M/s. Urban Development Group,, Ahmedabad v. The Income Tax Officer, Ward-9(4),, Ahmedabad

ITA 1705/AHD/2014 | 2009-2010
Pronouncement Date: 28-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 170520514 RSA 2014
Assessee PAN AAAFU9491M
Bench Ahmedabad
Appeal Number ITA 1705/AHD/2014
Duration Of Justice 3 year(s) 5 month(s) 24 day(s)
Appellant M/s. Urban Development Group,, Ahmedabad
Respondent The Income Tax Officer, Ward-9(4),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 28-11-2017
Date Of Final Hearing 20-09-2017
Next Hearing Date 20-09-2017
First Hearing Date 20-09-2017
Assessment Year 2009-2010
Appeal Filed On 03-06-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV JUDICIAL MEMBER AND SHRI AMARJIT SINGH ACCOUNTANT MEMBER M/S. URBAN DEVELOPMENT GROUP 18 AABONA NR. CHITAVAN CLUB BIG DADDY ROAD AHMEDABD - 380058 PAN: AAAFU9491M (APPELLANT) VS THE ITO WARD - 9(4) AHMEDABAD (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL SR. D . R. ASSESSEE BY: S H RI PARIN SHAH A.R. DATE OF HEARING : 22 - 11 - 2 017 DATE OF PRONOUNCEMENT : 28 - 11 - 2 017 / ORDER P ER : AMARJIT SINGH ACCOUNTANT MEMBER : - THIS ASSES SEE S APPEAL FOR A.Y. 2009 - 10 AR IS ES FROM ORDER OF THE CIT(A) - XX AHMEDABAD DATED 14 - 03 - 2014 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. LD. CIT (A) E RRED IN LAW AND ON FACTS IN CONFIRMING DI SALLOWANCE BY AO OF RS. 25 000/ - WRITTEN OFF AS IRRECOVERABLE IN ACCOUNT OF B. A. PATEL & CO. LD. CIT I T A NO . 1705 / A HD/20 14 A SSESSM ENT YEAR 200 9 - 10 I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 2 (A) FAILED TO APPRECIATE THAT APPELLANT WROTE OFF AMOUNTS ADVANCED WITHOUT ANY SCOPE OF RECOVERY WHEN INCOME OFF ERED IN THE PAST ESTABLISHED BUSINESS CONNECTIONS. UNDER THE FACTS OF THE CASE ID. CIT (A) OUGHT TO HAVE ALLOWED AMOUNT WRITTEN OFF AS BUSINESS LOSS. IT BE SO HELD NOW. 2. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE MADE BY A O OF RS. 3 59 275/ - BEING PREFAB MODEL HOUSE DEVELOPMENT EXPENSES. LD. CIT (A) FAILED TO APPRECIATE THAT PREFAB MODEL MADE AS BUSINESS TOOL TO SELL A CONCEPT GOT DEMOLISHED DUE TO LACK OF MARKET AS A PRUDENT BUSINESS DECISION. LD. CIT (A) OUGHT TO HAVE DELETED DI SALLOWANCE MADE BY AO OF THE LOSS SUFFERED BY THE APPELLANT. IT BE SO HELD NOW. 3 LD. CIT (A) FURTHER ERRED IN LAW AND ON FACTS IN HOLDING THE LOSS INCURRED ON DEMOLISHMENT OF PREFAB MODEL AS CAPITAL LOS S NOT ALLOWABLE AGAINST INCOME OF THE CURRENT YEAR AS CONSTRUCTION EXPENSES WERE CAPITALIZED IN THE BOOKS. LD. CIT (A) ERRED IN NOT APPRECIATING THAT THE APPELLANT DESIGNED LOW COST PREFAB MODEL HOUSE RESISTANT TO EARTHQUAKES FOR DEMO AND ANY LOSS INCURRED BY DEMOLISHING THE MODEL HOUSE IS ALLOWABLE O N ABANDONMENT OF A PROJECT. LD. CIT (A) OUGHT TO HAVE ALLOWED EXPENSES/LOSS CLAIMED. IT BE SO HELD. 4 LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING D ISALLOWANCE BY AO OF RS. 52 467/ - IN RESPECT OF INTEREST ON BANK OVERDRAFT IN ABSENCE OF BUSINE SS ACTIVITY CARRIED OUT DURING THE YEAR. LD. CIT (A) OUGHT TO HAVE APPRECIATED THAT APPELLANT UTILIZED OVERDRAFT FOR THE PURPOSE OF AND DURING THE COURSE OF BUSINESS WHEREAS TEMPORARY LULL RESULTING IN LACK OF INCOME WOULD NOT TANTAMOUNT TO CLOSURE OR STOP PAGE OF BUSINESS. IT BE SO HELD NOW. 5. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE BY AO OF SALARY EXPENSES OF RS. 81 552/ - IN ABSENCE OF ANY BUSINESS ACTIVITY CARRIED OUT BY THE APPELLANT DURING THE YEAR. LD. CIT (A) OUGHT TO HAVE DELETED DISALLOWANCE APPRECIATING THAT SALARY PAID TO EMPLOYEES DURING COURSE OF BUSINESS NOT PERMANENTLY CLOSED IS ALLOWABLE EXPENSE. IT BE SO HELD NOW. 6. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO REDUCING COST OF CAPITALIZED EXPE NDITURE FROM THE COST OF OFFICE WHILE COMPUTING CAPITAL GAIN. LD. CIT (A) OUGHT TO HAVE ACCEPTED WORKING OF CAPITAL GAIN SUBMITTED BY APPELLANT IN ABSENCE OF CLAIM OF DEPRECIATION OR USAGE OF OFFICE PREMISES THE COST CLAIMED WAS ALLOWABLE ON COMMERCIAL PRI NCIPLES. IT BE SO HELD NOW. 7. INITIATION OF PENALTY U/S 271(1 )(C) OF THE ACT IS NOT JUSTIFIED. 8. LEVY OF INTEREST U/S 234A/B/C/D OF THE ACT IS NOT JUSTIFIED. 3. THE FACT OF THE CASE ON THE ISSUE S PERTAINING TO THE APPEAL OF THE ASSESSEE IS AS UNDER: - DISALLOWANCE OF RS. 25 000/ - WRITTEN OFF FOR AS IRREVOCABLE 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143( 3) IN THE CASE OF THE ASSESSEE T HE ASSESSING OFFICER OBSERVED THAT I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 3 ASSESSE HAS GIVEN PRIVATE ADVANCE OF RS. 25 000/ - TO B.P. PATEL AND CO. SHOWN AS OUTSTANDING AT THE END OF THE YEAR. THE ASSESSING OFFICER NOTICED THAT ASSESEE HAS WRITTEN OFF THE SAME AMOUNT AS BUSINESS LOSS. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSE ON THE GROUND THAT ASSESSEE FAILED TO ESTABLISH TH E BUSINESS CONNECTION AND NOT FURNISHED ANY CONTRA ACCOUNT ALONGWITH THE DETAILED ADDRESS OF THE PERSON TO WHOM THE ADVANCE WAS MADE. IN THE APPEAL THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 5. 4. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE OF RS.25 000/ - WRITTEN OFF BY THE APPELLANT IN RESPECT OF THE LOANS GIVEN TO B.A. PATEL & CO. TREATING THE SAME AS BUSINESS LOSS. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT EXPLAINED THE BUSINESS EXIGENCY OF GIVING THE LOANS TO B.A. PATEL & CO. MOREOVER THE APPELLANT DID NOT FURNISH THE CONTRA ACCOUNT AND DETAILED ADDRESS OF THE PERSON TO WHOM THE ADVANCE WAS GIVEN. SI NCE DURING THE YEAR THE ASSESSEE WAS NOT CARRYING OUT ANY BUSINESS ACTIVITY AND CLOSED DOWN ITS BUSINESS AND SHOWN THE PROFIT ON SALE OF PROPERTY THUS THE WRITTEN OFF CLAIMED BY THE APPELLANT WAS DISALLOWED. ON THE OTHER SIDE THE APPELLANT HAS SUBMITTED T HAT THE VARIOUS PAYMENTS WERE MADE TO THE OTHER PARTIES AS PER INSTRUCTIONS OF B.A. PATEL & CO. FOR WHOM THE APPELLANT WAS WORKING AS ADVISOR FOR PREFAB HOUSE. IT WAS ALSO MENTIONED THAT TO THE A.O. IT HAS BEEN BROUGHT TO THE NOTICE THAT \ IN EARLIER YEARS T HE APPELLANT HAS RECEIVED INCOME FROM B.A. PATEL & CO. AND THUS THEY WERE HAVING BUSINESS RELATION WITH