AI Insights
The case involves multiple appeals related to the income tax assessments of Varda Projects (India) Pvt. Ltd. for the assessment years 2015-16 and 2016-17. The primary disputes centered around the additions made by the Assistant Commissioner of Income Tax (ACIT) under various heads, including unexplained cash credits for unsecured loans, classification of rental income, and treatment of agricultural income. The Tribunal examined the legal and factual basis of these additions, considering the submissions, evidence, and relevant legal provisions. The Tribunal's decision involved a detailed analysis of the nature of the transactions, the intent behind them, and the compliance with procedural requirements under the Income Tax Act.
Appeal Details
Counselvise Citation
[2024] 140 COUNSELVISE.COM (IT) 29781 (ITAT-RAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 11 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-10-2024
Appeal Filed By
Assessee
Order Result
Partly Allowed
Next Hearing Date
29-08-2024
Assessment Year
2015-2016
Appeal Filed On
16-11-2022
Judgement Text
" आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM (आयकर अपील सं. / ITA No. 224, 225/RPR/2022) (िनधाŊरण वषŊ / Assessment Year: 2015-16, 2016-17) (ITA No. 233/RPR/2022) (Assessment Year: 2016-17) आदेश / O R D E R Per Arun Khodpia, AM: The captioned appeals are directed at the instance of assessee for AY 2015-16 and 2016-17, whereas the cross appeal is filed by the revenue for the AY 2016-17, against the orders of Commissioner of Income Tax(Appeals), NFAC, New Delhi [in short “CIT(A)]”, u/s 250 of the Income Tax Act, (in short “The Act”), both dated 20.09.2022 for respective assessment years. The orders of Ld. CIT(A) have resulted against the order of Assistant Commissioner of Varda Projects (India) Pvt. Ltd., Raipur V S Assistant Commissioner of Income Tax, Circle-1(1), Raipur Assistant Commissioner of Income Tax, Circle-1(1), Raipur V s Varda Projects (India) Pvt. Ltd., Raipur PAN: AACCV7195G (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Amit M. Jain, Adv. राजˢ की ओर से / Revenue by : Shri S. L. Anuragi, CIT- DR सुनवाई की तारीख / Date of Hearing : 29.08.2024 घोषणा की तारीख / Date of Pronouncement : 21.10.2024 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 2 Income Tax- 1(1), Raipur, (in short “The AO”), dated 28.12.2017 for AY 2015-16 and 26.12.2018 for AY 2016-17. 2. First, we shall be taking the appeal of the assessee for AY 2015-16 in ITA No. 224/RPR/2022, wherein the ground of appeal raised by the assessee are as under: 1. On facts and circumstances of the case, the CIT(A) has erred in enhancing the income of the assessee whereas the case as selected for limited scrutiny and the enhancement was made beyond the purview of limited scrutiny. The enhancement made by the Ld. CIT-Appeal is not within the purview of section 251 of the Income Tax Act, 1961. Therefore, the enhancement made by the CIT-Appeal is justified, unwarranted and uncalled for. 2. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. in respect of unsecure loan, wherein the Ld. A.O. has utilized the information / enquiries / documents collected behind the back of the assessee and without providing the same and thereby violated the principle of natural justice. The assessment order passed by the A.O. and sustained by NFAC, is in violation of natural justice is invalid and renders the assessment order void-ab-initio. 3. On the facts and in the circumstances of the case, the IT(A) has erred in sustaining the order of the A.O., wherein the Ld. A.O. has erred in adding unsecured loan of Rs. 1,40,00,000/- as unexplained cash credit u/s 68. Thus, the addition made by the A.O. and sustained by the CIT-A is driven by unproven facts and is unjustified, unwarranted and called for. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in treating the discontinuation of dealership as discontinuation of business and has disallowed all the business expenditure of Rs. 3,09,62,622/-. The disallowances of all the business expenditure made by the CIT-Appeal is unjustified, unwarranted and uncalled for. 5. On the facts and in the circumstances of the case, the CIT(A) has erred in partially sustaining the order of the A.O. i.e. by Rs. 50,9,130/- (out of income from house property is of Rs. 1,07,07,480/-) wherein the Ld. Assessing Officer has erred in taxing the rental income from furnished showroom as income from house property as against. Thus, the addition ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 3 made by the A.O. and partially sustained by the CIT-A is unjustified, unwarranted and uncalled for. 6. On the facts and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in taxing the interest income of Rs. 2,04,722/- as income from other source instead of business income as claimed by the appellant. The change in classification of income by the A.O. and sustained by the CIT-Appeal is unjustified, unwarranted, and uncalled for. 7. On the fact and in the circumstances of the case, the CIT(A) as erred in treating the long-term capital gain as short-term capital gain and determining short term capital gain of Rs. 2,00,81,971/-. The change in classification of a long-term capital gain as a short-term capital gain by the Ld. CIT(A) is unjustified, unwarranted, and uncalled for. 8. On the fact and in the circumstances of the case, the CIT(A) has erred in making addition of Rs. 12,28,900/- by treating he agricultural income as not genuine and unexplained u/s 68. The addition made by the CIT-Appeal is unjustified, unwarranted, and uncalled for. 8. The appellant reserves the right to add, amend or alter any grounds of appeal at any time of hearing. 3. The concise facts of the case are that, the assessee is a private limited company, had filed its return of income in ITR6 on 30.09.2015 declaring total income at ‘NIL’. Subsequently, the case was selected for limited scrutiny through \"CASS.\" Notice u/s 143(2) and 142(1) were issued. In response, Ld. Counsel of the assessee appeared and filed written submission a/w necessary details and documents, which were examined on test check basis. During the year under consideration, the assessee derived income from long term capital gain (LTCG) and dealerships of Volkswagen cars. In the course of assessment proceedings, Ld. AO observed that the assessee has taken fresh unsecured loans in the relevant FY from two parties, namely ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 4 (i) Giniya Construction & Infra Pvt. Ltd. for Rs. 10,00,000/- , (ii) Jupiter Dealcom Pvt. Ltd. for Rs. 1,30,00,000/-. It is noted that at the end of FY, i.e., on 31.03.2015, the loans so received are outstanding. Necessary documents to examine the loan transactions in terms of the provisions of Section 68 were enquired from the assessee, and in compliance, the assessee filed the copies of the return acknowledgement, confirmation of account, audit report and the bank statements of the above lender companies. To examine the transaction in depth, Ld. AO issued notices u/s 133(6) to the lenders at the address available with him, but all such notices have returned unanswered with the remark of postal authority as “Left” or “Not known.\" Under such a situation, a notice u/s 142(1) was issued to the assessee on 13.11.2017 with certain queries on the issue. In compliance, the assessee filed detailed submission on 15.11.2017. In continuation of the proceedings to verify the identity as well as creditworthiness of the lender companies and genuineness of the transactions, summon u/s 131 of the Income Tax Act was issued to Shri Sunil Khemka Director of the lender company M/s Jupiter Dealcom Pvt. Ltd., accordingly, statements of Shri Sunil Khemka were recorded on 29.11.2017 u/s 131 of the I. T. Act. Ld. AO further analysed financial strength and weakness of the lender company and accordingly have made following inferences: 6. Following inferences can be drawn from the financials of the above companies- 1 . Reserves are the funds earmarked for a specific purpose, which the company intends to use in future. In the instant case of the lender company, the only use ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 5 is apparent which is to route unaccounted money of various intending beneficiaries. 2. Non-current liabilities or the long term liabilities are obligations which are expected to be Settled in not less than 365 days or 12 months of the balance sheet date. AS is evident, the company extends unsecured loan and the same are paid back to the company in coming years. All the bank transactions are in round figures which show no business transactions as such. 3. The fixed asset-turnover/receipt ration in all the companies is very low. The return on fixed assets is not favourable with this low ratio due to the fact that the amount of the investment is the biggest amongst the asset categories; therefore, revenue generation is reliant upon these assets, The only motive of the above companies are to circulate the unaccounted money through facade of various intermediary channels so that the ultimate trail of cash deposit could not not be easily traced out and the profit or loss goes unhindered to the final beneficiary. 4. Low income is shown in comparison to high investment and loans in the aforesaid companies, Theoretically, shell companies are companies without active business operations or significant assets. They can be set up by 'businesspeople for both legitimate and illegitimate purposes. Illegitimate purposes for registering g shell company include hiding particulars of ownership from the law enforcement, laundering unaccounted money and avoiding tax, With the shell company as a front, all transaction$ are shown on paper as legitimate business transactions, thereby turning black money into white, In this process, the business person also avoids paying tax on the laundered money. All these facts appear to be applying in above cases, 5. Shell companies are defined as those firms which are set up by nominal paid- up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies, no dividend income, high cash in hand, private companies as majority shareholders, low turnover and ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 6 operating income. nominal expenses, nominal statutory payments and stock in trade and minimum fixed asset. All these parameters squarely applies in the above two companies. The name of the company Jupiter Dealcom Pvt. Ltd is also mentioned in the list of suspected shell companies. 4. Ld. AO, further noted that, multilayered investigation have been conducted by the Income Tax Department with respect to sham transaction all over the country in past few years which ultimately prove that the theory propounded by the assessee were not in conformity with the findings and the nature of transactions. 5. Ld. AO further elaborated the modus operandi of such transaction and have concluded with the remark that explanation offered by the assessee are not satisfactory for which onus was of the assessee to furnish and explain about the nature and source of such credit to the satisfaction the Assessing Officer. It is further stated by the Ld. AO that mere filing of income tax return is not sufficient to prove the genuineness and creditworthiness of the transaction. In the present case even the directors of the aforesaid two companies are unknown to the assessee, further there is no business credentials of the companies, therefore, it cannot be ascertained that this companies have extended unsecured loan to the assessee company without conducting any due diligence or knowing worth of the company. Keeping in view all such facts and circumstances, unsecured loan receipt of Rs. 1,40,00,000/- from the aforesaid two companies are held to be not genuine and therefore, an addition on account ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 7 of unexplained cash credited invoking the provisions of Section 68 of the Income Tax Act, was made by the Ld. AO. 6. Another addition with regard to income from house property for Rs. 1,07,07,480/- was made by the Ld. AO, observing that the dealer ship of Volkswagen Cars was discontinued with effect from 27.02.2014, this fact is duly verifiable from the MOU signed between the parties. Inference drawn by the Ld. AO that impliedly no business activities were run by the assessee company in the year under consideration FY 2014-15. Another fact brought in the assessment order that after termination of dealer ship with Volkswagen, the assessee entered into five-years rent agreement with M/s Amarnath Vehicles Pvt. Ltd. on 07.01.2014 for running its commercial activities. The business premises of the assessee company was entirely taken over by the M/s Amarnath Vehicles Pvt. Ltd. This fact was also duly fortified by the copy of Rent Agreement reproduced in the assessment order. On the basis of aforesaid facts, Ld. AO reached on the conclusion that the assessee is not entitled to various claims qua the business expenses in its profit and loss account. Ld. AO stated that since there is no business, there can be no business income of the assessee, unless there is any business activity, business expenses cannot be allowed. Ld. AO further explained about the business activities, elaborating the profit and loss account of the assessee in terms of various expenditure claimed by the assessee, Ld. AO had noted that the assessee has been in the business of selling of vehicles hence, the rental income cannot be clubbed with that of his ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 8 other income. The assessee’s income from rent and maintenance charges of building are to be treated as income from house property and the same is entitled for statutory deduction @30% of total rent received for maintenance u/s 24(a) of the Act. Sale of cars by the assessee in relevant year should be treated as sale of capital asset, as the assessee had claimed that the dealership business was closed effective from 27.02.2014, according to MOU for closer of business, therefore, selling of cars available with the assessee cannot be covered under ‘business loss’ but the same has to be categorized under the head ‘capital loss’ which will be adjusted with ‘capital gains’ of the assessee. Similarly, interest income from bank & FDR will not be set off from finance cost which is capital loss of the assessee and will be treated separately as ‘income from other sources’, with the aforesaid observations, Ld. AO proceeded with recomputing the income of the assessee and has determined assessed income of the assessee at Rs. 2,49,12,202/-, which was recomputed as under: ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 9 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 10 7. Aggrieved with aforesaid additions made by the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A), wherein, various issues raised by the assessee are either dismissed, partly allowed or enhanced. 8. To challenge the aforesaid findings in the order of Ld. CIT(A), the assessee have filed the present appeal before us. Our ground wise adjudication for the issues assailed before us are as under: 9. Ground No. 1: Challenging the powers of Ld. CIT(A) to make enhancement beyond the purview of limited scrutiny as per provisions of section 251 of the Act. 9.1 Ground No. 1 of the present appeal is pressed by the assessee assailing the issue connected with ground no. 8 of the present appeal, thus, our observations & decision on Ground no. 1, rendered together with Ground No. 8, to be referred in the ensuing para’s. 10. Ground No. 2 & 3: Regarding violation of principle of natural justice and sustaining of addition on account of unsecured loan of Rs. 1,40,00,000/- as unexplained cash credit u/s 68. 