Honorable ITAT held that It is not necessary that all categories of its business activities must start either simultaneously or the last stage must start before it can be said that the business was set up. Absence of flow of revenue irrelevant for deciding whether a business has been set up.
In the instant case, the fact of purchase of land, commencing of the construction of residential house on the said land and the sale of land is not in dispute. The only dispute is whether the land was an ‘asset’ within the meaning of section 2(ea) and, therefore, liable to wealth-tax or the land along with the superstructure can be considered as ‘residential house’ and, therefore, can be considered to be an exempted asset under section 5(vi).
Ld. CIT(A) on pages 51-52 of his order that the assessee could not provide even the names and addresses of those parties to whom cash sales were claimed to have been made. This is the main basis on which Ld. CIT(A) has confirmed the decision of the A.O. In our considered opinion, it cannot be said that in the case of cash sales, the assessee is bound to keep record of the names and addresses of the buyers. The judgement of Hon’ble Bombay High Court cited by the Ld. A.R. rendered in the case of R B Gurnam Fatehchand vs ACIT as reported in 75 ITR 33 also supports the case of the assessee. In that case also, the assessee was not in a position to give the addresses of the customers to whom cash sales were made. Under these facts, it was held by the Hon’ble Bombay High Court that this cannot be the basis to reject the book results.
Tribunal decision in the case of ITO Vs Gyani Exports as reported in 94 TTJ 557 wherein, it was held that gain from foreign exchange fluctuation as eligible for deduction u/s 80HHC. No contrary decision was brought to our notice by Ld. D.R. and hence, on this issue also, we decline to interfere in the order of Ld. CIT(A).
In the Tribunal decision rendered in the case of Srivatsan Surveyors (P.) Ltd. v. ITO [2009] 32 SOT 268 (Chennai) the issue was decided against the assessee on the basis that the depreciation on restrictive covenant is ‘a right in persona’ and not a ‘right in rem’ and, hence, depreciation on it is not allowable as per the provisions of section 32(1)(ii). In that case, Rs. 1 crore was paid to one of the directors on the basis of non-compete covenant entered into between the assessee-company and its director R. Srivatsan, as per which the said director agreed not to carry on his individual business of general insurance survey, loss assessment, valuation of assets, etc., for a period of seven years.
The assessee is getting twin benefit from the employer, one of which is not taxed on the basis of reimbursement of rent by the assessee to the employer. The first benefit is of rent free accommodation provided by the employer to the assessee employee for which the employer is incurring rental expenditure of Rs. 1.70 lacs per month in addition to providing interest free deposit of Rs. 40 lacs with the land lord. The 2nd benefit being received by the assessee is this that he is getting HRA of Rs.3 lacs approximately per month including special HRA of Rs.1.70 lacs per month.
ACIT v. Subhash Sevaram Bhavnani Assessee sold his residential house on consideration of sum of Rs. 35,00,000/- on 03.11.2007 and has spent a sum of Rs. 30,44,695/- on purchase of plot and on construction of a residential house thereon. The construction of this residential house was completed in the month of March, 2008. Since the construction was completed within three years of transfer of capital asset, the ratio as laid down in the case of Subramaniya Bhat (supra) is applicable to the facts of this case as it has been clearly held in that case that for claiming deduction u/s 54, the construction of the house should be completed within the prescribed time limit and date of commencement of construction is not material for claiming deduction.
The capital expenditure incurred by the assessee on purchase of motor cars could not be considered as expenditure incurred by the assessee on in-house research & development and, therefore, the same was not eligible for weighted deduction under section 35(2AB). Similarly, capitalized interest on purchase of car was also not eligible for this benefit for same reasons because it was equal or similar to cost of car. Hence, this ground was to be rejected.
Chimanlal Manilal Patel Vs. ACIT The AO has not disputed the consideration received by the assessee. The addition has been made on the basis of deeming provisions of section 50C. The assessee has furnished all the facts of sale, documents! material before the AO. The AO has not doubted the genuineness of the documents/details furnished by the assessee. Only because the assessee agreed to the additions because of the deeming provisions it cannot be construed to be filing of inaccurate particulars on the part of the assessee. The assessee agreed to addition on the basis of valuation made by the stamp valuation authority cannot be a conclusive proof that the sale consideration as per the sale agreement is seemed to be incorrect and wrong. In view of these facts we are of the considered view that penalty cannot be levied on the basis of deeming provision.
Tribunal is not empowered to pass an order ‘thereon’ on the subject-matter which is not in appeal as per the appeal memo to be adjudicated upon. As far as the question of withdrawal of cross-objection is concerned, in the light of the above discussion, had the cross-objection was not withdrawn, even then, such a legal issue was beyond the scope of the adjudication through a cross-objection under section 253(4) because the impugned legal issue was altogether an independent as well as a separate issue.
