE A.O WAS FULLY JUSTIFIED IN MAKING THE ADDITION. HE THUS SUPPORTED THE ORDER OF A.O. THE LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND SUPPOR TED HIS ORDER. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O WHILE MAKING THE ADDITION HAS NOTED THAT NO DETAILS WERE FURNISHED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM OF INTEREST FOR EXPENSES. WE FIND THAT BEFO RE LD. CIT(A) ASSESSEE HAD FILED DETAILS ON THE BASIS OF WHICH THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. RULE 46A OF THE I.T. RULES STIPULATE THAT CIT(A) FO R THE REASONS TO BE RECORDED, CAN ADMIT THE EVIDENCE PRODUCED BY THE ASSESSEE IN THE APPEAL . HOWEVER, THE EVIDENCE PRODUCED BY THE ASSESSEE UNDER RULE 46(A)(1) CANNOT BE CONSIDERED ON MERITS UNDER RULE 46A(3) UNLESS THE A.O IS GIVEN AN OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENT PRODUCED BY THE ASSESSEE. IN THE PRESENT CASE, WE FIND THAT ON THE ADDITIONAL EVIDENCE SUBMITTED BY ASSESSEE BEFORE CIT(A), THE SAME WERE NOT CONFRONTED TO THE A.O NOR ANY REMAND REPORT WAS OBTAINED FROM A.O. WE ARE THEREFORE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE A.O SHOULD HAVE BEEN GIVEN AN OPPORTUNIT Y TO EXAMINE THE EVIDENCE THAT WERE FURNISHED FOR THE FIRST TIME BEFORE CIT(A) . W E THEREFORE SET AS IDE THE ISSUE TO THE FILE OF LD. CIT(A) FOR HIM TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEE DLESS TO STATE THAT LD. CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 9 HEARING TO BOTH THE PARTIES . THUS THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . WE NOW TA KE UP TH E CASE OF JAIMIN MAFATLAL PATEL( ITA NO. 737/AHD/2013 ). 16. THE GROUNDS RAISED BY REVENUE READS AS UNDER: - 1. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND FN FACTS IN ACCEPTING THE 'SAMJUTI KARAR' AS A VALID DOCUMENT FOR TRANSFER OF RIGHT IN THE LAND IN WHICH THE TRANSFEREE ASSESSEE DIDN T MAKE ANY INVESTMENT. 1A.THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN TREATING THE APPLICATION OF INCOME AS INCOME & ALLOWING THE EXPENS ES AGAINST THE SAME. 2.THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.14,32,167/ - MADE ON ACCOUNT OF VARIOUS EXPENSES LIKE DEPRECIATION, INTEREST EXPENSES, SALARY, EXPENSES, SECUR ITY SALARY .VEHICLE EXPENSES ETC. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF TH E LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD MAY BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 17. BEFORE US BOTH THE PARTIES HAVE SUBMITTED THAT THE F ACTS AND CIRCUMSTANCES OF THE G R O UND NO. 1 IN PRESENT APPEAL IS IDENTICAL TO THE G ROUND NO 1 IN ITA NO. 736/AHD/2013. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN VIEW OF THE AFORESAID SUBMISSION THAT THE FACTS AND CIRCUMSTANCES OF THE CASE AND GROUND NO. 1 ARE IDENTICAL TO THAT OF IN ITA NO. 736AHD/2013, WE FOR REASONS STATED HEREINABOVE , WHILE DECIDING THE CASE IN ITA NO. ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 10 736AHD/2013 AND FOR SIM ILAR REASONS DISMISS THE GROUND O F REVENUE IN THE PRESENT APPEAL . 19. GROUND NO. 2 IS WITH RESPECT TO DISALLOWANCE OF RS. 14,32,167/ - ON ACCOUNT OF VARIOUS EXPENS ES LIKE DEPRECIATION, INTEREST EXPENSES, SALARY EXPENSES ETC. 20. A.O NOTICED THAT ASSESSEE HAD CLAIMED VARIOUS EXPENSES AGGREGATING TO RS. 14,32,167/ - AS LISTED AT PAGE 20 OF THE ASSESSMENT ORDER. HE NOTED THAT THERE APPEAR TO BE NO BUSINESS ACTIVITY CARRIE D OUT BY THE ASSESSEE AND THEREFORE THERE WAS NO JUSTIFICATION F OR CLAIMING THE EXPENSES. HE FURTHER NOTED THAT SINCE THE ENTIRE SHARE OF 6.25% OF LAND CONSIDERATION WAS ADDED ON SUBSTANTIVE BASIS IN THE CASE OF MAFATLAL PATEL , THERE APPEAR TO BE NO JUSTIF ICATION F OR CLAIMING THE EXPENSES. HE ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) DECIDED THE ISSUE BY HOLDING AS UNDER: - 5.3.11 GROUND NO. 5.1, 5.2 AND 5.3 ARE RELATED TO DISAL LOWANCE OF VARIOUS EXPENSES AMOUNTING TO RS.14,32,167 