10.1 At the outset, Authorized Representative (Ld. AR) of the assessee, Shri Amit M. Jain, Adv. reiterated the facts of the issue from the order of Ld. AO and ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 11 Ld. CIT(A), have submitted that the addition qua the unsecured loan of Rs. 1,40,00,000/- treating the same as unexplained cash credit u/s 68 made by the Ld. AO was unjustified. Furthermore, it is contended that the confirmation of the action of Ld. AO by the Ld. CIT(A) was driven by unproven facts, thus, unwarranted and uncalled for. Ld. AR further submitted that during the course of assessment proceedings and before the First Appellate Authority, the assessee had furnished all the necessary documents to substantiate the identity and creditworthiness of the lenders and genuineness of the transaction as required under the provisions of section 68 of the I.T. Act. With regard to the onus on the assessee to make available necessary information in support of its contentions and to explain the genuineness of the unsecured loans availed, Ld. AR have furnished a submission which is extracted as under: Vardha Projects (India) Pvt. Limited ITA - 224/RPR/2022 A.Y.2015-16 SYNOPSIS Brief Facts The present appeal before the Hon'ble Bench has been filed by the assessee against the order of CIT-Appeal (NFAC) wherein the Ld.CIT-Appea1 has confirmed the various addition and disallowances made by the A.O. in order passed u/ s 143(3) of the I. T. Act, 1961. Grouns No-2 and 3: \"On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O in respect of unsecured loan, wherein the Ld. A.O. has utilized the information/enquiries / documents collected behind the back of the assesse and without providing the same and thereby violated the principle of natural justice. The assessment order passed by the A.O. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 12 and sustained by NFAC, is in violation of natural justice is invalid and renders the assessment order void-ab-initio\"(Ground no-2) \"On the facts and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O , wherein the Ld. A.O. has erred in adding unsecured loan of Rs.1,40,00,000/- as unexplained cash credit u/s 68. Thus the addition made by the A.O. and sustained by the CIT-A is driven by unproven facts and is unjustified, unwarranted and uncalled for.\" \"(Ground no-3) These grounds relates to the addition made by the A.O. of Rs. 1.40 crore on account of unsecured loan . The addition has been made u/s 68 of the I.T. Act, 1961. Observation of the A.O. ▪ The observation of the A.O. is from page 2 to 18 of A.O. order. The relevant paras are para 4 to 10 at page 9 to 18 of the order. The A.O. has made the addition of Rs. 1.40 crore u/ s 68 on account of unsecured loan received during the year from two Raipur based companies namely Jupiter dealcom Pvt. Ltd (1.30 crore) and Giniya Construction and Infra Pvt. Ltd (10 lacs). The main allegation of the A.O. while making the addition are :- o Financials of both the companies are poor. o As per notification of the FIU , Jupiter Dealcom Pvt. Limited is common to shell companies but have not been established as shell companies till date. o General modus operandi discussed for accommodation entires. Observation of the CIT-A ▪ The observation f the CIT(A) is at para 5.2 to 5.4 at page 7 to 11 of CIT (A) order. Submission of the assesse: ▪ During the course of assessment proceeding and 1st appellate proceeding , the assesse has submitted following documents : o Confirmation of accounts. (page no-77 and 96 of PB) o Audited financial statement (page no 80-91 and 97-121 of PB) ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 13 o Bank account statements (page no- 92-95 and 122 of PB) o ITR (page no 79 of PB) o Copy of account and bank statement for repayment of loan (page no 125 to 130 of PB) o Master date and profile as per MCA data (page no-123-124 of PB) ▪ Summons u/ s 131 was issued to Mr. Sunil Khemka , Director of Jupiter Dealcom Pvt. Limited . Mr. Sunil Khemka appeared and Statement was recorded. Mr. Sunil Khemka has confirmed the fact that company has given the loan to assesse. Refer ques. 3 of statement at page -11 of the assessment order. ▪ The transactions are through banking channel and both the lenders have confirmed to have given the unsecured loans , therefore the genuineness of the transaction is proven. ▪ From bank statements the credit worthiness of the unsecured loans are established. Refer page 92-95 for Jupiter Dealcom Pvt. Ltd (Jupiter Dealcom) o None of the transaction can be said to be of bogus accommodation entry. o The balance since 27.06.2014 was was 1,33,90,490/- . The loan was given on 25.02.2015 i.e. after 6 months. o These proves the creditworthiness of Jupiter Dealcom Pvt. Ltd. Refer page no 122 for Ginita Construction and Infra Pvt. Limited (Giniya Construction) :- o The money has been received by Giniya from Mr. G.P. Singhania and S.K.Singhania who are shareholders and directors of the company. o The company is owned by Singhania Family . (Refer page no104 of PB) o These proves the creditworthiness of Giniya Construction. Both the companies has land as assets : o For Giniya Construction (Refer page at 118 of PB) o For Jupiter Dealcom (Refer page at 89 of PB) ▪ Repayment has been done In F.Y. 2015-16 to Jupiter Dealcom (Refer page 125 of PB) In F.Y. 2020-21 to Giniya Construction (Refer page no 129 of PB) Interest regularly paid on year to year basis Case laws at Page 351 to 450 of PB. Since the genuineness and creditworthiness of the lenders are proved the addition made by the A.O. and sustained by the CIT-Appeal deserves to be deleted. Amended provision of section 68 i.e. source of source is not applicable in the case of unsecured loan. The assesse relies upon the following judgments :- ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 14 Deputy Commissioner of Income Tax Vs. Arti Catalyst Solutions P. Ltd. (2022) 64 CCH 0115 AhdTrib Joint Cit (Osd) Cc 7(4), Mumbai vs M/S Shalimar Housing & Finance, Mumbai Bench of ITAT (I.T.A. No. 4079/Mum/2019 Ground No-4 “On the facts and in the circumstances of the case, the CIT(A) has erred in treating the discontinuation of dealership as discontinuation of business and has disallowed all the business expenditure of Rs. 3,09,62,622/-. The disallowances of all the business expenditure made by the CIT-Appeal is unjustified, unwarranted and uncalled for” The A.O. and CIT-Appeal has erred in treating the discontinuance of dealership as discontinuation of business. Observation of the A.O. The observation of the A.O. is from page 18-32 of assessment order. Observation of CIT-Appeal Observation is at para 6.4 to 6.11 of CIT-Appeal order at page 16-23 of CIT Appeal order. Submission of the assesse o One of the main objects is to deal or to do business in automobile. Object clause A(3) of MOA. Refer page 156 of PB. Dealership of Volkswagen (VW) is not the only object of business of the assesse. o The intention of the assesse while purchasing the cars from Volkswagen was to sale it for business purpose and therefore the assesse has correctly recognized the income from sale of car as business income. In order to ascertain the true character of income it is equally important to verify the intention of the person for entering into any transaction. In the present case the purchase and sale of car is for trading purpose and therefore the same has to be classified as business income. In this regards reliance is placed in the judgment of Hon'ble ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 15 Apex Court in case of G.Venkatswami & Co Vs CIT 35 ITR 0594. Copy of judgment is enclosed herewith. Annexure -1. o The assesse has sold the cars kept as stock in trade. Refer page 65 and 67 of PB. ▪ The AO has treated the income from sale of car as capital gain income by treating the cars as capital asset which is not correct. As per section 2(14) of the I.T. Act, 1961 stock-in-trade is excluded from capital asset. The cars sold were held as stock in trade and was not disputed by the assesse and therefore the income on sale of car has to be treated as business income and not capital gain. o The assesse relies on the judgment of Hon'ble Allahabad HC in case of CIT Vs Rita Diwan (2014) 90 CCH 0045. Copy of judgment is enclosed herewith.Annexure-2. o Cars were sold in F.Y. 2014-15, vat PAID . No dispute regarding Genuineness of stock . Refer page 184 to 205 of PB. o Definition of business is at section 2(13) of the I.T. Act, 1961. o Section 176 of the I.T. Act, 1961 is relevant. Ground No-6 \"On the facts and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O , wherein the Ld. A.O. has erred in taxing the interest income of Rs. 2,04,722/- as income from other source instead of business income as claimed by the appellant. The change in classification of income by the A.O. and sustained by the CIT- Appeal is unjustified, unwarranted and uncalled for. \" The A.O. AND CIT-Appeal erred in treating the interest income as income from other sources, instead of business income claimed by the assesse. Observation of the A.O. The observation of the A.O. is at para 14 page 30 of PB Observation of the CIT-Appeal ▪ The observation of the CIT-Appeal is at para 9 page 31 of CIT-Appeal order. Ground No-7 \"On the fact and in the circumstances of the case , the CIT(A) has erred in treating the Long term capital gain as Short term capital gain and determining short term capital gain of Rs. 2,00,81,971/-. The change in classification of a Long term capital gain as a short term capital gain by the Ld. CIT (Appeal) is unjustified, unwarranted and uncalled for\" ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 16 The CIT-Appeal has erred in treating the Long term capital gain as short term capital gain. Observation of the CIT-Appeal The observation of the CIT-Appeal is at para 10 page 31 of CIT-Appeal order. Submission of the assesse Indexation is allowed for cost of acquisition in F.Y. 10-11 and cost of improvement done in F.Y. 2011-12, Since the property was sold on 30.03.2015. Cost of improvement done in 2012-13 and 2013-14 are to be short term capital gain. Ground No-8 and Ground No. 1 \"On the fact and in the circumstances of the case , the CIT(A) has erred in making addition of Rs. 12,28,900/- by treating the agricultural income as not genuine and unexplained u/s 68. The addition made by the CIT-Appeal is unjustified, unwarranted and uncalled for. \" The CIT-Appeal has erred in enhancing the income of the assesse by treating the agricultural income as non-genuine and unexplained u/ s 68. Observation of the CIT-Appeal ▪ The observation of the CIT-Appeal is at page 35 of CIT-Appeal order. Submission of the assesse o Rent agreement with the farmer at page 292-306 of PB. o Continuous agricultural income since F.Y. 2009-10 . Refer page 287 to 291 of PB. o The land is used for agricultural activity. o No investigation done by the CIT-Appeal even after having sufficient evidence filed by the Assesse. 10.2 Based on aforesaid submission, Ld. AR contended that apart from submission of essential documents, summons u/s 131 was also issued to Mr. Sunil Khemka, Director of lending company M/s Jupitar Dealcom Pvt. Ltd., who appeared before the Ld. AO and his statement were recorded on oath, wherein ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 17 Mr. Khemka has confirmed the fact that the lender company had extended the loan to the assessee. Reference was made to question no. 3 in the statement which is reproduced in the assessment order at page no. 11, which reads as under: Á’u 03% D;k vkidh daiuh o/kkZ ÁkstsDV~l bf.M;k Ák- fy- ls dc ls ,oa fdl Ádkj ls tqM+h gqbZ gSa \\ o/kkZ ÁkstsDV~l esa vkidh daiuh dh ’ks;j gksfYMax gSa \\ mÙkj % o/kkZ ÁkstsDV~l ds Mk;jsDVj Jh jk/ks vxzoky esjs vPNs fe= gSA esjk muds lkFk ¼dEiuh½ tehu [kjhnh ds laca/k esa ,d ekSf[kd vuqca/k gqvk FkkA ftlds fy, eSaus mls 1]30]00]000@& #- ,Mokal psd ls isesaV o\"kZ 2014&15 esa fd;k FkkA ;s tehu u;k jk;iqj esa djhc ikap&N ,dM+ dk gS ysfdu ;s lkSnk dSaly gks x;k D;ksafd ml tehu ij dksbZ fuekZ.k fd;k tkuk vykmM ugha FkkA fQj gekjk lsVyesaV gqvk Fkk fd ml jkf”k dk C;kt eq>s nsaxsA eSa 18 ij”ksaV ds fglkc ls C;kt ekax jgk Fkk fdarq oks 6 ij”ksaV ds fglkc ls C;kt nsus dh ckr dj jgs Fks blfy;s ;s ysunsu ugha gqvkA 10.3 Ld. AR further submitted that the transaction between the lender company and the assessee company were executed through banking channel and both the lenders have confirmed to have given the unsecured loans, therefore, identity of lenders and genuineness of the transactions are proven. 10.4 Regarding creditworthiness of the lender companies, Ld. AR submitted that as per bank statement of Jupitar Dealcom Pvt. Ltd. maintained with Bank ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 18 of Baroda (A/c No. 17380200000638) for the period from 01.04.2014 to 31.03.2015 and from 01.04.2015 to 21.01.2016, which are placed before us at page no. 92 to 95 of the assessee’s PB, it is discernible that M/s Jupitar Dealcom Pvt. Ltd. has a balance of Rs. 1,33,90,490/- as on 16.11.2014 and the loan was extended to the assessee company on 25.02.2015 i.e., approximately after 06 months. It is further submitted that there was no cash deposits in the bank account of M/s Jupitar Dealcom Pvt. Ltd., therefore, the creditworthiness of said lender company cannot be doubted. 10.5 Apropos, unsecured loan received from M/s Giniya Construction & Infra Pvt. Ltd. (in short “Giniya”), Ld. AR submitted that the companies owned by Singhania Family holding entire capital of the said company. The amount of Rs. 10,00,000/- unsecured loans was given by the company on 05.03.2015 through RTGS as can be verified from the bank statement of the lender company, copy of which is placed before us at page no. 122 of the Assessee’s PB. Before providing the unsecured loan to the assessee company, the lender company has received funds from Shri S. K. Singhania and Shri G.P. Singhania for Rs. 3.00 lac & 6.5 lac, respectively, therefore, the source of funds in the hands of lender company cannot be doubted. 10.6 To prove the creditworthiness of both the companies, Ld. AR further drew our attention to page 89 & page 118 showing fixed assets (land) of the ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 19 lender companies, which are noticed to be of Rs. 1.03 crores (Jupitar) and Rs. 1.01 crores (Giniya). 10.7 Ld. AR further submitted that the unsecured loan availed by the assessee company are duly repaid in the FY 2015-16 and FY 2020-21, which is demonstrated before us as per confirmations / Accounts statement along with bank statement of the lender companies placed at page no. 125 to 130 of the assessee’s PB. Ld. AR further submitted that the interest on aforesaid loans are regularly paid on year to year basis. So, the allegation by the revenue that the unsecured loans are not genuine is totally baseless and misconceived. 10.8 Backed by aforesaid submission, it was the prayer by the Ld. AR that the identity, creditworthiness of the lenders and genuineness of the transactions are duly proved by the assessee before both the revenue authorities, therefore, the addition made by the Ld. AO and sustained by the Ld. CIT(A) are liable to be deleted. 10.9 On the aforesaid contentions, Ld. AR have placed his reliance on various judgments placed before us at page no. 351 to 450 of the Assessee’s PB, out of which reliance is placed on judgment accorded by Hon’ble High Court of Madhya Pradesh, Indore Bench, reported in (2018) 408 ITR 0561 (MP), in the case of PCIT & Ors. Vs Chain House International Pvt. Ltd. & ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 20 Ors., wherein it is held that “Once genuineness, creditworthiness and identity of investors are established, no addition could be made under 68.” 10.11 In another case, Oriental Trading Company Ltd. vs. Commissioner of Income Tax (1963) 49 ITR 723, Hon’ble Mumbai High Court, has held that, “on the facts and circumstances of the case, assessee’s initial burden stood discharged and there being no material to show that revenue discharges its burden, cash credit could not be treated assessee’s suppressed income.” 