Ms. Minu Budhia, Kolkata V. DCIT, CIRCLE - 8(2), KOLKATA, Kolkata

CO 128/KOL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 4128 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: D K KOTHAR I AR SHRI V K JAIN
• Keywords: Gift; Salary income; Bonafide belief; Avoidance of tax; Deemed dividend
• Section: 143(3); 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & HONBLE SHR I S.S.VISWANETHRA RAVI, JM] I.T.A NO. 1450/KOL/2015 ASSESSMENT YEAR : 2008-0 9 DCIT, CIRCLE-8(2), KOLKATA -VS- MS. MINU BUDHIA [PAN: AEFPB 5941 N] (APPELLANT) (RESPO NDENT) C.O. NO. 128/KOL/2017 (ARISING OUT OF I.T.A NO. 1450/KOL/2015) ASSESSMENT YEAR : 2008-0 9 MS. MINU BUDHIA -VS- DCIT, CIRCLE-8(2), KOLKA TA [PAN: AEFPB 5941 N] (CROSS OBJECTOR) (RESPONDE NT) FOR THE DEPARTMENT : SHRI S. DASGUPTA , ADDL. CIT DR FOR THE ASSESSEE : SHRI D.K. KOTHAR I, AR SHRI V.K. JAIN, FCA DATE OF HEARING : 09.08.2018 DATE OF PRONOUNCEMENT : 24.08.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTI ON BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)-20, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO. 708/CIT(A)-20/CC-1(2)/14-1 5 DATED 23.09.2015 AGAINST THE ORDER PASSED BY THE DCIT, CC-II, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 2 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 2 143(3)/263/143(3) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) DATED 31.03.2014 FOR THE ASSESSMENT YEAR 2008-09. 2. AT THE OUTSET, WE FIND THAT THERE IS A DELAY OF 696 DAYS IN FILING THE CROSS OBJECTION BY THE ASSESSEE BEFORE US. THE ASSESSEE HAS FILED A DE LAYED CONDONATION PETITION FOR THE SAME. AT THE TIME OF HEARING, THE LD. AR STATED THA T THE CROSS OBJECTION PREFERRED BY THE ASSESSEE ARE ONLY SUPPORTIVE OF THE ORDER OF THE LD . CIT(A) AND HENCE HE IS NOT PRESSING THE SAME, IN SUPPORT OF WHICH, NECESSARY ENDORSEMEN T HAS BEEN MADE BY THE LD. AR IN OUR FILE. ACCORDINGLY, CROSS OBJECTION PREFERRED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL OF T HE REVENUE IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 2,30,00,000/- MADE U/S 2(22)(E) OF THE ACT TOWARDS DEEMED DIVIDEND, IN THE FACTS AND C IRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 10.09.2008 DECLARING TOT AL INCOME OF RS. 1,86,55,853/-. THE ASSESSEE IS DERIVING INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAINS AND OTHER SOURCES. