WINDSOR SHELTERS,PUNE vs. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 5, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE

BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER Assessment Year : 2017-18 Windsor Shelters, ACIT, Circle-5, Sr.No. 47/30, Aranyeshwar Sant Pune Nagar Chowk, vs. Taware Colony, Pune-411009 PAN : ABCFS7010D (Appellant) (Respondent) Assessee by : Ms. Nisha Lahoti Department by : Ms. Bhavya. I.V. – Jt.CIT Date of Hearing : 25-06-2026 Date of Pronouncement : 31-07-2026 O R D E R PER ASTHA CHANDRA, J.M.: The appeal filed by the assessee is directed against the order dated 30-12-2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2017-18. 2. Briefly stated, the facts of the case are that the assessee is a registered partnership firm and engaged in the business of Promoter, Builder and Developer. For the AY. 2017-18, the assessee filed its return of income on 31-10-2017 declaring total income of Rs. 1,96,73,750/-. The case of the assessee was selected for scrutiny under CASS. Accordingly statutory notices u/s. 143(2) and 142(1) of the Act along with questionnaire were issued and duly served upon the assessee. In response thereto the assessee submitted its reply and after considering the same, the Ld. Assessing Officer (“AO”) completed the assessment u/s.143(3) of the Act, vide his order dt. 24-12-2019 at an assessed income of

Rs.2,97,85,368/- by computing the income of the assessee in the following manner:

“5. Observations, Findings and Decision 5.1. I have carefully examined the assessment order, the grounds of appeal, and the detailed statement of facts provided by the appellant. The primary grievances relate to the disallowance of various expenditures and a significant addition regarding the repayment of capital to a retiring partner.

5.2. Regarding Disallowance of Donations (Rs. 1,45,230): The appellant has not demonstrated how these donations are incurred wholly and exclusively for the purpose of business under section 37(1). In the absence of a direct nexus with business operations, such voluntary contributions are not deductible as business expenditure. The addition is, therefore, upheld. 5.3. Regarding TDS Debited to P&L (Rs. 17,380): The appellant admits that TDS was wrongly debited to the Profit and Loss account. Income tax, including TDS which is a mode of recovery of tax, is not a deductible expenditure. The AO's decision to add this back is correct in law. 5.4. Regarding Service Tax and Interest (Rs. 1,60,491 and Rs. 3,72,683): The appellant claims that Rs. 3,72,683 is interest and not penalty. However, interest or penalties for delay in statutory payments like service tax are compensatory/penal in nature and are generally not allowed as business deductions if they arise from an infraction of law. In the absence of proof that these payments were purely compensatory and not penal, the disallowance is sustained. 5.5. Regarding Disallowance u/s 40(a)(ia) (Rs. 19,04,186): The AO made this addition due to non-deduction of TDS on interest paid to Mahesh Sahakari Pat Sanstha. The provisions of section 40(a)(ia) are mandatory. Since the appellant failed to deduct the required tax at source, 30% of the expenditure was rightly disallowed by the AO. 5.6. Regarding Repayment of Capital to Retiring Partner (Rs. 74,47,000): This is the most substantial addition. The AO found a differential value in the repayment of capital. In real estate firms, any excess payment to a retiring partner over and above their capital balance often represents an indirect transfer of interest in the firm's assets (stock or land). Such payments are often treated as capital gains in the hands of the firm or as non-deductible distributions of profit. The appellant's explanation failed to convince the AO of the commercial expediency or the accounting correctness of this transaction in the context of the firm's book values. 5.7. Conclusion: After considering the facts and the legal position, I find that the appellant has failed to provide sufficient documentary evidence to rebut the findings of the Assessing Officer on any of the major issues. The additions are based on a sound interpretation of the law and the facts discovered during the scrutiny. Order: The appeal is hereby REJECTED, and the assessment order dated 24/12/2019 is upheld in its entirety.” 4. Dissatisfied, the assessee is in appeal before the Tribunal raising the following Grounds of Appeal:

“1. On facts and circumstance prevailing in the case and as per provisions and scheme of the Act, it be held that the Ld. AO framed the assessment order without issuing show cause notice to the Appellant is violation of principles of natural justice and not in accordance with the provisions of law. The assessment so framed shall be treated as null and void. Appellant be granted Just and proper relief in this respect. 2 Without prejudice to ground no. 1 and on facts and circumstances prevailing the case and as per provisions and scheme of the Act, it be held that the Ld. AO erred in disallowing the donation of Rs.1,45,230/-. It be held that the addition made on this account by Ld. AO and confirmed by the Ld. First Appellate Authority is improper, unjustified and contrary to the provisions of law and scheme of the Act and facts prevailing in the case. The addition so made be deleted. The Appellant be granted just and proper relief in this respect.