10.12 Per contra, rebutting to the contentions raised by Ld. AR, Ld. CIT DR, Shri S. L. Anuragi, representing the department have placed his strong reliance on the orders of revenue authorities and requested to sustain the same. 10.13 We have considered the rival submissions, perused the material available on record and case laws relied upon. In the present case, as demonstrated before us. Ostensibly, all the relevant information, documents and explanations to substantiate the identity and creditworthiness of the lenders and genuineness of the transaction are duly furnished by the assessee before both the revenue authorities, so before us. Ld. AO had made the addition under his perceptions qua the utilization of funds available with the lender companies, without dislodging the contention of the assessee, alleging that the lenders are shell entities. Ld. AO referred to the notification issued by the Ministry of Finance dated 14.07.2017 stating the list of companies ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 21 exhibiting attributes common to shell companies but have not been established to be shell companies as on date. Since the name of M/s Jupitar Dealcom Pvt. Ltd. was appearing in the said list, Ld. AO after theoretically discussing the modus operandi and features of shell companies, have held that M/s Jupitar Dealcom Pvt. Ltd. is a bogus entity. Regarding name of the lender company appearing in the notification issued by Ministry of Finance, Ld. AR placed the contention that, it was just a proposed list by the ministry and not the conclusive / final list of shell companies, which thereafter, have been issued by the ministry or brought on record by the revenue. Ld. AO disregarded the admission of the Director of M/s Jupitar Dealcom Pvt. Ltd., Mr. Sunil Khemka, regarding providing of loan to the assessee company. Be that at it may, the initial onus cast upon the assessee was discharged, as the necessary information / evidence necessary to prove essential ingredients required u/s 68 are furnished before the revenue authorities. Ld. CIT(A) have discussed the matter, merely by extracting the observations of the Ld. AO along with certain case laws and have concluded that the assessee was not able to establish the creditworthiness of the lender, nor has it been able to prove the genuineness of transaction, without making any specific comment on the transaction referring to the documents furnished by the assessee. On perusal of documents of both the lender companies, it is observed that both the companies are having sufficient funds to extend the loans, the loans are duly repaid in future, the transactions are through proper banking channel, the source of funds are not doubted at any stage, the lenders have fixed assets in the form of land, their ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 22 balance sheets are showing adequate net worth so as to extend unsecured loans to the assessee company. Under such facts and circumstances, as the initial onus cast upon the assessee was duly discharged qua the unsecured loans availed by the assessee, addition u/s 68 on account of unexplained cash credit in the present case is unjustified, therefore, the decision of Ld. CIT(A) on this issue was not in accordance with mandate of law thus, needs to be reversed. Consequently, the addition of Rs. 1.40 lacs u/s 68 on account of unexplained cash credit made by the Ld. AO and sustained by Ld. CIT(A), stands vacated. 11. Ground No. 4: Regarding disallowance of business expenditure of Rs. 3,09,69,622/- 11.1 On this issue observations of the Ld. AO are exhaustively elaborated and dealt with by the Ld. CIT(A) in para 6 to 6.11 of his order, the same is culled out for the sake of completeness of facts as under: 6. Ground No. 3: This ground pertains to the findings of the Assessing Officer that appellant's business is discontinued. The facts of the case are that the appellant was running show room of Volkswagen cars which was terminated with effect from 27/02/2014, i.e. in the Financial Year 2013-14. It is stated that MOU with Volkswagen was signed on 01/12/2014. The appellant had 18 passenger cars in stock, out of which 9 were new cars, and all were sold to the new dealer during the year appointed by Volkswagen namely M/S Amarnath ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 23 Vehicles Pvt. Ltd. As per the appellant, the Assessing Officer cannot hold that business had discontinued during the current year and accordingly he could not have computed the income of the appellant after discontinuation as Capital loss and also rent realized for the show room under the head 'income from house property'. It is argued that termination of dealership is not indicative of the termination of complete business of the appellant 6.1 The Assessing Officer in the assessment order stated that after cessation of dealership, no business activity is carried out by the assessee. Since the business activity was stopped, the Assessing Officer disallowed depreciation claimed also. He noted that there are no expenses claimed for electricity for work shop or advertisement expenses. The Assessing Officer reproduced the details of other expenses as per note No. 2.21 of the balance sheet. It was noted that the assessee had given the entire show room building to the successor dealer on rent and hence the Assessing Officer also noted that rent and maintenance charges received for the building can be only assessed under the head 'income from house property' and from such rent, 30% of statutory deduction can only be allowed. The Assessing Officer also held that after closure of business, vehicle become the assets of the assessee company and so any loss or gain on sale of such vehicle can be assessed under the head 'capital gain'. Further, the claim of interest income from FDs will not be set off from financials costs but it (financial costs) will be assessed as capital asset of the assessee. (I have not agreed with these proposition of AO) ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 24 6.2 The computation made by the Assessing Officer is (slightly modified for more clarity) now considered. First, he listed the transactions to be treated as under: ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 25 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 26 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 27 6.3 The appellant argued that dealership of Volkswagen was terminated by MOU dated 01/12/2014. It was further argued that despite the termination of dealership, no changes were made in the object clause of the appellant which had provided further activities and, in any case, the appellant had sold 18 vehicles during the year for which sale account was produced. The appellant also stated that cars being stock in trade cannot be considered as capital assets for the appellant. The appellant also referred to Section 176 (3A) and submitted that even after discontinuation, the amount received on sale has to be considered for the business income as if business was not discontinued. 6.4 The submission is considered. First it is to be considered whether the business of the appellant is discontinued or not. It is seen from Profit & Loss account that on the revenue side, the appellant has shown revenue from operations and other income. If we consider revenue from operations, the same is given under the head \"Note No. 2.15\" which is reproduced as under: - ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 28 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 29 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 30 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 31 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 32 6.5 Thus, it is very clear from the above that there is no service income and workshop receipts, claim and incentives received from Volkswagen and other various business incomes except income from insurance payout and sale of remaining stock sold. Similarly, under the head 'other income', there is no income from booking cancellation, incentives received, etc. There is no purchase of trade in goods including cars or spare parts during the year. The closing stock of both the cars and stock of spares has become NIL. Stock of spares was even NIL during the earlier year. Nowthe reference is made to MOU signed on 01/12/2014 neither with Volkswagen Group Sales India Pvt. Ltd (VWGSIPL). It is clearly stated in para-2 of page 1 that the appellant requested vide letter dated 24/02/2014 to accept its resignation as authorized dealer of Volkswagen which was accepted from 27/02/2014. In para 1 and 2 on page 2, it was also agreed and confirmed by the appellant that it had no unsold stock of cars, spare parts or accessories or these were directly transferred to Amarnath Vehicles Pvt. Ltd. Thus, it is very clear that business of dealership stood closed with effect from 27/02/2014. In fact, workshop and show room premises were rented out to the new dealer with effect from 01/02/2014 even prior to formal resignation. From various income shown under the head 'revenue from operations' and also under the head 'other income', it is very clear that appellant's income other than sale of cars is only interest income, agricultural income, sale of property (assessed and offered also as capital gain) and rental charges received for the building given on rent. It is to be noted that the premises from which the show room of the appellant was running was given on rent to the successor dealer, namely, Amarnath Vehicles Pvt. Ltd., and rental income and maintenance Charges were received for the same with effect from 01/02/2014. 6.6 Thus, it is concluded that there is no purchase of any stock during the year and even employees' salary had also come down from last year's As. 23,21 ,947/- to current year Rs. 2.40,000/- (only a single employee). Thus, clearly even though transfer of stock of cars including new cars and demo cars had taken place in the earlier year as confirmed in the agreement with VWGSIPL, only invoices are ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 33 issued during the current year which is just the formalization of transaction and it has happened as per the mutual convenience of Amarnath Vehicles Pvt. Ltd. and the appellant. It is also noted that transfer of any movable property takes place either on the transfer of possession or and the transfer of risk whichever is earlier. Here after the termination of dealership the appellant was not in a position to use the stock including demo cars in any way and also since premises were transferred, as confirmed in the agreement it is clear that all the stocks including demo cars were transferred to the new dealer with effect from 27/02/2014 and in any case the premises were already under the control of new dealer. The argument that the agreement for termination of dealership was entered into on 01/12/2014 is also not material as it clearly provided in the agreement itself that termination of dealership took place on 27/02/2014 and after that the appellant has not purchased any stock and also did not run the work shop during the current year. It appears that accounts were reconciled between the appellant and VWGSIPL to arrive at the liability as mentioned in para 6 on page 2. 6.8. After holding that the business discontinued for the appellant and no business was carried out in current year, now the question arises how receipt on sale of car requires to be assessed. The appellant has pointed out to Section 176 (3A) applicable in respect of discontinued business. Now coming to the applicability of Section 176(3A), it is noticed from bare reading of this Section that it is applicable in case of discontinuation of business. This section is not applicable if there is succession in the business. It is to be noted that succession and discontinuation are two mutual exclusive concepts and there cannot be discontinuation in a case where there is succession. If the trades is continued even after dissolution or liquidation of Company or Firm or on transfer, it is termed as 'succession' and not discontinuation of business. Thus, as discussed above, even though business of appellant is discontinued, the business of dealership is not stopped and it has been smoothly transferred to M/s. Amarnath Vehicles Pvt. Ltd. because as provided in the rent agreement with the appellant, ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 34 the showroom premises were handed over by the appellant to Amarnath Vehicles Pvt.Ltd. With effect from 01/02/2014 and also the MOU made with VWGSlPL as discussed above para 6.5 provided that the appellant was not left with any unsold stock of cars, spare parts, etc. Thus, legally section 176(3A) will not have any application since the business of dealership is not discontinued but dealership was taken over by another party. As far as the issuance of bills during the current year by the appellant is concerned, it is argued by the appellant that since bills are issued during the current year, business should be treated as continued for the appellant during the current year even though dealership business might have been stopped but trading continued. Here it is noted that transfer of stock takes place either on the transfer of possession or transfer of risk and reward whichever is earlier. As is clear from the MOU that appellant had already handed over the possession of everything to the successor namely Amarnath Vehicles Pvt. Ltd. even the showroom premises were transferred and in any case the appellant was unable to make any sale as transfer of the remaining stock including the demo vehicles after termination of dealership. It is clear that effective transfer had taken place in the earlier year and the bills are issued during the current year which is no more than a paper transaction and thus it cannot be held that business of trading continued during current year when appellant was not in ownership of any stock even though so shown in the balance sheet because MOU, rent agreement and also the entire sequence of events point otherwise. Thus, it is held that there was no business of the appellant during the current year and Section 176(3A) will also not apply. 6.9 In the show-cause notice issued on 25/08/2022 and 28/08/2022, it was also pointed out that capital loss as suggested by the Assessing Officer against the capital gain of the building sold during the year will not be allowed and appellant was asked to make its submissions. The appellant reiterated that it has claimed all the expenses incurred as business expenses only and so business loss is required to be adjusted against capital gain. However, as held above that there was no business carried out during the year, so there is no question of ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 35 allowance of any expenditure during the year in absence of any business. Further, action of the Assessing Officer to compute capital loss has also not been upheld because there is no transfer of stock during the current year, hence there is no question of any capital receipts and thereby allowance of any related purchases in cash and other expenses as done by the Assessing Officer as discussed above in para 6.2 above. Hence it is held that capital loss for the year is NIL. 6.10 Even if for the moment presumed that there is capital loss during the year, this capital loss is computed by the assessing Officer by allowing financial costs, PF payment, salary etc., which is improper. However, since there are no capital assets involved against which capital loss is computed by the ld. AO, so the capital loss computed in any case was not a loss computed under the head \"Capital Gain\" and once it is so It cannot set off against the capital gain computed and the assessment order to this extent is enhanced both for computation of capital loss and for its set off against capital Gains (independent of each other).Penalty proceedings under section 271(1)(c) is initiated for furnishing inaccurate particulars of income. 6.11. Just for completeness, the income/ loss from transfer of cars pertaining to earlier year is worked out as under:- Consideration on sale of remaining stock- Volkswagen 93,54,161 Insurance receipt of closed business 1,63,364 Less: Cost of cars sold (Opening Stock) -1,56,95,019 Business Loss -61,77,494 Even the liability worked out in agreement/ MOU with VWGSlPL will pertain to earlier year only when this business for appellant stood discontinued. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 36 11.2 On perusal of the aforesaid observations, workings and findings, the controversy which, we need to consider and adjudicate is summarised as under: a. “Whether the business of the assessee shall be treated as discontinued effective from 27.02.2014 i.e., from the date of discontinuation of dealership in terms of MOU with Volkswagen signed on 01.12.2014, consequently, the related expenditure claimed by the assessee shall be eligible for deduction as business expenditure or not?” b. Whether the selling of cars available with the assessee after closure of dealership to be treated as capital asset instead of stock in trade, thus, the transaction of sale of such cars and related expenses to be categorized as “capital loss” and consideration received on sale of cars and related incomes, as “capital gain?” 11.3 Ld. AR, while arguing on behalf of the assessee stating that the assessee company was formed for business through various objects, and amongst them one of the main object is to deal or to do business in auto mobile. Ld. AR to support such contention have shown us “Memorandum of Association” (MOA) of the assessee company placed before us at page no. 156 to 167 of the PB, wherein the relevant clauses showing main objects of the company consists of various objects out of which clause No. A(3) pertains to various businesses inter alia includes business of Automobiles. For the sake of ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 37 clarity, clause No. A(1 to 3) of the MOA of the assessee are culled out hereunder: A. THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED ON ITS INCORPORATION ARE: 1. To set up Residential Industrial) Mining, Roadways, Highways, Irrigation and other and to act as builders, developers, colonizers, contractors, Interior decorators, Architectural and structural designers, Town planners and Surveyors for any person, firm, society or company, semi Govt./Govt. authority and to purchase, lease, exchange, acquire, construct, sale, develop or reconstruct house, bungalows multistoried flats, godowns buildings warehouses, Industrial sheds, bridges, dams, garages and to work on any land of the company, other lands and to pull down, rebuild, alter, enlarge, improve, existing structures and works thereon to Convert appropriate land into roads, streets, gardens. Farm houses and convinces and to improve and deal with property of the company or other property either rural or urban and immovable property leasehold or freehold either on rent, leave or for any consideration and to sell resale, develop, construct, let on hire and take assign, pledge lease out or otherwise dispose of on installment basis or under hire purchase agreement or in other manner and hereditaments of whatever for the improvements thereof to otherwise and to do civil, engineering and electrical work related to construction activities. 2. To purchase acquire, sell Brokerage or otherwise transfer all types of properties and to carry on the business of real estate viz. developed, undeveloped unclaimed, rural, urban, agricultural, industrial, residential, commercial lands and buildings whether temporary or permanent: 2. To set up project and carry on the business as producers, manufacturers, importers exporters, traders, buyers, sellers, suppliers, indenters, sub-agents, agents, jobbers, brokers, repairers, cleaners, or otherwise deal in automobiles, motor cars, lorries, vans, motor-cycles, cycle-cars, motors, scooters, and other vehicles suitable for propulsion on land, sea, or in the air or in any combination thereof and vehicles of all description whether propelled or assisted by means of petrol, spirit, steam, gas, electrical, solar energy, animals or other power, engines, chassis, bodies, other parts and components, accessories and all machinery, implements, appliances, apparatuses, lubricants, solutions, enamels and all things capable of being used for, in, or in ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 38 connection with the manufacture, maintenance and working of motors or other vehicles in automobile sector and carry on all other allied business such as insurance agents. 11.4 It was the submission by Ld. AR that the assessee company is incorporated for the purpose of and to carry out various businesses as authorized by its MOA, the dealership of Volkswagen is not the only object of business of the assessee. 11.5 Ld. AR further submitted that the intention of the assessee while purchasing the cars from Volkswagen was to sell them under the business of the assessee. The purchase and sale of cars was for the purpose of trading, the same cannot be termed as any other income, other than the business income of the assessee. Ld. AR advanced the argument that in order to ascertain the true character of the income, it is important to verify the intent of the person for entering into the transaction. Ld. AR placed his reliance on the Judgment of Hon’ble Apex Court in the case of G. Venkatswami & Co. vs CIT, 35 ITR 594, wherein Hon’ble Apex Court described the business income and has held as under: “Business income -Adventure in the nature of trade-Meaning-Isolated transaction- Expression “in the nature of trade” suggests that it is allied to transactions that constitute trade or business but may not be trade or business itself and that it is characterised by some of the essential features that make trade or business but not by all of them- Hence even an isolated transaction can satisfy the description of an adventure in the nature of trade. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 39 11.6 Ld. AR further drew our attention to the facts of the issue regarding selling of cars have shown us the audited financials of the assessee company for the year under consideration wherein at page no. 65 of Assessee’s PB, note no. 2.10 comprising inventories, showing Cars amounting to Rs. 1,56,95,019/- (as on 31.03.2014) and ‘NIL’ (as on 31.03.2015) as stock in trade. It was the submission that the Cars purchased by the assessee during the continuation of dealership are stock in trade of the assessee, which after the termination of dealership are sold to various customers by issuing tax invoices under the name and style “Varda Project (India) Pvt. Ltd.” (copies of such invoices and ledger account for sale of vehicle are submitted at page no. 184 to 205 of the Assessee’s PB. It is also clarified that applicable Value Added Tax (VAT)on the sale of such cars @14% was also paid by the assessee company under the TIN No. 22211104551. It was the submission that the Cars sold are stock in trade of the assessee therefore, the income generated from sale of such cars was business income, the same cannot be recharacterized to be treated as capital asset and the income generated therefrom, as capital gain. Ld. AR further placed his reliance on the order of Hon’ble Allahabad High Court in the case of CIT vs Rita Diwan (2014) 90 CCH 0045, wherein Hon’ble Allahabad High Court as held that : “The circumstances which have been adverted to in the order passed by the CIT(A) furnished cogent justification in holding that the assessee was not engaged in the business of purchase and sale of shares. Merely because in certain instances the shares were sold before the completion of a year was no reason to treat the income as arising from them as a business transaction when the assessee had duly shown it as short-term capita/ gains. The CIT(A) had duly considered all ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 40 the facts and circumstances of the case and had come to the conclusion that the intention of the assessee was to make an investment and not to carry on any trade or business in shares or securities. This finding has been affirmed by the Tribunal. There is distinction between the shares which are held as investment (capita/ asset) and shares which are held as stock- in-trade (trading asset) As per case of Commissioner of Income-tax (Central), Calcutta v. Associated Industrial Development Co. (P.) Ltd. [1971] 82 ITR 586, Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it had maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment Appeal does not give rise to any substantial question of law. 11.7 Ld. AR further discussed the definition of business as per section 2(13) and sub-section (3) & (3A) of section 176 of the Act, which reads as under: Section 2(13): “Business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Section 176: Discontinued business. (1) Notwithstanding anything contained in section 4, where any business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 41 discontinuance may, at the discretion of the Assessing Officer, be charged to tax in that assessment year. (2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed previous year or part of any previous year. (3) Any person discontinuing any business or profession shall give to the Assessing Officer notice of such discontinuance within fifteen days thereof. (3A) Where any business is discontinued in any year, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the person who carried on the business had such sum been received before such discontinuance. (4) Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance. (5) Where an assessment is to be made under the provisions of this section, the Assessing Officer may serve on the person whose income is to be assessed or, in the case of a firm, on any person who was a partner of such firm at the time of its discontinuance or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under clause (i) of sub-section (1) of section 142 and the provisions of ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 42 this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under clause (i) of sub-section (1) of section 142. (6) The tax chargeable under this section shall be in addition to the tax, if any, chargeable under any other provision of this Act. (7) Where the provisions of sub-section (1) are applicable, any notice issued by the Assessing Officer under clause (i) of sub-section (1) of section 142 or section 148 in respect of any tax chargeable under any other provisions of this Act may, notwithstanding anything contained in clause (i) of sub-section (1) of section 142 or section 148, as the case may be, require the furnishing of the return by the person to whom the aforesaid notices are issued within such period, not being less than seven days, as the Assessing Officer may think proper. 11.8 Backed by the aforesaid submission, it was the prayer by Ld. AR that the Ld. AO had incorrectly recategorized the income of the assessee from sale of Cars as capital gain by treating the stock of Cars as capital asset. Such interpretation by the Ld. AO was not in accordance with the mandate of law, the facts and circumstances, intent of the assessee and the final disposal of the Cars, everything is indicating that the cars were purchased as stock in trade to be sold in the regular course of business and even after the discontinuation of dealerships the Cars were sold in the regular course of business only, thus, the income generated from sale of the Cars is rightly considered as business income by the assessee and the same cannot be disturbed by treating as capital asset under any stretch of imagination. The additions made by the Ld. AO by recharacterization of income and thereby disallowing the legitimate ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 43 expenditure pertaining to the said business was not justified and confirmation of such action by Ld. CIT(A) was unlawful, unwarranted and uncalled for, thus, all such additions / disallowances are liable to be struck down. 11.9 Contradicting the aforesaid submissions, arguments and contentions by the Ld. AR, Ld. CIT-DR reiterated the facts of the issue from the order of Ld. AO and deliberation / decision from the order of Ld. CIT(A), he placed his strong reliance on the order of Ld. AO and Ld. CIT(A), have requested to uphold the same. 11.10 On a thoughtful consideration of the pleadings by both the parties, perusal of material available on record and case laws relied upon by the Ld. AR, we find material substance in the contentions raised on behalf of the assessee. Under the factual matrix of the present case, it is noticed that the assessee company is incorporated and authorized by its Memorandum of Association to carry out various businesses according to its objects which inter alia includes “Business of Automobiles”. The assessee company was running a dealership as Volkswagen’s authorized dealer in the territory of Raipur, C.G. operating under the trade name, “Volkswagen Raipur”, as per agreement dated 19.06.2013, for sale and purchase of Volkswagen products. Subsequently, as per MOU dated 01.12.2014 entered into on the request of assessee to Volkswagen Group Sales India Pvt. Ltd. dated 24.02.2014, the dealership of ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 44 the assessee stands cancelled effective from 27.02.2014. The stock of Cars left with the assessee after cancellation of the dealership was sold by the assessee in the ensuing FY 2014-15. As the dealership of assessee was terminated on 27.02.2014, the left over stock of Cars with the assessee are categorized as capital asset by the revenue and income generated from sale of such stock as capital gain. Herein, respectfully following the analogy drawn by Hon’ble Apex Court in the case of G. Venkatswami Naidu & Co. (supra), it is to be looked into what is the nature of income under consideration. The expression “in the nature of trade” postulates existence of certain element in the adventure, the conduct of assessee indicates that the transaction of purchase and sale had the character of adventure in the nature of trade, thus, the gains obtained from such transactions are assessable as business income. Hon’ble Allahabad High Court in the case of Rita Diwan (supra), deliberating on the similar issue, has held that the intention of the assessee was to be considered in deciding the nature of the income. 11.11 In the present case considering the facts and circumstances where the stock of Cars, after the date of cancellation of dealership, held by the assessee was sold in the normal course of business in the coming FY. The intent of the assessee at various stages i.e., (i) at the time of purchase of such Cars, (ii) while carrying the same as stock in trade during the existence of dealership and even thereafter and (iii) at the time of selling of Cars, was to deal with such stock for trading purpose under the objects of the assessee company. The inference drawn by the revenue that there was no service income and ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 45 workshop receipts, claim and incentives received from Volkswagen and other various business incomes, except income from insurance payout and sale of remaining stock, similarly no other business related income generated by the assessee during the year under consideration, indicates that the assessee’s business was discontinued. Such contentions by the revenue cannot be concurred with qua the transaction of sale of closing stock of the Cars, as when we analyse the initiation, continuation and culmination of such transaction even in isolation, the same cannot be categorized as capital transaction, since after the termination of dealership the assessee has sold the remaining stock to different customers (end users) under the routine trade / business. 11.12 Considering the totality of facts of the instant case, we do not find any substance in the observations and decisions of the revenue authorities, looking to the nature of transactions, respectfully following the judicial pronouncements referred to supra, we consider it apposite to hold that the transaction of sale of Cars by the assessee company which were held as stock in trade while it was dealer of the Volkswagen and till such cars are finally disposed of by selling of the same under the normal course of business, thus, qualifies to be the business transaction, therefore, the stock of Car cannot be treated as capital asset and income generated from such transaction even at a future date shall be taxable as business income of the assessee during the year in which it was actually received. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 46 11.13 As the issue regarding nature of income generated from ‘sale of car’ and related ‘income from insurance payout’ are decided by us to be treated as ‘income from businesses of the assessee, therefore, the related expenses business expenses claimed by the assessee are eligible for deduction from the business income. However, for verification of facts and figures, and to workout necessary calculations the issue is restored to the file of Ld. AO in terms of our aforesaid observations. Resultantly, the ground of appeal no. 4 of the present appeal is partly allowed for statistical purpose. 12. Ground No. 5: Regarding partially sustaining the rental income received by the assessee from furnished showroom as income from the house property. 12.1 The assessee has rented its Showroom and Workshop premises located at Raipur and at Village Sambalpuri to the successor dealer of Volkswagen M/s Amarnath Vehicle Ltd. on rent. Assessee received maintenance charges and rental income towards renting of premises during the year under consideration as per rent agreement dated 07.01.2014. The premises was handed over to the tenant on 01.02.2014 for a period of 5 years. The income so received by the assessee are treated as business income by the assessee accordingly various business expenditure are claimed towards such income. The Ld. AO, under the conviction that the assessee has been in the business of selling of vehicles hence the rental income cannot be clubbed ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 47 with that of his other income, therefore, the income generated from letting out of property should be treated as income from house property and the assessee would be entitled to claim the statutory deduction u/s 24 of the Act for 30%, as maintenance charges. On this issue it was the argument by the assessee before the revenue authorities that the rent received from the commercial properties according to one of the objects given in the MOA of the assessee company was a commercial activity of the assessee therefore, the income received from letting out of property shall be treated as business of income from. Ld. CIT(A) have approved the interpretations of the Ld. AO drawn by the Ld. AO, however, have allowed the proportionate interest expenses u/s 24(b) of the Act for Rs. 56,28,350/- incurred on funds borrowed to acquire the said property, but sustain the remaining addition for Rs. 50,79,130/-. 12.2 Aggrieved with the aforesaid actions of the ld. AO and Ld. CIT(A), assessee raised the issue in present appeal. 12.3 On this issue, Ld. AR of the assessee has furnished a written synopsis, the same is extracted as under: Ground No-5 \"On the fact and in the circumstances of the case, the CIT(A) has erred in partially sustaining the order of the A.O. i.e. by Rs. 50, 79,130/- (out of Income from house property is of Rs. 1,07,07,480/-) wherein the Ld. Assessing Officer ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 48 has erred in taxing the rental income from furnished showroom as income from house property as against. Thus, the addition made by the A.O. and partially sustained by the CIT-A is unjustified, unwarranted and uncalled for.” The A.O. and CIT-Appeal has erred in considering the income from renting out of showroom as income from House property in place of income from business as claimed by the assessee. Observation of the A.O. ▪ The observation of the A.O. is at para 14 page 30 of PB. Observation of CIT-Appeal ▪ The observation of the CIT-APPEAL is at para 7.2 page 24 to 28 of CIT- Appeal order. Submission of the assessee ▪ One of the main object of the assesse company is to let out and leasing out of the properties of the assesse company (Refer page no 156 OF PB and clause 1 of MOA) ▪ Since one of the main object is renting of property also, the assesse has correctly accounted it under the head business income. ▪ Reliance is placed on the judgment of S.G .Mercantile Corp (P) Ltd Vs CIT 1972 AIR 732 Where in it was held by Hon' ble Apex Court that letting out of property was the its business as authorized by memorandum of association therefore the same has to be assessed under section 10 (of Old Act, i.e. 1922 ) as business income. Copy of judgment is enclosed herewith. Annexure-3. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 49 ▪ The assessee also relies upon the judgment of: Hon'ble Apex court in case of Chennai Properties & Investments Ltd (2105) 93 CCH 0003 placed at Page 451-452 of PB vol II. Hon'ble Apex Court in case of Rayala Corporation (P) Ltd Vs ACIT (2016) 96 CCH 0124 placed at page 453-454 of PB vol 11. Hon'ble Allahabad HC in case of Hardoi Baba Roller flour Mill (P) Ltd vs CIT (2019) 104 CCH 0213 placed at Page 455-456 of PB vol 11. Hon'ble AP & Telangana HC in case of PCIT Vs. Bharathi Warehousing Corporation (2107) 392 ITR 0160 placed at page 457-459 of PB vol 11. ▪ The case laws relied upon by CIT-Appeal also emphasis on the object clause of the MOA of the company. ▪ Merely because the assesse has not let out any other properties are not construe that income from letting out of show room is income from house property. ▪ In Immediate assessment next year the A.O. treated it as business income. 12.4 Backed by aforesaid submission, Ld. AR contended that in the present case, the assessee had carried out the activity of letting out as per object clause (A1) in the MOA of the company (extracted supra), departments contentions that assessee had not let out any other property cannot be the basis to treat the letting out of showroom as income from house property. It was the submission that in next AY, the AO of the assessee had treated the income from letting out as business income of the assessee. In view of such facts and taking support from various case laws, it was the prayer that the ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 50 income earned by the assessee from letting out of showroom and workshop are in the nature of business of the assessee, therefore, the same should be treated as income from business. The addition by treating such income as “income from house property” was unjustified, unwarranted and uncalled for. 12.5 Ld. CIT-DR on the other hand, strongly supported the orders of Ld. AO and CIT(A). 12.6 We have considered the rival submissions, perused the material available on record and case laws pressed before us to support the contentions raised by the assessee. The analogy drawn by Hon’ble Apex Court in the following judgments relied upon by the assessee are as under: S.G. Merchentile Corpn. Pvt. Ltd. vs CIT Calcutta 1972 AIR 732 The relevant finding was that “Company formed with the object of acquiring or taking on lease lands, buildings etc. and dealing with them commercially- company taking on lease marketplace and letting it out- income from the lease hold property whether to be assessed u/s 10 or section 12.” As the letting out of property was business authorized by the MOA of the company, the income was assessable u/s 10 (business income as per Income Tax, 1922) and not u/s 12 (income from other sources as per Income Tax, 1922) Chhenai Properties & Investments Ltd Vs Commissioner of Income Tax (2015) 373 ITR 0673 (SC) ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 51 Conclusion While deciding whether the income received from letting out of property is business income or income from house property, deciding factor is not the ownership of land or leases but the nature of the activity of the assessee and the nature of the operations in relation to them. The objects of the company must also be kept in view to interpret the activities. Rayala Corporation Pvt. Ltd. Vs ACIT (2016) 386 ITR 0500 (SC) Held The learned counsel appearing for the assessee submitted that the issue involved in these appeals is no more res integra as this Court has decided in the case of Chennai Properties and Investments Ltd. v. Commissioner of Income Tax [20151373 ITR 673 (SC) that if an assessee is having his house property and by way of business he is giving the property on rent and if he is receiving rent from the said property as his business income, the said income, even if in the nature of rent, should be treated as \"Business Income\" because the assessee is having a business of renting his property and the rent which he receives is in the nature of his business income. Conclusion: Where business of company was to lease its property and to earn rent therefrom, income so earned should be treated as its business income. 12.7 In view of the principle of law laid down by Hon’ble Apex Court in the aforesaid judgments, facts and circumstances of the present case, as the assessee company was incorporated having the main object, which includes “leasing of properties”, moreover, such plea of the assessee was accepted and ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 52 allowed by the department in immediate succeeding AY, therefore, treating the income from letting out of property as income from house property by the revenue authorities was misconceived and misconstrued which has no standing in the eyes of law. We, therefore, are of the considered opinion that the income generated by the assessee through letting out of showroom and workshop is in the nature of business activity, therefore, the same should be treated as ‘income from business’, thus, the related expenses are to be considered as business expenditure. For verification of facts and figures and calculation of business income / expenditure, in terms of our aforesaid observation, the issue is restored back to the files of Ld. AO. Resultantly, ground no. 5 of the appeal is partly allowed for statistical purposes. 13. Ground No. 6: Issue regarding reclassification of interest income from business income to income from other sources by the Ld. AO and confirmation by the Ld. CIT(A) treating that the business of the assessee was discontinued. 13.1 As the issue regarding discontinuation of business is already discussed and decided by us in ground no. 4 of the present appeal, holding that the business of the assessee is still in operation, therefore, in terms of our decision therein, we hold that the interest income of Rs.2,04,722/- received by the assessee during the year is in the nature of business income, therefore, we allowed Ground no. 6 of the appeal in favour of the assessee. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 53 14. Ground No. 7: Regarding treatment of gain on sale of property as Short Term Capital Gain instead of LTCG. 14.1 The issue in this ground is that the assessee had shown LTCG in the ROI at Rs. 1,74,80,952/-. Whereas Ld. AO had treated the same as Short Term Capital Gain while computing the income of the assessee. The issue thereafter was carried before the Ld. CIT(A) wherein it is observed that the property sold is under development till the FY 2013-14 i.e., immediately to the previous year 2014-15, then how the capital gain on sale of the subject property, became LTCG, and why the assessment may not be enhanced. In response, it was the submission by assessee that the property under consideration was purchased during the FY 2010-11 and thereafter construction was carried out till it was completed in FY 2013-14. The contention of the assessee was not found convincing by the Ld. CIT(A), he noted that since the construction work was completed during the FY 2013-14, the period of three year was not accomplished, therefore, the property sold was not a long term capital asset as per provisions of section 2(29AA). Accordingly, Ld. CIT(A) has held that the capital gain arising from the sale of subject property was short term capital gain and benefit of capital gain will not be allowed. 14.2 On the issue, Ld. AR submitted that the indexation is allowed for cost of acquisition in FY 2010-11 and cost of improvement done in FY 2011-12 since ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 54 the property was sold on 30.03.2015. It is further submitted that cost of improvement done in 2012-13 & 2013-14 are to be treated as short term capital gain. 14.3 Ld. CIT-DR on the other hand placed his reliance on the revenue authorities. 14.4 We have considered the rival submissions and perused the material available on record. To decide the issue regarding treatment of the property u/s to be held as long term capital asset or short term capital asset, first we need to comprehend the relevant and applicable provisions of section 2(29A) in conjoint reading with section 2(42A), the same therefore, are extracted as under: [(29A) \"long-term capital asset\" means a capital asset which is not a short- term capital asset [(42A) [\"short-term capital asset\" means a capital asset held by an assessee for not more than [thirty-six] months immediately preceding the date of its transfer:] 14.5 On conjoint reading of the provisions in aforesaid two sections, it is absolutely clear that an asset shall be considered as a long-term capital asset ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 55 when it is held by the assessee for more than a period of 3 years or 36 months. In the present case the property was acquired by the assessee during FY 2010-11 thereafter, the construction work was carried out during FY 2011-12 up to FY 2013-14. Herein, we agree and concur with the contention by the Ld. AR that since the property has been completed more than 36 months on the date of sale from the date of its acquisition by the assessee, the same is a long-term capital asset. Regarding benefit of indexation, it was the submission by Ld. AR that indexation shall be allowed on the cost of acquisition and cost of improvement incurred by the assessee, which has completed more than 36 months on the date of sale, on the other hand cost of improvement incurred in the said property within 36 months prior to the date of sale should be treated as short-term capital gain. We find force in the contention of Ld. AR; thus, we approve the same. However, for the limited purpose, in order to examine the dates of acquisition, dates of improvement and cost incurred, the matter is restored to the file of AO for computation of long-term capital gain / short term capital gain, in terms of our aforesaid observation. Resultantly, Ground No. 7 of the appeal of the assessee is partly allowed for statistical purposes. 15. Ground No. 8 & 1: Regarding addition of Rs. 12,28,900/- by treating the agriculture income as ingenuine and unexplained u/s 68 of the Act. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 56 15.1 On this issue, it was the submission of Ld. AR that the addition was made by the Ld. CIT DR by enhancing the income of the assessee taking into the consideration the addition made regarding agricultural income in the succeeding AY 2016-17 for Rs. 19,70,070/- by Ld. AO. Referring to the issue, it is submitted that the assessment of the assessee was picked up through CASS under limited scrutiny and as per notice u/s 143(2) dated 19.09.2016, the issue identified for examination does not include examination of agricultural income. Copy of notice furnished before us is extracted as under: ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 57 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 58 15.2 On perusal of the aforesaid notice, it is the contention by Ld. AR that as per notice u/s 143(2), it is evidently apparent that the issue raised by the Ld. CIT(A) was not under the scope of jurisdiction conferred upon the revenue authorities through limited scrutiny. Under such circumstances, the addition u/s 68 made by Ld. CIT(A) through enhancement was without jurisdiction, against the mandate of law, thus, cannot survive. 15.3 On the other hand, Ld. CIT- DR, submitted that the revenue authorities are well within their powers to examine the agricultural income of the assessee, therefore, the legal ground raised by the assessee is liable to be rejected. 