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 12.04.2010 ACCEPTING THE RETURNED INCOME. LATER ASSESSMENT WAS SET ASIDE TO THE FILE OF LD. AO VIDE ORDER U/S 263 OF THE ACT PASSED BY THE CIT ON 21.01.2013 FOR MAKING A FRESH ASSESSMENT AS PER PROVISIONS OF SECTION 2(22)(E) OF THE ACT, AFTER MA KING NECESSARY INVESTIGATION ABOUT THE CLAIMS OF THE ASSESSEE IN CONNECTION WITH I) WHETHE R THE ADVANCE WAS INTEREST BEARING AND II) WHETHER THE ADVANCE WAS MADE TO HER BY THE COMPANY DURING THE ORDINARY COURSE OF MONEY LENDING BUSINESS OF THE COMPANY. THE LD. A O AS WELL AS LD. CIT OBSERVED THAT THE ASSESSEE HAD TAKEN AN ADVANCE OF RS. 2,30,00,00 0/-FROM M/S PATTON INTERNATIONAL LTD., A COMPANY IN WHICH THE ASSESSEE HOLDS 23% OF ITS SHARE CAPITAL. ADMITTEDLY, M/S PATTON INTERNATIONAL LTD. HAD ACCUMULATED PROFITS A S ON 31.03.2007 OF RS. 3 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 3 22,82,41,790/- AND RS. 36,56,84,224/- AS ON 31.03.2 008. THE ASSESSEE WAS DIRECTED TO EXPLAIN AS TO WHY THE SAID RECEIPT OF RS. 2,30,00,0 00/- FROM THE CLOSELY HELD COMPANY IN WHICH SHE IS HOLDING MORE THAN 10% OF VOTING POWER, BE NOT CONSTRUED AS RECEIPT FALLING WITHIN THE AMBIT OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE STATED THAT M/S PATTON INTERNATIONAL LTD. HAD GIVEN DEPOSITS TO THE ASSESSEE COMPANY PURSUANT TO TWO SEPARATE LEASE AGREEMENTS ENTERED ON 31.03.2008 FOR LEASING TWO OFFICES PREMISES MEASURING A) 777 SQ. FT. BUILT UP AREA ON 6 TH FLOOR AT 3C, CAMAC STREET, KOLKATA-16 FOR WHICH DEPOSIT SUM OF RS. 1 C RORE WAS RECEIVED BY THE ASSESSEE AND B) 777 SQ. FT. BUILT UP AREA ON 9 TH FLOOR AT 3C, CAMAC STREET, KOLKATA-16 FOR WHICH DEPOSIT AMOUNT OF RS. 1,30,00,000/- WAS RECEIVED BY THE ASSESSEE FROM M/S PATTON INTERNATIONAL LTD. . THE ASSESSEE PLACED THE LEASE AGREEMENTS DATED 31.03.2008 BEFORE THE AUTHORITIES. IT WAS FOUND THAT M/S PATTON INTER NATIONAL LTD. HAD GIVEN 2,30,00,000/- AS INTEREST FREE ADVANCE TO THE ASSESSEE. 4.1. THE PROPERTY SITUATED AT 9 TH FLOOR AT 3C, CAMAC STREET, KOLKATA-16 WAS ALREADY OCCUPIED BY THE OLD TENANT M/S ALL CARGO MOVERS (IN DIA) PVT. LTD., WHOSE LEASE AGREEMENT HAD EXPIRED ON 31.03.2008 AND THAT THE SA ID TENANT HAD NOT VACATED THE PREMISES ON 31.03.2008 AND HAD IN FACT SOUGHT FOR EXTENSION OF LEASE PERIOD BY ANOTHER 12 MONTHS DUE TO UNAVOIDABLE CIRCUMSTANCES. THE ASS ESSEE HAD AGREED FOR SUCH EXTENSION OF TENANCY TO THE OLD TENANT STATED SUPRA . THE LEASE AGREEMENT DATED 31.03.2008 ENTERED WITH M/S PATTON INTERNATIONAL LT D. BY THE ASSESSEE IN RESPECT OF FLAT SITUATED AT 9 TH FLOOR, 3C, CAMAC STREET, KOL-16 SPECIFICALLY MENTI ONED THAT THE ASSESSEE WAS IN THE PROCESS OF TAKING POSSESSION FROM M/S A LL CARGO MOVERS (I) PVT. LTD. PURSUANT TO THE SAID TENANT VACATING THE PREMISES. 