DCIT,CORPORATE CIRCLE-1(1), BHUBANESWAR vs. M/SD. SRB CONSULTANCY (P) LIMITED, BHUBANESWAR

The assessee has also filed cross objection in revenue’s appeal in ITA No.11/CTK/2021.

In revenue;s appeal, the following grounds have been raised:

In Cross objection, the assessee has filed a consolidated grounds consisting of 10 grounds, as follows:

After hearing both the sides, we are satisfied that there was sufficient cause in filing the appeal delay by 56 days by the revenue. Hence, we condone the delay of 56 days and admit the appeal for hearing.

Shri S.K.Mohapatra, ld CIT DR appeared on behalf of the revenue and Shri Dillip Kumar Mohanty, ld AR appeared on behalf of the assessee.

In respect of Ground No.1 of revenue, it was submitted by ld CIT DR that the issue was against the action of the ld CIT(A) in deleting the disallowance made by the AO in respect of deduction u/s. 80IA of the Act. Ld CIT DR drew our attention to page 2 of the assessment order, wherein, the AO has specifically mentioned that in absence of any supporting documents regarding the claim of deduction u/s. 80IA (4)(iv) of the I.T.Act, 1961, the deduction has been denied. Ld CIT DR further drew our attention to order of the ld CIT(A) in pages 10 and 11 wherein, the ld CIT(A) has deleted the addition. Ld CIT DR vehemently opposed the order of the ld CIT(A). It was his prayer that the order of the AO be restored.

In reply, ld AR submitted that all the details had been provided in the course of remand proceedings.

We have considered the rival submissions. Perusal of the order of the ld CIT(A) shows that the ld CIT(A) has taken into consideration the fact that all the evidences required had been provided in the course of remand proceedings. Perusal of remand report, as extracted by ld CIT(A) in para 4.1 of his order at page-5, shows that the AO has recognized that the assessee is in the business of power generation since financial year 2010-11 and the assets had been installed in three different States in the assessment years 2011-12 and 2013-14. It is clear that the assessee has been granted the benefit of deduction u/s. 80IA of the Act during the earlier assessment years and the AO in the remand proceedings only submits that P a g e 5 | 13

In respect of Ground No.2 of appeal of the revenue, it was the submission of ld CIT DR that the issue was against the action of the ld CIT(A) in deleting the addition made by the AO towards unexplained investment u/s. 69 r.w.s 68 of the Act.

Ld CIT DR drew our attention to page 3 para 4 of the assessment order, wherein, the AO categorically mentions that the investments are though disclosed in the books of account, the source of the same remained unexplained. Ld CIT DR drew our attention to page 15 para 5.3 of the order of ld CIT(A), wherein, the ld CIT(A) has deleted the same on the findings that the evidences of Mutual Funds were produced and details of investments were produced before the AO during remand proceedings. It was the submission that the order of the AO was liable to be restored.

In reply, ld AR drew our attention to the extracts of the remand report at para 5.1 of the order of the ld CIT(A), wherein, in the remand report, the AO has specifically mentioned that substantial investments in Mutual Funds amounting to Rs.6.09 crores can be attributable to the receipt of Rs.10.18 crores received by the assessee in the bank account with HDFC OD account. It was the submission that the AO has basically accepted the investments made in the remand proceedings but had only questioned the same on account of independent third party verification. It was the submission that no third party verification could be possible in respect of Mutual Fund investment as the same were supported by documents. He vehemently supported the order of the ld CIT(A).

We have considered the rival submissions. Perusal of the order of the ld CIT(A) clearly shows that ld CIT(A) has taken into consideration the fact that all the evidences were produced before the AO in the remand proceedings and the AO has done all necessary verification and has given a positive verification in respect of investments, the source for the same has also been shown by the assessee. This being so, as the Revenue has not been able to dislodge any of the findings of fact as arrived at by the ld CIT(A), we find no error in the order of the ld CIT(A) on this issue. Consequently, Ground No.2 of the revenue stands dismissed.

In respect of Ground No.3 of appeal, it was submission of ld CIT DR that the issue was against the action of the ld CIT(A) in restricting the P a g e 7 | 13

Ld CIT DR drew our attention to page 6 of the assessment order, wherein, the AO mentions that the details of vehicles, Model No. and date of purchase etc had not been produced for verification. Ld CIT DR further drew our attention to page 26 para 9.1 of the order of ld CIT(A), wherein, in para 9.4 the ld CIT(A) had made disallowance of 5% of the expenses, by following the decision of Co-ordinate Bench of the Delhi Tribunal in the case of Vinay Bhasin vs ACIT in ITA No.6904/Del/2017. It was the submission that the ld CIT(A) has estimated disallowance of 5% of the expenses on account of personal use of the vehicle. It was the submission that the order of the AO was liable to be restored.

In reply, ld AR submitted that the disallowance is actually not called for. It was his further submission that this issue is raised by the assessee in Cross objection in Ground No.4,5 & 6. It was the submission that he does not wish to press these grounds in Cross objection.