15.4 We have considered the rival submissions and perused the material available on record. As per the issues identified for examination in the notice for limited scrutiny the first item is “(i) Income from heads of income other than business / profession mismatch”. Accordingly, the Ld. AO / Ld. CIT(A)’s are permitted to examine the issues qua the incomes other than income from business / profession. As the agricultural income of the assessee cannot be the business income of the assessee, therefore, there was no bar on the revenue authorities to exercise the process of assessment on the agriculture income. In view of such observations, ground No. 1 of the assessee challenging the scope of assessment and enhancement by Ld. CIT(A), being bereft of merits, does not deserves to be allowed, thus, rejected. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 59 16. Ground No. 8: On merits of the issue Ld. AR of the assessee have furnished before us copies of rent agreements with the farmers along with Aadhar cards of the farmers placed at page no. 292 to 306 of the Assessee’s PB, for land use for agricultural purpose as per convenience of the farmers to cultivate the land for harvesting of crops, storage and to sale the same for which the decided consideration shall be paid by the farmers to the assessee company. It is also submitted that the assessee is continuously showing agriculture income in its ROI since FY 2009-10, to support such contention, a summary of such income for FY 2009-10 to FY 2015-16 a/s copy of Audited P&L account of the assessee company showing agriculture income are placed before us at page no. 287 to 291. Based on such evidence, it was the plea that the land is used for agricultural activity. All such documents were duly submitted by the assessee before the Ld. CIT(A), however no investigation was conducted by the Ld. CIT(A) and has held that the agricultural income derived by the assessee is an unexplained income of the assessee and is liable to be taxed under the provisions of section 68 of the Act. Since the assessee have submitted requisite documents in support of agriculture income along with identity proofs of the farmers, who had carried out the cultivation and harvesting procedures on the impugned lands, the agricultural activity on the subject land cannot be doubted without any proper inquiry, we observe that on this aspect the revenue is squarely failed to substantiate as to how it has been inferred that there was no agricultural activity conducted on the said land and ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 60 the income declared as agricultural income is bogus / unexplained dehors any cogent / corroborative evidence to prove the same. In view of such observations on merits, we find that the observations of Ld. CIT(A) are not tenable in the eyes of law, therefore, the addition or enhancement made by the Ld. CIT(A) is directed to be deleted, consequently, ground no. 8 of the present appeal of the assessee, stands allowed. 17. Ground No. 9: of the present appeal is general in nature, thus, does not require separate adjudication. 18. Resultantly, the grounds of appeal of the assessee in ITA No. 224/RPR/2022 for the AY 2015-16 is allowed / partly allowed for statistical purposes / dismissed, in terms of our observations under the respective grounds of appeal. ITA No. 225/RPR/2022, AY 2016-17 (Asseessee’s appeal) 19. The grounds of appeal raised by the assessee in ITA No. 225/RPR/2022 are as under: 1. On facts and circumstances of the case, the CIT(A) has erred in enhancing the income of the assessee which is not within the purview of section 251 of the Income Tax Act, 1961. Therefore, the enhancement made by the CIT-Appeal is justified, unwarranted and uncalled for. 2. On the fact and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in making ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 61 addition of Rs. 19,70,070/- by treating the agricultural income as not genuine an explained u/s 68. The addition made by the A.O. and sustained by the CIT- Appeal is unjustified, unwarranted an called for. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in partially sustaining the order of the A.O., i.e. by Rs. 58,39,891/- (out of total addition of Rs. 11,53,93,600/-), as unexplained cash credit u/s 68. The addition made by the A.O. and partially sustained by the CIT-A is unjustified, unwarranted, and uncalled for. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in partially sustaining the order of the A.O. i.e. by Rs. 6,76,911/- (out of total addition of Rs. 31,40,235/-), u/s 14A r.w.s r.w.r. 8D. The addition made by the A.O. and partially sustained by the CIT-A is unjustified, unwarranted and uncalled for. 5. On the facts and in the circumstances of the case, the IT(A) has erred in treating the discontinuation of dealership as discontinuation of business and has disallowed all the business expenditure of Rs. 3,01,13,969/-. The disallowances of all the business expenditure made by the CIT-Appeal is unjustified, warranted and uncalled for. 6. On the facts and in the circumstances of the case, the CIT(A) has erred in taking interest income and Misc income of Rs. 63,02,965/- as income from other source instead of business income as claimed by the appellant and has also erred in not allowing the claim of expenditure incurred for earning such income. The change in classification of head of income and not allowing the expenditure by the CIT-Appeal is unjustified, unwarranted and uncalled for. 7. On the fact and in the circumstances of the case, the CIT(A) as erred in taxing the rental income from furnished showroom as income from house property as against claimed by the appellant as business income and thereby erred in making addition of Rs. 84,81,842/- under the head of income from House property. Thus, the addition made by CIT-A is unjustified, unwarranted and uncalled for. 9. The appellant reserves the right to add, amend or alter any grounds of appeal at any time of hearing. 20. Ground No. 1: Dismissed as not pressed. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 62 21. Ground No. 2: Regarding addition of Rs. 19,70,070/- u/s 68 of the Act by treating the agricultural income as not genuine and unexplained. On this issue, the observations of the AO are culled out as under: 2. Further perusal of books revealed that the assessee has shown agriculture income of Rs. 19,70,070/-. In this regard, the assessee has submitted copies of agreements made with 08 persons and has submitted cash receipts vouchers. However, all these submissions could not prove genuineness of agricultural activity as •yell as transaction shown by the assessee. The assessee failed to establish that the income claimed is direct nexus with the agricultural activities. Moreover, nothing was produced. so as to prove that agricultural activities have actually been undertaken viz. the assessee could not produce the documents related to cost of agricultural activities like purchase of seeds, cost of tilling, purchase of fertilizers, pesticides etc. Assessee also could not produce the evidences of sales of agricultural produce. Hence, Rs. 19,70,070/- is added back to the total income of' the assessee. Since, the assessee has furnished inaccurate particulars of his income, penalty proceedings u/s 271 (l)(c) of the Act is being initiated separately. 21.1 The addition made by the AO was challenged before the Ld. CIT(A), however the assessee was unsuccessful in getting its contentions approved, therefore, the addition made was sustained by the Ld. CIT(A). 21.2 As the issue is identical to the ground of appeal no. 8 in ITA No. 224/RPR/2024 for AY 2015-16 except the quantum of addition, therefore, our observations and decisions on merits of the issue therein shall mutatis ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 63 mutandis apply on this ground under consideration for AY 2016-17, accordingly, Ground no. 2 of the assessee’s appeal is allowed. 22. Ground No. 3: Regarding addition of Rs. 11,53,93,600/- is an unexplained cash credit u/s 68, which was partly sustained by the Ld. CIT(A) to the extent of Rs. 58,39,891/- 22.1 The observations of the Ld. AO qua the addition u/s 68 are extracted hereunder for the sake of completeness of the facts: 3. During the previous year, the assessee has shown outstanding unsecured loan at Rs. 12,60,73,234/- from 11 parties as per following: - S. I. Name of Lender Amount in Rs. Remark 1 Shri Radheshyam Agrawal 2,52,99,243/- Opening 4,87,51,000/- 2 Manju Devi Agrawal 19,00,000/- Opening 22,00,000/- 3 R.S. Agrawal, HUF 9,50,000/- Opening 9,50,000/- 4 Payal Bidi, Ambikapur 15,00,000/- Opening 15,00,000/- 5 Shantikunj Ispat Pvt. Ltd. 5,77,32,441/- Opening 5,29,10,000/- 6 Giniya Construction & Infra Pvt. Ltd. 10,00,000/- Opening 10,00,000/- 7 Goenka Business & Finance Ltd. 10,54,814/- Fresh Loan 8 S. K. Growth fund Pvt. Ltd. 16,33,150/- Opening 15,11,650/- 9 Supreme Realtech Ltd. 10,07,102/- Fresh Loan 10 Sarthak Ispat Pvt Ltd. 3,03,00,000/- Fresh Loan 11 Yamini Investment company Ltd 36,96,484/- Opening 35,21,084/- Total 12,60,73,234/- ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 64 On perusal of submission, in respect of unsecured loan for the following parties, the findings are as under: SI. Name of Lender Amount in Rs. Remark 1 Shri Radheshyam Agrawal 2,52,99,243 1. Returned income is only Rs.2,70,000/- 2. Bank Account showing cash deposit (IDBI A/c, Dena Bank A/c) and Transfer. 2 Shaktipunj Ispat Pvt. Ltd. 5,77,32,441 1. The returned income is Nil. 2. Continuous Losses in preceding years. 3. No sufficient balance in bank accounts. 4. Transactions are routed circulstly by the assessee and Radheshyam Agrawal. 3 Supreme Realtech ltd. 10,07,102 1. The retuned balance in bank accounts. 2. No sufficient balance in bank accounts. Immediate outward transactions against inward transactions with nominal balance. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 65 3. This is a paper company without any business activity. Company address is New Delhi and the account is operated in Kolktata. 4. Transactions have been routed through Marigold Dealer Pvt. Ltd. Assessee and Radheshyam Agrawal. 4 Goenka Business & Finance Ltd. 10,54,814 The assessee has not provided bank account statement. Transaction is not ascertainable. 5 Sarthak Ispat (P) Ltd. 3,03,00,000 1. The returned income is Nil. 2. Continuous Losses in preceding years. 3. No sufficient balance in bank accounts. Total 11,53,93,600 In view of the above observations, the unsecured loans are not accepted as creditworthiness of lenders are not established by the assessee and genuineness of the transactions are also not proved. Therefore, Rs. 11,53,93,600/- is treated as unexplained credit and thus added back to e total income of the assessee. Since, the assessee has furnished inaccurate particulars of his come, penalty proceedings u/s 271 of the Act is being initiated separately. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 66 22.2 The issue thereafter, when assailed before the Ld. CIT(A) by the assessee, the addition was vacated substantially, but partly sustained to the extent of Rs. 58,39,891/-. The observations of the Ld. CIT(A), while deciding this issue are extracted for better appraisal of the facts: 6.1 During the course of appellate proceedings, the appellant submitted that during the year under consideration the appellant was having total unsecured loan of Rs. 12,60,73,234/- out of which loan of Rs. 11,53,93,600/- received from five parties are said by the Assessing Officer to be new loans. With regard to loans from Radheshyam Agrawal and Shaktikunj Ispat (P) Ltd., the appellant submitted that the appellant has taken loan from these parties during the A. Y. 2015-16 also and the Assessing Officer after considering all the submissions and documents furnished by the appellant had treated the loan obtained from these parties as genuine and has not made any addition. 6.2. Shri Radheshyam Agrawal — Addition made Rs. 2,52,99,243/- The Assessing Officer has noted that returned income is only Rs. 2,70,000/- and various bank accounts show cash deposits. I have verified the documents filed. It is seen that Shri Radheshyam Agrawal is Director of the Company. He has shown income mainly from salary in return of income filed. Various accounts of the creditor were filed and from these, it is seen that except for the following three entries as under:- 20/04/2015 Rs. 50 lacs 21/04/2015 Rs. 30 lacs 26/08/2015 Rs. 1 crore ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 67 The balance deposits of Rs. 58,32,000/- are preceded by cash deposit on the same date or immediately preceding date in bank accounts- PNB 00876 or IDBI or Bank of India. The details are as under: Bank a/c from which transferred Date of credit in Varda Amount reflected in confirmation Date of cash deposit Amount of cash deposit BOI a/c. 935010110003772 12/14/2015 477000 12/14/2015 477000 -do- 2/12/2016 477000 2/12/2016 477000 PNB a/c. 3246001100000087 12/14/2015 315000 12/14/2015 315000 -do- 1/4/2016 400000 1/4/2016 400000 -do- 2/4/2016 395000 2/4/2016 750000 -do- 2/4/2016 355000 -do- 2/9/2016 1600000 2/9/2016 900000 -do- 3/14/2016 320000 2/9/2016 700000 -do- 3/14/2016 320000 IDBI a/c. 049104000082651 1/4/2016 500000 1/4/2016 500000 Total 4832000 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 68 The appellant is silent regarding these cash deposits in the bank accounts mentioned as above. Even though the size of balance sheet is about Rs. 10.44 crores but it is locked up in the land and how this land is acquired and at what price is also not known. There is nothing in the return of income which shows that creditor earned any income in cash. Thus, the credit of Rs. 48,32,000/- remain unexplained and the addition of the same is confirmed to the income of the appellant and balance amount is deleted. 6.3. Shaktikunj Ispat Pvt. Ltd/- Addition made Rs. 5,77,32,441/- It is seen that Shaktikunj Ispat Pvt Ltd. is a sister concern of the appellant. In the earlier year also, it was having credit balance of Rs. 5.29, crores which was- accepted. The funds have come during the year from cash credit account of the creditor, since in earlier year, this deposit was accepted, the same should be accepted in the current year also. The credit balance of appellant is also appearing in the balance sheet of the creditor and hence the addition made is deleted. 6.4. Goenka Business and Finance Ltd.-Addition made — Rs. 10,54,814/- The Assessing Officer has only noted that bank account was not filed before him. However, the appellant has furnished a copy of submission made before the Assessing Officer and it clearly shows copy of confirmation and also the bank account copy being enclosed to the submission filed to the Assessing Officer on 26/11/2018. Further, the Company has shown returned income above Rs. 14 Lacs. In the balance sheet of Company, the appellant is appearing as debtor. Considering this, there is no case for making addition u/s. 68 and same is deleted. 6.5 Sarthak Ispat (P) Ltd. — Addition made Rs. 3,03,00,000/- It is seen that the Company has got substantial assets and is in active business. The loss shown is only due to depreciation. It has paid taxes under MAT where profit shown is Rs. 1.09 crores. It Is further seen that this credit has come in the month of March, 2016 as per documents filed by the appellant. This loan is appearing under the head 'Advances' in balance sheet of Sarthak Ispat (P) Ltd.'. Bank account copy filed from which the loan was given also does not show anything unusual and hence this addition made u/s. 68 is deleted. 