4.2. IN ANOTHER LEASE AGREEMENT DATED 31.03.2008 EN TERED INTO BY THE ASSESSEE WITH M/S PATTON INTERNATIONAL LTD. IN RESPECT OF FLAT SITUAT ED AT 6 TH FLOOR, 3C, CAMAC STREET, KOL- 16, IT WAS SPECIFICALLY MENTIONED IN THE LEASE AGRE EMENT THAT THE LESSOR I.E. THE ASSESSEE 4 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 4 WAS IN THE PROCESS OF BECOMING OWNER OF THE SAID PR EMISES WHICH ACTUALLY BELONGED TO HER FATHER-IN-LAW SHRI H.P. BUDHIA, WHO EXPRESSED H IS DESIRE TO GIFT THE FLAT TO HER ON THE OCCASION OF HIS 50 TH MARRIAGE ANNIVERSARY AND THE ASSESSEE DECIDED TO L EASE OUT THE SAID PREMISES TO M/S PATTON INTERNATIONAL LTD. AS SOON AS SHE BECAME OWNER OF THE PREMISES. 4.3. BOTH THE LEASE AGREEMENTS CONTAINED A CLAUSE T HAT IF POSSESSION WAS NOT GIVEN WITHIN A YEAR, THE ADVANCE/DEPOSIT MONEY HAD TO BE REFUNDED BACK ON DEMAND TO THE LESSEE I.E. M/S PATTON INTERNATIONAL LTD. THE ASSE SSEE PURSUANT TO THE AFORESAID LEASE AGREEMENTS DATED 31.03.2008 SOUGHT TO CATEGORIZE TH E RECEIPT OF RS. 2,30,00,000/- (1CRORE + 1.30 CRORES) FROM M/S PATTON INTERNATIONA L LTD. AS LEASE SECURITY DEPOSIT AND THAT THE SAME WOULD NOT BE CONSTRUED AS LOAN/ADVANC E WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT AS THE SAID SECURITY DEPOSITS W ERE RECEIVED BY THE ASSESSEE AS COMMERCIAL TRANSACTION IN THE ORDINARY COURSE OF HE R BUSINESS. 5. THE LD. AO OBSERVED IN HIS ASSESSMENT ORDER THAT WITH REGARD TO THE FLAT SITUATED AT 9 TH FLOOR, 3C, CAMAC STREET, KOLKATA-16, THOUGH THE LEA SE AGREEMENT WITH ALL CARGO MOVERS (I) PVT. LTD. HAD EXPIRED ON 31.03.2008, TH E SAID TENANT EXPRESSED ITS INABILITY TO VACATE THE PREMISES AND REQUESTED TO EXTEND THE LEASE BY 12 MONTHS. CONSEQUENTLY, THE ASSESSEE WAS UNABLE TO HAND OVER THE FLAT TO M/ S PATTON INTERNATIONAL LTD PURSUANT TO LEASE AGREEMENT DATED 31.03.2008 ENTERED INTO BY TH E ASSESSEE. 5.1. THE LD. AO ALSO OBSERVED IN HIS ASSESSMENT ORD ER THAT THE FATHER-IN-LAW OF THE ASSESSEE SHRI HARI PRASAD BUDHIA (H.P. BUDHIA) WAS UNABLE TO MAKE THE INTENDED GIFT OF THE FLAT SITUATED AT 6 TH FLOOR, 3C, CAMAC STREET, KOL-16 TO THE ASSESSEE WI THIN THE PRESCRIBED TIME AND THEREFORE, THE ASSESSEE WAS UNA BLE TO HAND OVER THE SAID FLAT TO M/S PATTON INTERNATIONAL LTD. ULTIMATELY THE SAID FLAT WAS GIFTED BY FATHER-IN-LAW TO THE ASSESSEE VIDE DEED OF GIFT DATED 15.09.2009. IN THE SAID DEED OF GIFT, IT WAS NOTICED THAT 5 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 5 THE SUBJECT MENTIONED FLAT WAS ALREADY OCCUPIED BY A TENANT AND THAT THE SAID FLAT WAS GIFTED BY FATHER-IN-LAW TO THE ASSESSEE TOGETHER WI TH SUCH EXISTING TENANT. 