Raksha Buildtech Private Limited Vs ITO (ITAT Delhi)
ITAT Delhi held that addition under section 68 of the Income Tax Act cannot be sustained as assessee has proved the source of funds for purchase of land made in earlier assessment year. Accordingly, appeal allowed.
Facts- The assessee company was incorporated on 14.08.2006 and assessee is a builder, developers, colonizers, civil contractors and maintainers of residential buildings, flats, colonies, township and commercial premises etc. The assessee is a subsidiary of M/s. Emaar MGF Land Limited having 100% shares in the assessee company.
During assessment proceedings, AO found that assessee did not provide sale deed of properties at Village Kodliaball/Bejai Church, Mangalore with purchase price of Rs.2,48,94,564/- and Village Kodliaball/Bejai Church, Mangalore with purchase price of Rs.63,46,580/-. Since assessee has not furnished the above details, AO came to the conclusion that the assessee could not justify its purchases of immovable property to the extent of Rs.3,12,41,144/-. Accordingly, he made addition to that extent and treated the same as money not utilised for purchase of properties.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee has received advances from its holding company for purchase of the abovesaid lands and invested the funds received from its holding company in the inventories and the inventories were actually acquired by the assessee in FY 2005-06, 2006-07 & 2007-08 and assessee has carried on the above inventories until the current assessment year without there being any movement. Since the funds were invested in earlier assessment year and also assessee has shown the source of the above funds, there is no requirement for initiation of section 68 under the present circumstances.