6.6 Supreme Realtech Ltd. — Addition made Rs. 10,04,102/- From the documents filed, it is seen that fresh credit has come from this Company. It is not having any business activity or a very small activity. The returned income ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 69 is only Rs. 34,930/-. But the loan given to the appellant is immediately preceded by the funds received from another concern, Marigold Dealer Pvt. Ltd. This Company is a shell company which is used for layering of transactions. The creditworthiness of the Company is not proved which was necessary to prove for the deposits to be accepted. It is seen that in respect of loan received, the appellant has furnished balance sheet and Profit & Loss account, however, it is noted that the creditor is not having any business activities for very long period, and thus, the creditworthiness of the creditor is not established. The creditor is acting only as a conduit for granting credit through bank account entry, the source of which is not known. The transaction is entered into with a malafide intention just to give a true colour of a legitimate loan When there is neither any business relationship with the creditor nor any sufficient reasons for the creditor to advance money to the appellant just on the basis of confirmation and documents, the genuineness of loan cannot be accepted. The appellant is having access to loans through the banks and also raised sufficient loans from the banks also. Reasons for raising these loans from the companies which are not having any real business activities and are only acting as a conduit to give a colour of genuine loan transaction for the money for which ultimate source is unknown. Financial statements clearly show no business activity or establish creditworthiness of creditors. The only purpose of these companies appear to be to earn some commission by acting as a conduit for so called loans. As I hold so, I am reminded of Hon'ble Supreme Court's observation, in the case of CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC)], to the effect that \"Science has not yet invented any instrument to test the reliability of the evidence placed before a or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities\". Following decisions are relied upon — Reference is drawn to a recent decision of Hon'ble Supreme Court in the case of Binoy Viswam v. Union of India [2017] 396 ITR 66/249 Taxman 290/82 taxmann.com 211, wherein Lordships have held in no uncertain terms that menace of the black money which is deep rooted in the economy need to be tackled by taking multiple actions at the same time, by holding as under . \"99. Unearthing black money or checking money laundering is to be achieved to whatever extent possible. Various measures can be taken in this behalf. If one of the measures is introduction of Aadhaar into the tax regime, it cannot be denounced only because of the reason that the purpose would not be ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 70 achieved fully. Such kind of menace, which is deep rooted, needs to be tackled by taking multiple actions and those actions may be initiated at the same time. It is the combined effect of these actions which may yield results and each individual action considered in isolation may not be sufficient. Therefore, rationality of a particular measure cannot be challenged on the ground that it has no nexus with the objective to be achieved. Of course, there is a definite objective. For this purpose alone, individual measure cannot be ridiculed. We have already taken note of the recommendations of SIT on black money headed by Justice M.B. Shah. We have also reproduced the measures suggested by the committee headed by Chairman, CBDT on ‘Measures to tackle black money in India and Abroad'. They Faye, no uncertain terms, suggested that one singular proof of Identity of a person for entering into finance/business transactions etc may go a long way in curbing this foul practice.” The ratio laid down in CIT v. Daulat Ram Rawatmal[1973] 87 ITR 349 (SC) further throws light on the issue. In the case of a cash entry, it is necessary for the assessee to prove not only the identity of the creditor but also the capacity of the creditor and genuineness of the transactions. The onus lies on the assessee, under the facts available on record. A harmonious construction of section 106 of the evidence Act and section 68 of the Income Tax Act will be that apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of the creditors. [2019] 103 taxmann.com 48 (SC) PCIT v. NRA Iron & Steel (P.) Ltd. The Hon’ble Supreme Court in the case of Pr. CIT v NRA Iron & Steel (P.) Ltd [2019] 103 taxmann.com 48 (SC) held that that where assessee received share capital/premium, however there was failure of assessee to establish creditworthiness of investor companies, Assessing Officer was justified in passing assessment order making additions under section 68 for share capital / premium received by assessee company. Supreme Court reverses order of lower Authorities holding that where there was failure of assessee to establish credit worthiness of investor companies, Assessing Officer was justified in passing assessment order making additions under section 68 for share capital / premium received by assessee company. Merely because assessee company had filed all primary evidence, it could not be said that onus on assessee to establish credit worthiness of investor companies stood discharged. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 71 The Supreme Court of India in the case of Sadiq Sheikh v. Commissioner of Income Tax, Bangalore [2021] 124 taxmann.com 202 (SC) dismissed SLP against High Court ruling that where Tribunal deleted addition under section 68 made to assessee's income on account of cash receipts in its bank account by accepting assessee's explanation that said amount was transferred in his bank account from out of bank accounts of his brother-in-law and a close friend, since Tribunal ignored vital fact emanating from record that said creditors had not produced evidence to establish their capacity to raise such a huge amount, its order was to be set aside. The High Court of Andhra Pradesh in the case of Gayathri Associates [2014] 41 taxmann.com 526 (Andhra Pradesh) has held that Identity, creditworthiness and genuineness of transaction is not established merely by filing bank account details. The High Court of Allahabad the case of Sagittraious Builders &Colonisers 2012] 17 taxmann.com 198 held that not only the identity of parties, but their creditworthiness also needs to be established by the assessee. The Pune ITAT in the case of Sanjay Waman & co. [2002] 81 ITD 1 (Pune) (TM) held that it is part of the duty of the assessee to furnish evidence regarding the creditworthiness of the creditors. 6.7 The Delhi ITAT in the case of Anandtex international (P.) Ltd. v. ACIT [2022] 137 taxmann.com 146 (Delhi - Trib.) held that where assessee received share application money and claimed that same was invested by its director by taking advance from a company P, however assessee failed to establish creditworthiness of share applicant or genuineness of transaction, AO was justified in making additions under section 68 and concluding that assessee routed its own money in books of account through conduit of investor companies. Now, in the instant facts, in my view, the assessee has not been able to establish the creditworthiness of lender nor has he been able to establish the genuineness of transaction. Therefore, since the assessee has failed to establish both the genuineness of transaction and creditworthiness of party, in our view, he has not been able to discharge the onus cast upon him u/s 68 of the Act. And hence this addition of credit received at Rs. 10,00,000/- and the interest there on at Rs. 7891 is confirmed. 6.7 Thus, ground No. 2 is partly allowed where addition of Rs.(4832000+1007891=) 58,39,891 is confirmed and balance is deleted. Relief 115393600-5839891=Rs. 10,95,53,709. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 72 22.3 Though substantial relief was granted by the Ld. CIT(A) still the assessee, being dissatisfied with part confirmation of the additions, have assailed the issue before us. 22.4 On this issue, a written submission was furnished by the assessee, the same is extracted as under: Ground No-3 : These ground of appeal is against the order of CIT(A) wherein addition of Rs. 58,39,891/- ( out of total addition of Rs. 11,53,93,600/-) made u/ s 68 on account of unsecured loans has been sustained. Observation of the AO : The observation of the AO is at page 2 to 5 of the assessment order. Total addition made by the AO is of Rs. 11,53,93,600/- and sustained by CIT(A) is Rs. 58,39,891/-. Detail of addition made by the AO and sustained by the CIT(A) is as under:- ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 73 Name of the Lender Addition made by AO Relief granted by CIT(A) Addition sustained by CIT(A) Radhy Shyam Agrawal 2,52,99,243/- 2,04,67,243/- 48,32,000/- Shaktipunj Ispat (P) Ltd 5,77,32,441/- 5,77,32,441/- Nil Supreme Realtech Ltd 10,07,891/- Nil 10,07,891/- Goenka Business & Finance Ltd 10,54,814/- 10,54,814/- Nil Sarthak Ispat (P) Ltd 3,03,00,000/- 3,03,00,000/- Nil Note: Against the relief granted by the CIT(A), the department has filed a separate appeal. Observation of the CIT(A): The observation of the CIT(A) is at page 12 to 18 of the CIT(A) Order. Submission: During the assessment proceedings the assessee has submitted all the documentary evidence such as confirmation of account, ITR, Computation of Income, Relevant Bank statement and audited financial statement and Balance Sheet of individual. No enquiry was conducted by the AO. Without exercising the powers to make the enquiries, the addition made by the AO u/ s 68 is bad in law and deserves to be deleted. Reliance is placed on the decision of Hon'ble Chhatishgarh High Court in the case of Pawan Kumar Agrawal Vs ITO placed at page 602-604 of PB Vol Il and of High Court of ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 74 Karnataka in the case of G.Shubha Devi Vs ITO placed at page 605-606 of PB Vol Il. The transactions are through banking channel and both the lenders have confirmed to have given the unsecured loans, therefore the genuineness of the transaction is proven. For addition sustained in case of Radheshyam Agrawal: In the order passed by NFAC, the CIT(A) has observed, at page 13, that Radheshyam Agrawal has deposited certain cash before transferring it to the assessee. It was found by the CIT(A) that cash totaling to Rs. 48,32,000 was deposited on different dates before transferring it to the assessee. Kindly refer page 13 of CIT(A) order. And therefore, the amount of Rs. 48,32,000/- was sustained by the CIT(A). Among the total cash deposit entries of Rs. 48,32,000/- as mentioned by the CIT(A), two entries of Rs. 7,50,000/- and 7,00,000/- has wrongly been treated as cash deposit by the CIT(A). Detail thereof along with justification is as under:- Date of transfer by Radheshyam Agrawal Amount wrongly treated as cash deposit by CIT(A). Explanation 4/02/2016 7,50,000/- On 4/02/2016 lender has received amount of Rs. 7,50,000/- though banking channel from Santosh Kumar Parakh (Wrongly mentioned as Santosh Kawar Prakash by Bank) . There is no cash deposit. Kindly refer page 275 of PB vol 1. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 75 9/02/2016 7,00,000/- On 9/02/2016 the lender has received amount of Rs. 7,00,000/- through banking channel from Mr. Ankit Agrawal. There is no cash deposit of Rs. 7,00,000/-. Kindly refer page 275 of PB vol 1. Therefore, the CIT(A) has wrongly construed the above mentioned amount as cash deposit in place of banking transfer and therefore the amount of Rs, 14,50,000/- deserves to be deleted. The remaining amount of cash deposit of Rs. 33,82,000/- on various dates by Mr Radheshyam Agrawal has been made from his available cash balance and cash withdrawn by him from his other bank accounts immediately before the deposit. For addition sustained in the case of Supreme Realtech Ltd. The assessee has received loan of Rs. 10 Lacs during the year under consideration. Refer confirmation of account at page 316 of PB Vol II. The lender has received the amount from Marigold Dealer (P) Ltd which was advances as loan to the assessee company. Refer Bank statement at page 317-318 of PB vol 1. Total share capital and reserve & surplus of the assessee company is Rs. 19,01,29,619/- out of which loan of Rs. 10 Lac has been advanced to the assessee company. Therefore, the creditworthiness and genuineness of the loan advanced by Supreme Realtech Ltd is duly established and the addition made by the AO and Sustained by the CIT(A) may kindly be deleted. Relevant case laws are at page 464 to 564 of PB Vol II ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 76 22.5 On the basis of aforesaid submission, it was the prayer by Ld. AR that the part addition sustained by the Ld. CIT(A) is also unjustified and therefore, liable to be deleted. 22.6 On the contrary, Ld. CIT DR submitted that the additions u/s 68 made by the Ld. AO are entirely sustainable, whereas major relief was granted by the Ld. CIT(A), which was not in the proper appreciation of the facts, for which a cross appeal is also filed by the revenue in ITA No. 233/RPR/2022 for AY 2016-17 assailing the issue regarding deleting the addition made by the Ld. AO u/s 68 without appreciating the fact that creditworthiness of the lenders were not established by the assessee and genuineness of transactions were also not proved. Ld. CIT DR drew our attention to the statement of facts submitted along with the appeal memo having remarks of the Ld. AO qua each loan creditor, the same is extracted hereunder for completeness of the facts : ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 77 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 78 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 79 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 80 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 81 22.7 We have considered the rival submissions, perused the material available on record and case laws relied upon by the parties. On perusal of the findings by the Ld. CIT(A), it is observed that all the primary information requisite from the assessee like confirmation, ITR, computation of income, relevant bank statements, audited financial statements and balance sheets are ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 82 furnished. No further information was called for from the assessee by the revenue, neither any inquiries are conducted u/s 131 or 133(6) in the course of assessment or appellate proceedings for which the revenue authorities are empowered to do so. Ld. AR placed his reliance on the decision of Hon’ble Jurisdictional High Court of Chhattisgarh in the case of Pawan Kumar Agrawal vs. ITO in tax case no. 24/2011 dated 04.04.2017, wherein it has been held that: 6. Section 68 of the Act provides a process by which the Assessing Authority has to reach at transactions of those persons with whom the Assessee had entered into transactions in which the particular assessee is involved, to conclude the assessment on the basis of the transactions referable to those persons. Such concluded assessments will have a bearing on the acceptability or otherwise the plea set up by the Assessee in the course of proceeding under Section 68 of the Act. So much so, notwithstanding, the finality attained by the assessment proceeding in relation to the lender, the borrower is entitled to say that the contents of the returns of the lender and the matters emanating therefrom have to be looked Into. In that view of the matter, the Appellate Authority was Justified, also on the basis of the Judicial precedents referred by it, in entering the finding that the Assessee had discharged his primary onus under Section 68 of the Act. That having been done, the First Appellate Authority was fully justified in taking the view that it was open to the department to take recourse of Section 131 or Section 133(6) of the Act if they were to further proceed. That not having done so, the First Appellate Authority was within its jurisdiction to conclude on facts and law, in favour of the Assessee. The Appellate Tribunal, in the Appeal at the instance of the Revenue, has not rendered the decision holding the finding of the First Appellant Authority regarding applicability of Sections 131 and 133(6) of the Act, as the case may be, is erroneous in law. So much so, the impugned decision of the Tribunal ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 83 stands faulted on a substantial question of law referable to the contents of Section 68 of the Act and the failure of the Revenue to take recourse to Sections 131 and 133(6) of the Act, in the case of the Assessee, where the primary onus under Section 68 the Assessee. 