5.2. BASED ON THE AFORESAID FACTS, THE LD. AO OBSER VED THAT THE ASSESSEE DID NOT POSSESS ANY CLEAR TITLE [ FREE OF ANY ENCUMBRANCE I.E WIT HOUT TENANCY] IN RESPECT OF THE FLAT SITUATED AT 9 TH FLOOR, 3C, CAMAC STREET, KOL-16 SO AS TO MAKE IT E LIGIBLE TO BE LEASED OUT TO M/S PATTON INTERNATIONAL LTD. ON 31.03.2008 FOR WHICH THE LEASE AGREEMENT WAS ENTERED ON 31.03.2008. SIMILARLY THE ASSESSEE WAS N OT HAVING POSSESSION OF THE FLAT SITUATED AT 6 TH FLOOR, 3C, CAMAC STREET, KOL-16 AS ON 31.03.2008 S O AS TO LEASE IT OUT TO M/S PATTON INTERNATIONAL LTD. FOR WHICH LEASE AGREE MENT DATED 31.03.2008 WAS ENTERED BY THE ASSESSEE. HENCE THE LD. AO CONCLUDED THAT T HE MONEY RECEIVED FROM M/S PATTON INTERNATIONAL LTD. CANNOT BE CHARACTERIZED AS A LEA SE DEPOSIT AND IS ACCORDINGLY A LOAN DRAWN BY THE ASSESSEE FROM THE SAID COMPANY WHICH P OSSESSED SUFFICIENT ACCUMULATED PROFITS AND HENCE THE SUBJECT MENTIONED TRANSACTION WOULD FALL WITHIN THE MISCHIEF OF SECTION 2(22)(E) OF THE ACT AND ACCORDINGLY, ADDED THE SUM OF RS. 2,30,00,000/- AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. 6. THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 6. DURING THE APPELLATE PROCEEDING THE AR HAS SUBMI TTED COPIES OF ALL THE RELEVANT DOCUMENTS TO PROVE THAT THE ASSESSEE COULD NOT HAND OVER THE POSSESSION OF BOTH THE LEASED PREMISES TO M/S PATTON INTERNATIONAL ON 01-0 4-2008 BECAUSE OF SOME UNAVOIDABLE REASONS WHICH WERE BEYOND THE CONTROL O F THE ASSESSEE. ALTHOUGH THE ASSESSEE HANDED OVER THE POSSESSION OF BOTH THE LEA SED PREMISES TO M/S PATTON INTERNATIONAL ON SUBSEQUENT DATES. THE AR HAS ALSO SUBMITTED THAT IT WAS A BONAFIDE BUSINESS AGREEMENT AND TRANSACTION BETWEEN THE ASSE SSEE AND M/S PATTON INTERNATIONAL. THEREFORE RELYING ON VARIOUS CASE LAWS, THE AR HAS ARGUED THAT AS LEASE ADVANCE WAS A GENUINE BUSINESS TRANSACTION, SO IT CANNOT BE TREAT ED AS DEEMED DIVIDEND U/S 2(22)(E). 7. THE AR HAS ALSO BROUGHT ON RECORD THAT ACCORDING TO VARIOUS JUDICIAL PRONOUNCEMENTS, THE PURPOSE OF BRINGING PROVISIONS OF SECTION 2(22)(E) OF THE STATUTE BOOK IS TO TAX SUCH ASSESSEE WHO AVOIDS PAYING TAX ON DIVIDEND IN THE GUISE OF AMOUNT RECEIVED AS ADVANCES AND LOANS. IN THIS CASE THE AS SESSEE HAS RECEIVED HUGE DIVIDEND FROM M/S PATTON INTERNATIONAL AND THE SAME HAS BEEN OFFERED FOR TAXATION. THE AR HAS ALSO POINTED OUT THAT THE ASSESSEE HAS RECEIVED SAL ARY OF RS.559750O/- AS DIRECTOR FROM 6 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 6 M/S PATTON INTERNATIONAL. THIS AMOUNT HAS ALSO BEEN OFFERED FOR TAXATION. THEREFORE THERE WAS NO OCCASION TO TAKE SOME AMOUNT FROM THE SAME COMPANY IN THE FORM OF LEASE ADVANCE TO AVOID TAXATION. IT IS IMPORTANT TO NOTE THAT IN BOTH THE CASES THE ASSESSEE HAS RETURNED BACK THE LEASE ADVANCE TO M/S PATTON INTER NATIONAL WITH INTEREST. 