We have considered the rival submissions. Perusal of the order of the ld CIT(A) shows that the details required by the AO had been produced in the remand proceedings and consequently, the ld CIT(A) has been extremely reasonable in restricting the disallowance to 5% towards personal use of the car. Ld CIT(A) has made the restriction basically on the ground

In respect of Ground No.4 of the revenue, it was submitted by ld CIT DR that it was against the action of the ld CIT(A) in deleting the addition made towards tours and travel expenses.

Ld CIT DR drew our attention to page 7 of the assessment order, wherein, the AO has disallowed the expenses towards tour and travels on the ground that self-supporting details, bills/vouchers and ledger copy in respect of the claim had not been produced by the assessee. ld CIT DR drew our attention to page 33 para 10.3 of the order of the ld CIT(A), wherein, the ld CIT(A) has deleted the disallowance after considering the fact that all the evidences were filed before the AO in the course of remand proceedings. It was the submission that ld CIT(A) has deleted the addition on the ground that no such addition was ever made in the previous assessment years, wherein, assessee’s assessment had been taken up for scrutiny, therefore, the order of the AO was liable to be restored.

In reply, ld A.R. supported the order of the ld CIT (A).

We have considered the rival submissions. Perusal of the order of the ld CIT(A) at para 10.3 shows that though the evidences had been produced before the AO, no discussion has been made by the AO in his remand report. Admittedly, on consideration of the remand report, it is presumed that the AO had nothing to comment in respect of the issue in the remand proceedings. This being so, the ld CIT(A) has rightly deleted the disallowance and we find no reason to interfere with the order of the ld CIT(A). Consequently, Ground No.4 of the revenue stands dismissed.

In respect of Ground No.5 of revenue, it was the submission of the ld CIT DR that the issue was against the action of the ld CIT(A) in deleting the addition made by the AO in respect of capital gain on sale of assets.

Ld CIT DR drew our attention to page 6 para 10 of the assessment order, wherein, the AO has recomputed the long term capital gains. It was his submission that all the details were not produced before the AO, therefore, the AO had made the disallowance. Ld CIT DR drew our attention to page 36 para 11.3 of the order of ld CIT(A), wherein, the ld CIT(A) has considered the fact that all the details were produced before the AO in the course of remand proceedings being the sale consideration in respect of car and same was also considered in the computation of long term capital gain. Ld CIT(A) has also considered the fact that there are sale of shares of Golden Anchor Pvt Ltd., and Rams Assorted Cold Storage ltd., It was his submission that in the remand proceedings, the AO had P a g e 10 | 13

In reply, ld AR supported the order of the ld CIT(A).

We have considered the rival submissions. Perusal of the order of the ld CIT(A) clearly shows that the ld CIT(A) has considered the fact that the evidences were produced before the AO in the course of remand proceedings and the AO in his remand report has also accepted the fact that the receipt from sale of shares had been recorded and reflected in the books of account of the assessee. Admittedly, in the remand proceedings, the AO mentioned that the fair market value of the shares was not provided by the assessee. Perusal of the order of the ld CIT(A) clearly shows that he has considered the fact that newly added section 50CA of the Act was applicable for assessment year 2018-19, wherein, it makes it necessary to determine the fair market value, even for a seller to ascertain capital gains in a sale transaction. Ld CIT(A) has considered the fact that the impugned assessment year is 2017-18 and consequently, the fair market value in respect of sale of shares is not a requirement. On this ground, the ld CIT(A) has deleted the addition. We find no error in the order of the ld CIT(A) on this issue. Consequently, Ground No.5 of revenue stands dismissed.

Ground Nos.1,2,7 & 8 of cross objection are in support of the order of the ld CIT(A). As we have upheld the order of the ld CIT(A), Ground Nos.1 to 7 and 8 of cross objections stand dismissed.

In respect of Ground No.3 of cross objection of the assessee, it was the submission of ld AR that the ld CIT(A) has directed that income received by the assessee as rent from SPA Insurance Broking Services was liable to be assessed under the head “ income from house property”. Ld AR drew our attention to paras 7 to 7.3 of the order of the ld CIT(A). It was the submission that though the ld CIT(A) has directed that the rental income is liable to be assessed under the head “ income from house property”, the AO has not given the assessee the benefit of section 24 of the Act

In reply, ld CIT DR submitted that if the standard deduction has not been given, then it has to be considered u/s.154 of the Act.

We have considered the rival submissions. Admittedly, the assessee has claimed that deduction u/s.24 in respect of income assessed under the head “ income from house property” has not been given. This being so, it is directed that the AO shall recomputed the income from rent as “ income from house property” separately as directed by the ld CIT(A) in para 7.3 of his order and grant the assessee permissible deduction as available. The AO shall also disallow the proportionate depreciation and repair expenses as

Ground Nos.9 & 10 of cross objection are general in nature, hence requires no separate adjudication.

In the result, appeal of the revenue is dismissed and cross objections of the assessee are partly allowed.