22.8 Ld. AR further placed his reliance on the order of Hon’ble High Court of Karnataka in the case of G. Shubha Devi Vs ITO (2019) 307 CTR 0536 (Kar), wherein it is observed that “AO had power of civil court by virtue of section 131, therefore, he could very well summon witnesses for verifying the genuineness for written confirmation given by them”. 22.9 As all the necessary primary information pertaining to the loan creditors are furnished by the assessee, however, inquiries as expected from the revenue authorities were not conducted under the provisions of section 131 or 133(6) of the Act, however the ratio of law laid down by Hon’ble Jurisdictional High Court in the case of Pawan Kumar Agrawal vs. ITO(supra) and the judgment by Hon’ble Karnataka Highcourt in the case of G. Shubha Devi Vs ITO (supra), that the failure on the part of revenue to take recourse u/s 131 and 133(6) of the Act, as the primary onus is duly discharged by the assessee u/s 68, the additions made cannot sustain, is squarely support the contentions of the assessee. 22.10 Under such facts and circumstances, wherein undisputedly all the primary information pertaining to each of the loan creditors are furnished by the ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 84 assessee before the revenue authorities. It is also a fact borne out from records that no action under section 131 or 133(6) have been taken by the Ld AO. However, we may herein observe that the Ld CIT(A) was also unable to look into all the key ingredients requisite to prove in affirmative to struck down the addition u/s 68, i.e., (i) Identity of Loan Creditor, (ii) Creditworthiness of the Loan Creditor and Geniuses of the transactions. Though Identity of the creditors are not doubted but the credit worthiness of loan creditors and genuineness of the transactions are doubted by the Ld AO, which were not commented upon by the Ld CIT(A), thus are subject to investigation and verification on the basis of facts and evidence. Prima facies, the conclusion drawn by the Ld CIT(A) are found to be based on contentions, submissions and information furnished by the assessee, accepting the same in toto, therefore the issue needs further verification of the facts with due enquiries with the concerned parties so as to reach at a logical conclusion. Therefore, the issue is restored back to the files of Ld AO for verification of the facts, in terms of our observations. 22.11 It is further noted that, the question raised by the Ld CIT(A) qua the cash deposits by Shri Radheshyam Agarwal, could not be answered by the assessee therefore the same is liable to be confirmed. Before us, it was the submission by Ld AR that out of 48,32,000/- an amount of Rs. 14,50,000/- (Rs. 7,50,000 + Rs. 7,00,000) was treated as cash deposit but the same was in-fact though bank transfers, such factual mistake ought to be verified therefore the ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 85 issue to the extent for Rs. 14,50,000/- is restored to the files for AO for verification and to decide on merits. Consequently, the decision of Ld CIT(A) allowing relief to the assessee, stands upheld, whereas the additions sustained for Rs. 58,39,891/- is confirmed for Rs. 43,89,891/- and remaining Rs. 14,50,000/- restored to the files of AO for verification and adjudicate in terms or our aforesaid observations. 22.12 Since the issue regarding addition u/s 68 is decided in terms of our aforesaid observations, the ground of appeal no. 3 in ITA No. 225/RPR/2022 of the assessee’s appeal is partly allowed for statistical purposes. 23. Ground no. 4: Addition by Ld. AO u/s 14A r.w.r. 8D for Rs. 31,40,235/- , scaled down by the Ld. CIT(A) to Rs. 676911/- AO’s observation in this issue are as under: 4. On perusal of Balance Sheet of the assessee, it is found that the non-current investment of the assessee is as on last day the previous year is at Rs. 9,44,00,000/- against Rs. 0 at the last day of the earlier previous year. The assessee, vide notice u/s 142 of the Act dated 06.11.2018 was asked to explain the interest expenses relatable to exempt income u/s 14A of the Act. The assessee has furnished reply which has been placed on record. However, the reply is not accepted. During the year, thy assessee has incurred interest expenses of Rs. 2,60,26,464/- and has shown its outstanding loans at Rs. 27,29,19,934/-. Further, the assessee does not hold interest free fund to make such a huge investment. As per rule 8D read with section 14A the Income-tax Act, the calculation of disallowable amount as under:- ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 86 Calculation of working under section 14A Rule 80D of Income Tax Rules, 1962 Particulars of Inadmissible Expenses Amounts(Rs.) Amounts(Rs.) (i) Amount of expenditure directly relation to exempted income 0 (ii) Interest expenditure not directly attributable to any particular income / receipt 26,68,235/- A Interest other than included under (i) 90,02,267 B Average value of investment 9,44,00,000 C Average value of total assets appearing in balance sheet 31,84,92,938 (iii) 1/2 % of average value of investment 4,72,000/- Total amount of expenses in relation to exempted income 31,40,235/- Chart of Average Working 31.03.2016 31.03.2015 Average A Investment (Shedule-6) 9,44,00,000 0 9,44,00,000 B Total Assets as per Balance Sheet 31,22,99,726 32,46,86,149 31,84,92,938 C Interest expenditure not directly attributable other than included in (i) Interest paid on others 90,02,267 ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 87 Considering the facts and circumstances of the case Rs. 31,40,235/- is added to the total income of the assessee. Considering the facts and circumstances of the case and submission placed on the record, the total income of the assessee is assessed as per following: - Income as per Return : Rs. (-)1,19,38,766/- Add: (i)As per above discussion in para 2.2 : Rs. 19,70,070/- (ii)As per above discussion in para 03 : Rs. 11,53,93,600/- (iii)As per above discussion in para 04 : Rs. 31,40, 235/- Total assessed income : Rs. 10,85,65,139/- Total assessed income R/O : Rs. 10,85,65,140/- Accordingly, the total income of the assessee is assessed as above u/s 143(3) of the I. T. Act, 1961. Allow credit for prepaid taxes and interest payable is as per ITNS-150 which is part of this order. Issue Demand Notice. initiate penalty proceedings u/s 271(1)(c) of the Act. 23.1 While the matter was carried before the Ld. CIT(A), the addition was reduced to Rs. 6,76,911/-. 23.2 It was the submission by Ld. AR that during the year under consideration as there was no exempt income was earned from investment by the assessee, therefore, no addition u/s 14A read with rule 8D is called for. For verification of this fact, Ld. AR drew our attention to page no. 77 of the PB containing therein note no. 2.15, showing details of income of the assessee for the year under consideration having no exempt income. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 88 23.3 The issue regarding addition u/s.14A read with rule 8D of the Act, ITAT, Raipur had taken a view in various cases one of them is reproduced hereunder, wherein it has been held that in case there is no exempt income earned during the year by the assessee, then, disallowance u/s 14A cannot be invoked. The ITAT, Raipur in the case of SGEPL Infrastructure Pvt. Ltd. Vs. ACIT-3(1), Raipur, ITA No.65/RPR/2018 dated 02.06.2022, on the issue had held as under: “8. Before the assessee has raised three grounds and first ground being general in nature need not require adjudication. In respect of ground no. 2 after having given a thoughtful consideration to the contentions advanced by the Ld. Authorized Representative of both the parties, we find substantial force in the claim of the Ld. AR that now when the assessee company had admittedly not received any exempt income during the year under consideration, therefore, no disallowance u/s.14A of the Act was called for in its hand. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Chettinad Logistics Pvt. Ltd. (2018) 257 Taxmann 2 (SC) and also of the Hon’ble High Court of Delhi in the case of Cheminvest Limited Vs. CIT, (2015) 378 ITR 33 (Delhi). Backed by the aforesaid judicial pronouncements, it was submitted by the Ld. AR that as per the settled position of law no disallowance u/s.14A in absence of any exempt income could have been made in the hands of the assessee. In the backdrop of the facts involved in the case before us read with the aforesaid settled position of law we find substance in the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. We, thus, in terms of our aforesaid observations vacate the disallowance of Rs.21,99,136/- made by the assessing officer and thus the ground of appeal no. 2 is allowed.” 23.4 Similar view has been taken by the Hon’ble Delhi High Court in the case of PCIT Vs. Oil Industries Development Board (2018) 101 CCH 452 (Del-HC) and that of CIT Vs. Holcim India Pvt. Ltd., (2014) 90 CCH 81 (Del-HC). ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 89 23.5 Respectfully following the aforesaid view taken by ITAT, Raipur as guided by Hon’ble Courts in various cases referred to supra, the addition u/s 14A made by the ld. AO and to the extent sustained by Ld. CIT(A) stands deleted. Resultantly, Ground no. 4 of appeal of the assessee is allowed. 24. Ground No. 5: Regarding disallowance of Rs. 3,01,13,969/- on account of discontinuation of dealership treating the same as discontinuation of business. 24.1 This ground is identical and is covered by our decision for ground no. 4 in ITA no. 224/RPR/2022, wherein our observations and decision rendered shall be mutatis mutandis apply to this ground of ITA No. 225/RPR/2022 for AY 2016-17. Resultantly, Ground no. 5 of present appeal is partly allowed for statistical purposes in terms of our relevant observations. 25. Ground No. 6: Regarding disallowance of expenditure on account of change in classification of head of interest income and miscellaneous income of Rs. 63,02,965/- 25.1 This ground is covered by our decision for ground no. 6 in ITA no. 224/RPR/2022 wherein our observations and decision rendered shall be mutatis mutandis apply on this ground in ITA No. 225/RPR/2022 for AY 2016-17. Resultantly, Ground no. 6 of present appeal is partly allowed for statistical purposes in terms of our relevant observations. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 90 26. Ground No. 7: Regarding addition of Rs. 84,81,842/- on account of reclassification of rental income received by the assessee from business income to income from house property. 26.1 This ground is covered by our decision for ground no. 5 in ITA no. 224/RPR/2022 wherein our observations and decision rendered shall be mutatis mutandis apply on this ground in ITA No. 225/RPR/2022 for AY 2016-17. Resultantly, Ground no. 7 of present appeal is partly allowed for statistical purposes in terms of our relevant observations. 27. Ground No. 9: Ground No. of the present appeal is general and academic in nature, hence no separate adjudication is required. 28. Resultantly, the appeal of the assessee in ITA No. 225/RPR/2022 for the AY 2016-17 is allowed / partly allowed for statistical purposes, in terms of our observations under the respective grounds of appeal. ITA No. 233/RPR/2022, AY 2016-17 (Revenue’s Appeal) 29. The grounds of appeal raised by the department in this appeal are extracted as under: 1. On the facts and circumstances of the case and in law, the Id. CIT(A), NFAC erred in deleting the addition made u/s 68 of the Income Tax Act, 1961 in respect of unsecured loan amounting to Rs. 10,95,53,709/- and only confirming the addition made by the AO to the extent of Rs. 58,39,891/- only without appreciating the facts ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 91 that the creditworthiness of the lenders were not established by the assessee and the genuineness of the transactions were also not proved. 2. The order of the Id. CIT(A), NFAC is erroneous both in law and on facts. 3. Any other ground that may be adduced at the time of hearing. 30. Ground No. 1: Regarding deleting the addition made u/s 68 w.r.t. unsecured loan amounting to Rs. 10,95,53,709/- and only confirming the addition made by the Ld. AO to the extent of Rs. 58,39,891/-. 30.1 This ground is covered by our decision for ground no. 3 in ITA no. 225/RPR/2022 for AY 2016-17, thus our observations and decision rendered therein, shall apply mutatis mutandis on this ground in ITA No. 233/RPR/2022 for AY 2016-17. Resultantly, Ground no. 1 of present appeal of the revenue is partly allowed for statistical purposes, in terms of our relevant observations. 31. Ground no. 2 & 3: of the present appeal of revenue are general and academic in nature, therefore no separate adjudication is required. 32. Resultantly, Appeal of the revenue in ITA No. 233/RPR/2022 is partly allowed. ITA No. 224, 225/RPR/2022(A) & ITA No. 233/RPR/2022 (D) Varda Projects (India) Pvt. Ltd. Vs ACIT, Circle-1(1), Raipur 92 33. In combined result, appeal of the assessee in ITA No.224/RPR/2022 for AY 2015-16 & 225/RPR/2022 for AY 2016-17 are allowed / partly allowed for statistical purposes and revenue’s appeal in ITA No.233/RPR/2022 for AY 2016-17 is rendered as partly allowed for statistical purposes in terms of our observations for the respective grounds of appeal. Order pronounced in the open court on 21/10/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 21/10/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretory) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- 2. ŮȑथŎ / The Respondent- 3. आयकर आयुƅ(अपील) / The CIT(A), 4. The Pr. CIT -1, Raipur, (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file. // स×याǒपत Ĥित True copy // "
Other Referred Cases
Deputy Commissioner of Income Tax Vs. Arti Catalyst Solutions P. Ltd., Joint Cit (Osd) Cc 7(4), Mumbai vs M/S Shalimar Housing & Finance, Hon'ble Apex Court in case of G.Venkatswami & Co Vs CIT, Hon'ble Apex Court in case of Chennai Properties & Investments Ltd, Hon'ble Apex Court in case of Rayala Corporation (P) Ltd Vs ACIT, Hon'ble Allahabad HC in case of CIT Vs Rita Diwan, Hon'ble AP & Telangana HC in case of PCIT Vs. Bharathi Warehousing Corporation, Hon'ble Supreme Court in case of PCIT & Ors. Vs Chain House International Pvt. Ltd. & Ors., Hon'ble Supreme Court in case of CIT Vs. Durga Prasad More, Hon'ble Supreme Court in case of CIT Vs. Holcim India Pvt. Ltd., Hon'ble Supreme Court in case of CIT Vs. Daulat Ram Rawatmal, Hon'ble Supreme Court in case of CIT Vs. NRA Iron & Steel (P.) Ltd., Hon'ble Supreme Court in case of Sadiq Sheikh Vs. Commissioner of Income Tax, Bangalore, Hon'ble Delhi High Court in case of Cheminvest Limited Vs. CIT, Hon'ble Delhi High Court in case of PCIT Vs. Bharathi Warehousing Corporation, Hon'ble ITAT, Raipur in case of SGEPL Infrastructure Pvt. Ltd. Vs. ACIT-3(1), Raipur, Hon'ble ITAT, Raipur in case of Sanjay Waman & co., Hon'ble ITAT, Raipur in case of G. Shubha Devi Vs ITO, Hon'ble ITAT, Raipur in case of CIT Vs. Holcim India Pvt. Ltd.
Laws Referred To
Income Tax Act, 1961
1:1 Consultation on Salary Structuring
₹1
1:1 Consultation on Legal Requirements
₹1
1:1 Consultation on SME Listing
₹0
Non-Compete Agreement
₹0
Assignment of Registered Trademark
Mehul₹500
Budget 2026: 5 Major Personal Tax Changes Every Taxpayer Must Know
Team Counselvise - February 05, 2026
Finance Bill, 2026: Key GST Reforms that will Reshape Compliance and Cash Flows
Team Counselvise - February 03, 2026
Finance Bill, 2026: Key Direct Tax Amendments on Assessments and Appeals
Team Counselvise - February 06, 2026