8. I HAVE CONSIDERED THE FINDING OF THE AO THAT BOT H THE LEASE AGREEMENTS IN WHICH ASSESSEE ENTERED INTO WITH M/S PATTON INTERNATIONAL COULD NOT MATERIALISE. THE AO HAS CORRECTLY POINTED OUT THAT ON THE DATE OF SIGNING O F LEASE AGREEMENTS, IN THE CASE OF FIRST OFFICE PREMISE AT 6TH FLOOR OF 3C, CAMAC STREET, KO L-I6 THE ASSESSEE WAS NOT THE RIGHTFUL OWNER AND IN THE SECOND PREMISE AT 9 TH , FLOOR OF THE SAME BUILDING ALTHOUGH THE ASSESSEE WAS THE OWNER BUT IT HAD GIVEN POSSESSION OF THIS P REMISE TO AN EARLIER TENANT WHO HAD NOT VACATED THIS PREMISE AS YET. I HAVE ALSO CONSID ERED THE SUBMISSION OF THE AR THAT BOTH THE LEASE AGREEMENTS WERE SIGNED ON LLL-03-200 8 ON THE BONAFIDE BELIEF OF THE ASSESSEE THAT THE FIRST PREMISE WOULD COME TO HER A S A GIFT FROM HER FATHER-IN-LAW (AS A LETTER OF THIS PURPOSE WAS RECEIVED BY THE ASSESSEE FROM HER FATHER-IN-LAW) AND THE SECOND PREMISE, AS THE LEASE AGREEMENT WITH THE EAR LIER TENANT HAD ALREADY LAPSED THEREFORE FROM 01.04. 2008 WHEN THE POSSESSION WAS TO BE GIVEN BY THE ASSESSEE, THIS OFFICE PREMISE WAS GETTING VACATED BY THE EARLIER T ENANT ON 31.03.2008. THE AR HAS ALSO SUBMITTED THAT ON SUBSEQUENT DATES POSSESSION OF BO TH THESE PREMISES WAS GIVEN ON LEASE TO M/S. PATTON INTERNATIONAL LTD., THEREFORE SIMPLY BECAUSE THE POSSESSION COULD NOT BE GIVEN ON 01.04.2008 (FOR REASONS BEYOND ASSE SSEES CONTROL) AND THAT, THE ASSESSEE HAD TO PAY BACK THE LEASE ADVANCE WITH INT EREST AS PER THE TERMS AND CONDITIONS OF THE LEASE AGREEMENT; THIS ACT OF RECE IVING LEASE ADVANCE MAY NOT BE TREATED AS DEEMED DIVIDEND AS PER SECTION 2(22)(E) OF THE IT ACT, 1961. I HAVE ALSO CONSIDERED DIFFERENT CASE LAWS BROUGHT ON RECORD BY THE A.O. IN THE ASSESSMENT ORDER AND BY THE AR IN THE WRITTEN SUBMISSION. I FIND THA T ALTHOUGH LEASE AGREEMENTS ENTERED INTO BY THE ASSESSEE COULD NOT MATERIALISE BUT AT T HE SAME TIME IT IS ALSO A MATTER OF FACT THAT THE ASSESSEE HAS ALREADY BEEN OFFERED FOR TAXA TION. THEREFORE IN MY VIEW AVOIDANCE OF TAXATION CANNOT BE THE REASON TO ENTER INTO LEAS E AGREEMENTS WITH M/S. PATTON INTERNATIONAL LTD. AND TO RECEIVE LEASE ADVANCE FRO M THE COMPANY. I THINK THE PURPOSE OF RECEIVING THE LEASE ADVANCE WAS TO COMPLETE A GE NUINE BUSINESS TRANSACTION AND AS ANY AMOUNT RECEIVED AS ADVANCE IN A NORMAL COURSE O F BUSINESS TRANSACTION IS NOT TO BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE IT A CT, 1961. THEREFORE, KEEPING IN VIEW VARIOUS JUDICIAL PRONOUNCEMENTS ON THIS ISSUE AND R ESPECTFULLY FOLLOWING THE SAME, ASSESSEES APPEALS ON GROUND NO 1 TO 6 ARE ALLOWED. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTS ET, WE FIND THAT THE FOLLOWING POINTS ARE NOT IN DISPUTE: A) THE ASSESSEE IS A REGISTERED-CUM-BENEFICIAL SHAR EHOLDER IN M/S PATTON INTERNATIONAL LTD. HOLDING MORE THAN 10% OF VOTING POWER THEREON. 