ACIT Vs Conwood Medipharma Pvt. Ltd. (ITAT Delhi)
CIT(A) noted that the assessee had not claimed the said professional expenses in its profit & loss account and had capitalized the same under work in progress i.e. ‘Building under Construction’ in fixed assets schedule. The CIT(A) thus deleted the addition. We find merit in the order of the CIT(A) and uphold that the provisions of section 40(a)(ia) of the Act are attracted only if expenses are claimed in the profit & loss account and not when the same are capitalized.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal filed by aseeesee is against order of CIT(A)-2, New Delhi dated 31.08.2015 relating to assessment year 2011-12 against order passed under. section 143(3) of the Income Tax Act, 1961.
2. The Revenue has raised following grounds of appeal which read as under:
1. Whether the Ld. CIT (A) has erred on facts and in law in deleting the addition of Rs. 10,20,64,174/ – on account of amount credited in bank account of the assessee in excess of receipts as per books of account and also allowing the assessee appeal against the rejection of the books of accounts of the assessee.
2. Whether the Ld. CIT (A) has erred on facts and in law in deleting the addition of Rs. 23,02,705/ – made on account of difference in brokers’ account submitted by assessee and party wise gross receipts in assessee’s books of accounts.
3. Whether the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 2,76,200/ – made on account of non deduction of TDS on professional charges.
4. Whether the Ld. CIT(A) has erred on facts and in law in deleting the disallowance of Rs. 6,25,265/- made as per rule 8D (i) (ii) & (iii) r/ w/ s 14A of the Act.
3. The Revenue has also raised an additional ground of appeal which reads as under:-
1. The Ld. CIT(A) has erred in admitting additional evidences without affording any opportunity to the AO which is violation of Rules 46A.
4. Briefly in the facts of the case, the assessee had furnished return of income declaring income of Rs. 42,43,39,960/-. The case of the assessee was selected for scrutiny. The assessee was engaged in the business of equity trading, derivatives trading and in real estate investment. The AO noted from the perusal of bank statement that the amount credited into bank account of the assessee was Rs. 59,71,35,900/- whereas the receipts of the year amounted to Rs. 49,50,71,726/-. The AO also analyzed the withdrawals made by the AO and the share transactions entered into by the assessee with different brokers and added the difference of 10,20,64,174/- between the deposits in the bank and the receipts shown by the assessee and further added difference of Rs. 23,02,705/- i.e. the difference between the broker’s statement and the receipt shown in the books of accounts of the assessee. The AO on the basis of certain information was of the view that the assessee was not trading in shar4 but was only an entry operator hence addition of Rs. 10,43,66,879/- was made.
5. The next addition made in the hands of the assessee was on account of deemed dividend under ,section 2(22)(e) of the Act at Rs. 29,27,178/ -. The assessee had claimed ROC expenses of Rs.2,50,91/- for enhancing its authorized share capital. However, the same was disallowed. The AO also disallowed the deduction claimed on account of professional fee paid of Rs. 2,76,200/- for non deduction of tax at source. Another addition made in the hands of the assessee was the disallowance under section 14A of the Act at Rs. 6,25,265/-.
6. Before the CIT(A), the assessee furnished written submissions and the CIT(A) dealt with each of the issue. The first issue which was decided was the addition made after rejection of books of accounts. The CIT(A) from para 3.0 to 3.1.9 dealt with the aforesaid issue and was of the view that the rejection of books of accounts was not sustainable.
7. Coming to the consequent addition made of Rs. 10,20,64,174/- on account of alleged difference in receipts as per the bank account of the assessee and receipts as per its books of account. The contention of the assessee in this regard was noted vide para 4.1.3, which reads as under:-
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