B.A. PATEL & CO. SINCE THE AMOUNT THUS PAID TO VARIOUS PARTIES WHEN IT IS IRRECOVERABLE THE SAME ARE WRITTEN OFF AS THE LOSS WAS INCIDENTAL TO THE BUSIN ESS. THE CLAIM OF THE APPELLANT IS FOUND NOT ACCEPTABLE FOR THE REASON THAT THE SMALL AMOUNTS WERE ADVANCED TO VARIOUS PARTIES AT THE INSTANCE OF B.A. PATEL & CO. AS CLAIMED OF WHICH RECOVERY COULD NOT BE MADE. ALTHOUGH IN THE BOOKS OF ACCOUNTS THE ACCOUNT OF B.A. PATEL & CO. HAS BEEN DEBITED BUT IN SPITE OF THE SPECIFIC REQUISITION TO THE A.R. IN THE APPELLATE PROCEEDINGS THAT THE APPELLANT SHOULD ESTABLISH THE BUSINESS CONNECTIONS WITH B.A. PATE! & CO. BY PRODUCING SUPPORTING EVIDENCES BUT HE FAILED TO PR ODUCE THE SAME. THE APPELLANT CANNOT CLAIM THE IRRECOVERIES AS BAD DEBT AS THE NECESSARY CONDITIONS U/S.36(L)(VII) ARE NOT COMPLIED WITH BECAUSE NO SUCH INCOME RELATING TO THOSE ADVANCES HAVE BEEN OFFERED BY THE APPELLANT EITHER IN THE PRECEDING YEARS OR I N THE YEAR UNDER CONSIDERATION. FURTHER APPELLANT'S CLAIM THAT IT SHOULD BE ALLOWED AS BUSINESS LOSS IS ALSO FOUND UNSUBSTANTIATED FOR THE REASON THAT HE HAS FAILED TO ESTABLISH THAT THE THIRD PARTIES OR B.A. PATEL & CO. WAS HAVING ANY BUSINESS CONNECTIONS AND FOR SUCH BUSINESS REQUIREMENTS/EXIGENCIES THE ADVANCES BY THE APPELLANT WERE GRANTED. IN VIEW OF THE ABOVE THE CLAIM OF LOSS I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 4 MADE BY THE APPELLANT IS NOT JUSTIFIED AND THEREFORE DISALLOWANCE MADE BY THE A.O. IS CONFIRMED. THUS THIS GROUND OF APPEAL IS DISMISSED. DISALLOWANCE OF RS. 3 59 275/ - PERTAINING TO PRE - F AB MODEL HOUSE DEVELOPMENT WORK EXP: - 5. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS. 3 59 275/ - TO WARDS P RE - FAB M ODEL H OUSE DEVELOPMENT WORK EXPENSE S . T H IS EXPENDITURE INCURRED IN THE FINANCIAL YEAR 2000 - 2001 WAS REFLECTED IN THE ACCOUNT OF THE ASSESSEE AS CAPITAL EXPENDITURE. THE REAFTER ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD WRITTEN OFF THE ENTIRE V ALUE OF COST OF BUILDING IN ORDER TO REDUCE ITS TAX LIABILITY . T HEREFORE THE CLAIM OF THE ASSESSEE WAS DISALLOWED . T HE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 6.4. I HAVE CONSIDERED THE FACTS OF T HE CASE AND SUBMISSION MADE BY THE APPELLANT. THE APPELLANT HAS CLAIMED OF RS.3 59 275/ - BEING PREFAB MODEL HOUSE DEVELOPMENT EXPENSES WHICH HAS BEEN DISALLOWED BY THE A.O. FOR THE REASON THAT THESE EXPENDITURES WERE INCURRED BY THE APPELLANT IN F.Y. 2000 - 2001 WHICH WAS A PRIOR PERIOD EXPENDITURE. THE APPELLANT HAS NOT SHOWN ANY SALE VALUE OF THE BUILDING BUT SIMPLY STATED THAT IT HAS BEEN DEMOLISHED BY THE WORKER WHO HAS TAKEN AWAY THE DEBRIS. THE APPELLANT HAS WRITTEN OFF THE CLAIM AS WAS SHOWN IN THE BAL ANCE SHEET. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT THE ENTIRE EXPENDITURE WAS SHOWN IN THE BALANCE SHEET AS CARR Y FORWARDED BUT DUE TO NO ATTRACTION AND LACK OF MARKET THE SAID MODEL LOST ITS PURPOSE AND THEREFORE IT WAS D ESTROYED. THE MODEL THUS WAS MADE WAS A TOOL OF BUSINESS AND INCOME WAS EARNED IN EARLIER YEARS BASED ON SUCH MODEL BEING SHOWN TO THE CUSTOMERS. ANY LOSS THEREFORE ON THE DEMOLISHING OF THE MODEL HOUSE WAS A BUSINESS LOSS. IT HAS BEEN NOTICED ON THE SPECIFIC QUERY RAISED BY THIS OFFICE THAT THIS MODEL HOUSE WAS STATED TO HAVE B EEN MADE ON THE LAND OF OTHER CONCERN M/S. K. K. ENTERPRISES AND CLAIMED THAT THE APPELLANT BEING A FIRM OF PROFESSIONAL WERE MARKETING THE KNOWHOW FOR SHOWIN G WHAT REALL Y THE PREFAB HOUSE IS THE APPPLLANT COULD CONSTRUCTED IN F.Y. 2000 - 01. HERE IT IS TO MENTIONED THAT THE EXPENDITURE CLAIMED TO HAVE BEEN MADE ON PREFAB MODEL HOUSE WAS CAPITALIZED BY THE APPELLANT AND THEREFORE THE SAME HAS BEEN SHOWN AS THE CAPI TAL ASSET IN THE BALANCE SHEET FROM THE STARTING OF THE YEAR OF I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 5 CONSTRUCTION. FURTHER THIS PREFAB HOUSE MODEL WAS PREPARED NOT ON THE APPELLANT'S OWN LAND BUT AT THE LAND OF THE OTHER PARTY. SO AFTER CONSTRUCTION THE APPELLANT DID NOT HAVE ANY CONTROL OVER SUCH HOUSE AS IT WAS NOT A MOVABLE ASSET. IT HAS NOT BEEN SHOWN WHY THIS MODEL WAS PREPARED AT THE LAND OF OTHER PARTY AND WHETHER THE BUSINESS OF THE OTHER PARTY HAVE IN ANY CONNECTED WITH THE MODEL HOUSE. MOREOVER IT IS NOT KNOWN THAT IN WHAT MANNE R THE APPELLANT HAS DERIVED ITS BUSINESS THROUGH MAKING THIS PREFAB MODEL. SO THE BUSINESS REQUIREMENTS OF THE SAME HAS NOT BEEN EXPLAINED. SINCE THE APPELLANT HAS NOT CLAIMED THE CONSTRUCTION EXPEN SES AS REVENUE EXPENDITURE OR IN THE CLOSING STOCK AT TH E END OF THE YEARS BUT THE SAME HAS BEEN SHOWN AS CAPITAL ASSET THEREFORE A NY EXPENDITURE MADE THEREUPON IS ALSO A CAPITAL LOSS ON DEMOLISHAN OF THE SAME AND AS SUCH CAPITAL LOSS CANNOT BE ALLOWED AGAINST THE INCOME OF THE YEAR UNDER CONSIDERATION. TH E REFORE THE APPELLANT'S CLAIM OF WRITTEN OFF OF THE CONSTRUCTION EXPENSES OF THE MODEL HOUSE IS NOT CORRECT AND THE DISALLOWANCE MADE BY THE A.O. IS JUSTIFIED AND THE GROUND OF THE APPELLANT IS DISMISSED. DISALLOWANCE OF RS. 52 467/ - IN RESPECT OF INTER EST OF BANK OVERDRAFT 6. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS. 52 467/ - INTEREST ON BANK OVERDRAFT ACCOUNT . THE ASSESSING OFFICER HAS DISALLOWED THE INTEREST EXPENDITURE ON THE GROUND THAT ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. IN THE APPEAL THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - 7.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMI SSION MADE BY THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE OF INTEREST EXPENSES OF RS.52 467/ - IN RESPECT OF THE BANK OVERDRAFT. THE AO OBSERVED THAT IN THE YEAR UNDER CONSIDERATION THE APPELLANT HAS NOT CARRIED OUT ANY BUSINESS ACTIVITIES STILL HE CONT INUED TO AVAIL THE OVERDRAFT FACILITY FOR WHICH INTEREST EXPENSES COULD NOT BE ALLOWED. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS SIMPLY CONTENDED THAT THE APPELLANT HAD CARRIED OUT VARIOUS ACTIVITIES AS EVIDENCED FROM THE ACCOUNT AND T HEREFORE IT CANNOT BE HELD THAT OVERDRAFT WAS NOT USED FOR THE BUSINESS PURPOSE. HE RELIED UPON THE CASE LAW OF HON'BLE IT AT MUMBAI THE APPELLANT NEITHER IN THE ASSESSMENT PROCEEDINGS NOR IN THE APPELLATE PROCEEDING HAVE SUBMITTED ANY DETAILS OF THE USES OF THE OVERDRAFT TAKEN FROM THE BANKS ESTABLISHING THAT THOSE WERE ONLY FOR BUSINESS PURPOSES. HE DID NOT EXPLAIN THE APPLICATION OF SUCH OVERDRAFT ON WHICH INTEREST HAS BEEN PAID. SO IT IS HELD THAT THE OVERDRAFT HAS BEEN UTILIZED FOR NON - BUSINESS PURPOS ES SPECIFICALLY WHEN NO BUSINESS ACTIVITIES HAVE BEEN CARRIED OUT IN THE YEAR UNDER HENCE THE I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 6 DISALLOWANCE MADE BY THE A. O. IS JUSTIFIED AND THE CONFIRMED. THUS THIS GROUND OF APPEAL IS DISMISSED. DISALLOWANCE OF SALARY EXPENSES OF RS. 81 552/ - . 7. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT A SSESSEE HAS DEBITED AN AMOUNT O F RS . 81 552/ - SALARY EXPENSES FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS DISALLOWED THE SAME ON THE GROUND THAT ASSESSEE HAS NO T CARRIED OUT ANY BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 8.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLAN T. THE AO HAS MADE THE DISALLOWANCE OF RS.81 552/ - BEING SALARY PAYMENTS IN VIEW OF THE FACT THAT NO BUSINESS ACTIVITIES HAVE BEEN CARRIED OUT IN THE YEAR UNDER CONSIDERATION. ONLY INCOME FROM CAPITAL GAINS HAVE BEEN SHOWN. ON THE OTHER SIDE DURING THE COU RSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS CLAIMED THAT THE EXPENDITURES WERE INCURRED DURING THE COURSE OF BUSINESS AND IN FACT IT WAS NOT CLOSED PERMANENTLY BUT A TEMPORARY LULL. THE SALARY WAS GIVEN TO THE EMPLOYEES. THE SUBMISSION MADE BY THE APPEL LANT IS NOT SUPPORTED BY ANY DETAILS AND EVIDENCES ESTABLISHING THE BUSINESS EXIGENCIES FOR KEEPING THE EMPLOYEES AND MAKING THE SALARY PAYMENTS TO THEM. SINCE NO BUSINESS ACTIVITIES HAVE BEEN CARRIED OUT IN THE YEAR UNDER CONSIDERATION AND ALSO IN ABSENCE OF ANY OTHER DETAILS SHOWING THAT IN THE SUBSEQUENT YEARS ANY BUSINESS HAS BEEN RESUMED AND CARRIED OUT THE SUBMISSION OF THE APPELLANT IS FOUND UNSUBSTANTIATED. THEREFORE THE DISALLOWANCE OF THE SALARY MADE BY THE A.O. IS JUSTIFIED AND THE SAME IS CONFI RMED. THUS THIS GROUND OF APPEAL IS DISMISSED. 8. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE LEARNED C OUNSEL HAS FURNISHED PAPER BOOK CONTAINING LEDGER ACCOUNT OF SALARY PROVIDENT FUND INTEREST STATEMENT OF BANK ETC. HE CONT ENDED THAT WHILE MAKING ABOVE DISALLOWANCES THE LD. CIT (A) HAS NOT CONSIDERED FULL FACTS AND SUPPORTING EVIDENCES IN RESPECT OF CLAIM OF THE ASSESSEE . ON THE OTHER HAND T HE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LD. CIT(A). I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 7 9. WE HA VE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. REGARDING DISALLOWANCE OF RS. 2 5 000/ - AS ADVANCE GIVEN TO B.A. PATEL & COMPANY WE OBSERVED THAT THE AFORESAID ADVANCE WAS MADE IN THE FINANCIAL YEAR 2006 - 07 WAS WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION ON THE GROUND THAT IT IS IRRE CO V ERABLE . WE OBSERVED THAT ASSESSEE HAS N EVER SHOWN ANY INCOME IN