7 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 7 B) M/S PATTON INTERNATIONAL IS A CLOSELY HELD COMPA NY. C) M/S PATTON INTERNATIONAL POSSESSES SUFFICIENT AC CUMULATED PROFITS AS ON 31.03.2007 TO THE TUNE OF RS. 22.82 CRORES AND RS. 36.57 CRORES A S ON 31.03.2008. 7.1. THE SHORT POINT THAT ARISES FOR OUR CONSIDERAT ION IS WHETHER THE RECEIPT OF RS. 2,30,00,000/- BY THE ASSESSEE PURSUANT TO LEASE AGR EEMENT DATED 31.03.2008 COULD BE CHARACTERIZED AS MONEY RECEIVED IN THE NATURE OF CO MMERCIAL TRANSACTION TOWARDS LEASE DEPOSIT SO AS TO FALL OUTSIDE THE MISCHIEF OF PROVI SION OF SECTION 2(22)(E) OF THE ACT. WE FIND FROM THE FACTS NARRATED ABOVE THAT THE ASSESSE E AT THE FIRST INSTANCE IN RESPECT OF FLAT SITUATED AT 6 TH FLOOR, 3C, CAMAC STREET, KOLKATA-16 DID NOT POSSES S ANY TITLE TOWARDS THE SAME AS ADMITTEDLY THE GIFT OF SUCH FLAT WAS DONE B Y HER FATHER-IN-LAW ONLY ON 15.09.2009, FALLING IN ASSESSMENT YEAR 2010-11. HEN CE THE SUBJECT MENTIONED FLAT WAS NOT AVAILABLE IN ABSOLUTE POSSESSION OF THE ASSESSE E SO AS TO ENABLE HER TO LEASE IT OUT TO M/S PATTON INTERNATIONAL LTD. AS ON 31.03.2008. FRO M THE CONTENTS OF GIFT DEED ON 15.09.2009 ENCLOSED IN PAPER BOOK FILED BY THE ASSE SSEE, IN PARA 2 THEREON, WE FIND THAT THE SAID FLAT WAS GIFTED BY ASSESSEES FATHER-IN-LA W TOGETHER WITH THE TENANCY RIGHT THEREON, MEANING THEREBY, THAT THERE WAS AN EXISTIN G TENANT ALREADY OCCUPYING THE SUBJECT MENTIONED FLAT, EVEN AS ON 15.09.2009. HENC E UNDER ANY CIRCUMSTANCES, THIS PROPERTY COULD NOT HAVE BEEN LEGALLY LEASED OUT BY THE ASSESSEE TO M/S PATTON INTERNATIONAL ON 31.03.2008 FOR WHICH PURPOSE THE P URPORTED RECEIPT CATEGORIZED AS LEASE DEPOSIT WAS RECEIVED. 7.2. SIMILARLY WITH REGARD TO FLAT SITUATED AT 9 TH FLOOR, M/S ALL CARGO MOVERS (I) PVT. LTD. [THE EXISTING TENANT OF THE ASSESSEE ] DID NO T VACATE THE SAID FLAT ON 31.03.2008 AND HAD EVEN SOUGHT FOR EXTENSION OF THE LEASE BY ANOTH ER 12 MONTHS. THIS FACT CLEARLY GOES TO PROVE THAT THE ASSESSEE IN ANY CASE COULD NOT HA VE LEASED OUT THE SUBJECT MENTIONED FLAT TO M/S PATTON INTERNATIONAL LTD. FOR WHICH TH E MONEY WAS RECEIVED IN THE FORM OF LEASE DEPOSIT. 8 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 8 7.3. THE AFORESAID FACTS AND CONDUCT OF THE ASSESSE E CLEARLY PROVE THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM M/S PATTON INTERNATIO NAL LTD. IN THE SUM OF RS. 2.30 CRORES WAS CLEARLY NOT IN THE NATURE OF LEASE DEPO SIT / SECURITY DEPOSIT PURSUANT TO LEASE AGREEMENT DATED 31.03.2008. HENCE IT CANNOT TAKE CH ARACTER OF LEASE DEPOSIT AND IN OUR CONSIDERED OPINION, THE SAID RECEIPT IS A CLEAR LOA N RECEIVED BY THE ASSESSEE FROM M/S PATTON INTERNATIONAL LTD, HENCE IT CLEARLY FALLS WI THIN