3 Without prejudice to ground no. 1 and on facts and circumstances prevailing the case and as per provisions and scheme of the Act, it be held that the Ld. AO erred in disallowing old TDS of Rs.17,380/-. It be held that the addition made on this account by Ld. AO and confirmed by the Ld. First Appellate Authority is Improper, unjustified and contrary to the provisions of law and scheme of the Act and facts prevailing in the case. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. 4 Without prejudice to ground no. 1 and on facts and circumstances prevailing the case and as per provisions land scheme of the Act, it be held that the Ld. AO erred in disallowing the penalty on service tax of Rs.5,33,174/-. It be held that the addition made on this account by Ld. AO and confirmed by the Ld. First Appellate Authority is improper, unjustified and contrary to the provisions of law and scheme of the Act and facts prevailing in the case. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. 5 Without prejudice to ground no. 1 and on facts and circumstances prevailing the case and as per provisions and scheme of the Act, it be held that the Ld. AO erred in disallowing interest on TDS of Rs.64,648 /. It be held that the addition made on this account by Ld. AO and confirmed by the Ld. First Appellate Authority is improper, unjustified and contrary to the provisions of law and scheme of the Act and facts prevailing in the case. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. Without prejudice to ground no. 1 and on facts and circumstances prevailing the case and as per provisions and scheme of the Act, it be held that the Ld. AO erred in disallowing the deduction of Rs.19,04,186/ under section 40(a)(ia) of the Act. It be held that the addition made on this account by Ld. AO and confirmed by the Ld. First Appellate Authority is improper, unjustified and contrary to the provisions of law and scheme of the Act and facts prevailing in the case. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. Without prejudice to ground no. 1 and on facts and circumstances prevailing the case and as per provisions and scheme of the Act, it be held that the Ld. AO erred in making addition of Rs.74,77,000/- on account of retention of capital of retiring partner. It be held that the addition made on this account by Ld. AO and confirmed by the Ld. First Appellate Authority is improper, unjustified and contrary to the provisions of law and scheme of the Act and facts prevailing in the case. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. The Appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing.”

„helpdesk‟ being typed as „helpdsek‟. The Ld. AR demonstrated the same by submitting the snapshot of the ITBA Portal containing emails sent by the Ld.CIT(A)/NFAC on the incorrect email id. Also, he brought to the attention of the Bench that the assessee had mentioned a different email id in Form 35 i.e. „accounts@windsorshelters.com‟, however, the notices were not sent on this email id. The Ld. AR further submitted that the assessee has a strong case on merits and is in a position to substantiate its case by filing the requisite details/ documentary evidence in support of its claim. He has therefore prayed that, in the interest of justice, the impugned issues may be set aside to the file the Ld. CIT(A)/ NFAC for decision afresh, after affording due opportunity of hearing to the assessee.

order of the Ld.CIT(A)/NFAC and restore the matter back to his file for adjudication afresh on merits and as per fact and law, after affording due opportunity of hearing to the assessee. The assessee is also hereby directed to update the correct and latest email id on the Department‟s record and be vigilant in receiving and responding to the notices. Needless to say, the assessee shall comply with the notices issued by the Ld. CIT(A) and make his submissions before him on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld.CIT(A) shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

Order pronounced in the open Court on 31-07-2026 (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER Tadepalli Naga Digitally signed by Tadepalli पुणे/Pune; Naga Murali Mohan दिन ांक/Dated : 31-07-2026 Murali Mohan Date: 2026.08.03 10:42:42 +05'30' TNMM

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „B‟ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////