RESPECT OF IMPUGNED ADVANCES I N THE PRECEDING OR CURRENT YEAR. T HE ASSESSEE FAILED TO FURNISHED ANY CONTRA ACCOUNT DETAI LED ADDRESS LOAN CONFIRMATION ETC. OF THE ABOVE PARTY. AFTER CONSIDERING THESE FACTS AND DETAILED FINDINGS OF THE LD.CIT(A) WE DO NOT FIND ANY ERROR IN THE DECISION OF THE LD. CIT(A) ON THIS ISSUE. THEREFORE THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS DISMISSED. REGARDING SECOND GROUND OF APPEAL PERTAINING TO WRITTEN OFF OF RS. 3 59 2 7 5/ - PERTAINING TO PRE - FAB MODEL HOUSE DEVELOPMENT EXPENSES . I N THIS CONNECTION WE OBSERVED THAT THE ABOVE EXPENDITURE WAS INCURRED IN THE FINANCIAL YEAR 2000 - 2001. TH E PRE - FAB H OUSE MODEL DEVELOPMENT EXPENSES WAS CAPITALIZED BY THE ASSESSEE AND SHOWN AS CAPITAL ASSET IN THE BALANCE SHEET FROM THE YEAR OF CONSTRUCTION. AFTER CONSIDERING THESE FACTS W E OBSERVED THAT WRIT ING - OFF THE AFORESAID EXPENDITURE IS OF THE NATU RE OF CAPITAL LOSS . T HEREFORE WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A) . ACCORDINGLY THE APPEAL OF THE ASSESSEE IS DISMISSED ON THIS ISSUE. REGARDING THIRD GROUND OF APPEAL PERTAINING TO DISALLOWANCE OF INTERES T EXPENSES OF RS . 52 467/ - IN RESPECT OF BANK OVERDRAFT I N THIS CONNECTION WE HAVE GONE THROUGH THE PAGE NO. 33 TO 38 OF THE PAPER BOOK CONTAINING INFORMATION PERTAINING TO THE BANK OVERDRAFT OF THE I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 8 ASSESSEE MAINTAI NED WITH BANK OF INDIA. WE NOTICED THAT MOST OF THE EXPENDITURE R EFLECTED IN THE OVERDRAFT BANK ACCOUNT W AS RELATED TO SALARY TRANSPORTATION LEGAL AND TELEPHONE EXPENDITURE ETC. THESE FACTS DEMONSTRATE THAT EXPENSES OUT OF BANK DRAFT ACCOUNT WERE INCURRED FOR THE BUSINESS PURPOSE OF THE ASSESSEE. IN VIEW OF THESE FACTS WE ARE NOT INCLINED WITH THE FINDING OF THE LD. CIT(A) THAT OVERDRAFT HAS BEEN UTILIZED FOR NON - BUSINESS PURPOSES . THEREFORE THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS ISSUE. REGARDING DISALLOWANCE OF SALARY EXPENSES OF RS. 8 1 552/ - WE HAVE GON E THROUGH PAGE NO. 28 OF THE PAPER BOOK CONTAINING DETAILS OF SALARY EXPENSES. WE NOTICED T HAT ASSESSEE HAS INCURRED TH ESE EXPENDITURE FOR MAKING PAYMENT TO OFFICE CLERK ACCOUNTANT ETC. THE NATURE OF EXPENDITURE INDICATES THAT THE SAME WERE INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE EXPENDITURE PERTAINING TO CONTRIBUTION MADE TO THE PROVIDENT FUND OF THE EMPLOYEES WERE ALLOWED BY THE ASSESSING OFFICER WHEREAS THE EXPENDITURE OF SALARY PAYMENT TO SIMILAR EMPLOYEES WERE DISALLOWED WITHOUT AN Y VALID REASON. IN VIEW OF THE ABOVE FACTS THE CLAIM OF THE ASSESSEE OF PAYMENT OF SALARY EXPENSES IS ALLOWED. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS ISSUE. 10. IN THE RESULT THE APPEAL OF THE ASSESSE E IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 28 - 11 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 28 /11 /2017 I.T.A NO. 1705 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. URBAN DEVELOPMENT GROUP VS. ITO 9 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER/ /