THE MISCHIEF OF SECTION 2(22)(E) OF THE ACT. THE LD. AR ALSO STATED THAT THE SAID LEAS E DEPOSIT OF RS. 2,30,00,000/- WAS REFUNDED TO M/S PATTON INTERNATIONAL LTD. IN THE SU BSEQUENT FINANCIAL YEAR, SINCE THE ASSESSEE COULD NOT HAND OVER VACANT POSSESSION OF T HE SUBJECT MENTIONED FLATS (I.E. FLAT AT 6 TH FLOOR AND 9 TH FLOOR) TO M/S PATTON INTERNATIONAL LTD. PURSUANT T O THE LEASE AGREEMENT DATED 31.03.2008. THE LD. AR ALSO STATED BEFORE US THAT ONCE THE VACANT POSSESSION OF THE FLAT WAS LEASED OUT TO M/S PATTON INTERNATIONAL LTD. SUBSEQUENTLY ON VACATION OF EXISTING TENANT SITUATED AT 9 TH FLOOR, 3C, CAMAC STREET, KOL-16 (ALL CARGO M OVERS (I) PVT. LTD. ), NO FRESH LEASE DEPOSIT IN THE SUM OF R S. 1 CRORE WAS RECEIVED BY THE ASSESSEE. THIS ACT ALSO FURTHER PROVES THE CONDUCT OF THE ASS ESSEE TO SHOW THAT SHE NEVER INTENDED TO COLLECT THE MONIES OF 1 CRORE AND 1.30 CRORES FR OM M/S PATTON INTERNATIONAL LTD. IN THE FORM OF LEASE DEPOSIT FREE OF ANY ENCUMBRANCE. HENC E IT COULD BE SAFELY CONCLUDED THAT EVEN THE SUBSEQUENT CONDUCT OF THE ASSESSEE DOES NO T PROVE THE SO-CALLED ALLEGED COMMERCIAL TRANSACTION ENTERED INTO BY THE ASSESSEE VIDE LEASE AGREEMENT DATED 31.03.2008. 7.4. IN VIEW OF THE AFORESAID FACTUAL OBSERVATIONS , THERE IS NO NEED TO GO INTO THE VARIOUS CASE LAWS RELIED UPON BY THE LD. AR AND THE CBDT CI RCULAR NO. 19/2017 DATED 12.06.2017 RELIED UPON BY THE LD. AR, INASMUCH AS A LL THOSE CASE LAWS AND CBDT CIRCULAR SUPPORTED THE FACT THAT IF THE RECEIPT IS IN THE NATURE OF TRADE ADVANCE OR RECEIPT IN THE COURSE OF COMMERCIAL TRANSACTIONS, THEN THE PROVISION OF SECTION 2(22)(E) WOULD NOT GET ATTRACTED. WHEREAS IN THE INSTANT CASE, THE SUBJECT MENTIONED RECEIPT OF RS. 2,30,00,000/- BY THE ASSESSEE CANNOT BE CATEGORIZED AS TRADE ADVANCE OR COMMERCIAL 9 ITA NO.1450/KOL/2015& C.O. NO. 128/KOL/2017 MS. MINU BUDHIA A.YR. 2008-09 9 TRANSACTION AND AS WE HAVE ALREADY OBSERVED HEREINA BOVE, THE ASSESSEE NEITHER POSSESSED THE FLAT FREE OF ANY ENCUMBRANCE OR THE T ITLE TO THE FLAT SO AS TO LEASE IT OUT, AS THE CASE MAY BE. 7.5. IN VIEW OF THE AFORESAID OBSERVATIONS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. AO HAD RIGHTLY MADE AN ADDITION T OWARDS DEEMED DIVIDEND U/S 2(22)(E) IN THE HANDS OF THE ASSESSEE IN THE SUM OF RS. 2,30 ,00,000/-. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE COURT ON 24.08.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 24.08.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-8(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA- 700069. 2. MS. MINU BUDHIA, 3C, CAMAC STREET, KOLKATA-70001 6. 3..C.I.T(A).- 4. C.I.T .- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S