SINCE APPELLANT INCURRED AND CLAIMED THE SAME AGAINST BUSINESS INCOME OF REAL ESTATE OUT OF THE PROFIT OF SALE OF LAND (6.25% SHARE) AT VILLAGE SUGHAD AND A.O. HELD SUCH TRANSACTION AS NOT BELONGING TO APPELLANT BUT THAT OF HIS FATHER. THE ADDITION OF 6.25% SHARE FROM THE TOTAL SALE CONSIDERATION AS PER 'FAIR MARKET VALUE' GIVEN BY DVO AMOUNTING TO RS.58,16 , 081 WAS MADE IN THE HANDS OF APPELLANT ON PROTECTIVE BASIS. AS DISCUSSED IN EARLIER PARA AS WELL AS IN THE APPEAL ORDER OF SHRI MAFATLAL P PATEL, SUCH CONTENTION AND ADDITION WERE HELD BY ME AS NOT JUSTIFIED. THE A.O. HAS NOT DOUBTED ABOUT BUSINESS ACTIVITIES OF REAL ESTATE OF THE APPELLANT. IT IS ONLY THE 'SAMJUTI KARAR' HELD BY HIM AS COLOURABLE DEV ICE, ENTIRE SALE CONSIDERATION AND PROFIT THEREOF WAS TAKEN SUBSTANTIVELY IN THE CASE OF MAFATLAL P PATEL, BUT THERE IS NO REASON OR LOGIC THAT VARIOUS EXPENSES RELATED TO BUSINESS ACTIVITY LIKE MOTOR EXPENSES, DEPRECIATION, INTEREST, SALARY ETC. WERE ALSO HELD BY A.O. AS NOT ALLOWABLE ON ACCOUNT OF A.O.'S FINDING IN THE CASE OF SHRI MAFATLAL P PATEL. THE A.O. HAS JURISDICTION OVER APPELLANT SINCE VARIOUS YEARS AND IT IS VERIFIABLE THAT APPELLANT'S BUSINESS ACTIVITIES RELATED TO REAL ESTATE IS SINCE MANY YE ARS, THEREFORE SUCH ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 11 OVERHEAD EXPENSES CANNOT BE HELD AS UNJUSTIFIED. IN ANY CASE, SINCE I HAVE ALREADY HELD THE 'SAMJUTI KARAR' AS A VALID AND ENFORCEABLE DOCUMENT AS WELL AS TO TREAT THE PROFIT FROM SALE OF 6,5% SHARE OF LAND ON SUBSTANTIVE BASIS IN THE H ANDS OF APPELLANT, THE A.O. IS DIRECTED TO ALLOW SUCH EXPENSES AND DELETE THE ADDITION MADE. THE APPELLANT GETS RELIEF ACCORDINGLY. 21. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) , REVENUE IS NOW IN APPEAL BEFORE US. 22. BEFORE LD. D.R. SUPPORTED THE ORDER OF A.O. HE FURTHER SUBMITTED THAT WHEN THE SHARE OF LAND HAS BEEN CONSIDERED AT 6.25% IN THE CASE OF ASSESSEE AND IN CASE OF MAFATLAL PATEL , THERE WAS NO JUSTIFICATION OF CLAIMING THE ENTIRE EXPENSES BY THE ASSESSEE . WITH RESPECT TO THE A.O S OBSERVATION THA T THERE APPEARS TO BE NO BUSINESS ACTIVITY UNDERTAKEN BY THE ASSESSEE AND ON WHICH NO FINDI NG HAS BEEN GIVEN BY LD. CIT(A), H E SUBMITTED THAT THE A.O S ORDER BE UPHELD . IN THE ALTERNATE H E SUBMITTED THAT THE MATTER MAY BE REMITTED TO THE FILE OF A.O TO DE CIDE THE ISSUE AFRESH. THE LD. A.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT(A). 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE DISALLOWING THE CLAIM , A.O HAS NOTED THAT THERE APPEAR TO BE NO BUSINESS A CTIVITY UNDERTAKEN BY THE ASSESSEE . WE FIND THAT THERE IS NO FINDING OF THE A.O THAT THE EXPENSES THAT HAVE BEEN CLAIMED BY THE ASSES SEE ARE ONLY WITH RESPECT TO HIS SHARE OF 6.25% OF THE PROFITS WHICH HAVE BEEN CONSIDERED BY LD. CIT(A). WE ARE THEREFORE O F THE VIEW THAT THE MATTER NEEDS RE - EXAMIN ATION AT THE END OF A.O. W E THEREFORE SET ASIDE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE AFRESH AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FULLY COOPERATE BY FU RNISHING ITA NO S. 736 & 737/A/13 & C.O NO. 133/A/13 . A.Y. 2009 - 10 12 PROMPTLY ALL THE REQUIRED DETAILS CALLED FOR BY THE A.O. THUS THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . 24. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. C.O NO . 133/AHD/2013 25. BEFORE US, LD. A.R. SUBMITTED THAT HE DID NOT WANT TO PRESS THE C.O IN VIEW OF NO TAX EFFECT TO WHICH LD. D .R HAD NO O BJECTION. WE THEREFORE DISMISS THE C.O OF THE ASSESSEE. 26. IN THE RESULT, THE C.O OF ASSESSEE IS DISMISSED. 27. IN THE RESULT , BOTH THE APPEAL S OF REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND C.O S OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 0 2 - 201 5 . SD/ - S D/ - (SHAILENDRA KR. YADAV ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6 . GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD