Reji Abraham, CHENNAI V. DCIT Corporate Circle 1(1), CHENNAI

ITA 1132/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1024 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 03-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Deemed dividend
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1699/CHNY/2018 ( / ASSESSMENT YEAR: 2013-14) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI 34. VS M/S. ABAN VENTURES PVT. LTD., 113, JANPRIYA CREST, PANTHEON RD, EGMORE, CHENNAI 600 008. PAN: AACCA4266H ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NOS.1132 & 1133/CHNY/2018 ( / ASSESSMENT YEARS: 2013-14 & 2014-15) MR. REJI ABRAHAM, NO.113, JANAPRIYA CREST, PANTHEON ROAD, EGMORE, CHENNAI 600 008. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI 34. PAN: ADQPR6864A ( /APPELLANT) ( /RESPONDENT) /REVENUE BY : MR.AR .V. SREENIVASAN, JCIT /ASSESSEE BY : MR.S. SRIDHAR, ADVOCATE /DATE OF HEARING : 05.07.2018 /DATE OF PRONOUNCEMENT : 11.09.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL BY THE REVENUE IN THE CASE OF M/S. ABAN VENTURES PVT. LTD., IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, DA TED 2 ITA NOS. 1699, 1132 & 1133/CHNY/2018 26.02.2018 IN ITA NO.85/CIT(A)-1/2016-17 FOR THE AS SESSMENT YEAR 2013-14 PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. 2. THE TWO APPEALS OF THE ASSESSEE, MR. REJI ABRAH AM ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, BOTH DATED 26.02.2 018 IN ITA NO.84/CIT(A)-1/2016-17 & 697/CIT(A)/2016-17 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY BOTH PASSED U/ S. 250(6) R.W.S 143(3) OF THE ACT. SINCE THE ASSESSEES ARE IN TERCONNECTED ALL THE APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 3. REVENUES APPEAL IN THE CASE OF M/S. ABAN VENTURES PVT. LTD., FOR THE ASSESSMENT YEAR 2013-14:- THE LONE ISSUE RAISED BY THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE LD.AO TO WARDS DEEMED DIVIDEND AMOUNTING TO RS.1.40 CRORES INVOKING THE P ROVISIONS OF SECTION 2(22)(E) OF THE ACT. 4. ASSESSEES APPEAL IN THE CASE OF MR. REJI ABRAHAM F OR THE ASSESSMENT YEAR 2013-14: THE LONE ISSUE RAISED BY THE ASSESSEE IN HIS APPEA L IS THAT THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ORDER OF THE LD.AO WHO HAD 3 ITA NOS. 1699, 1132 & 1133/CHNY/2018 MADE ADDITIONS TOWARDS DEEMED DIVIDEND RS.1.40 CROR ES INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 5. ASSESSEES APPEAL IN THE CASE OF MR. REJI ABRAHAM F OR THE ASSESSMENT YEAR 2014-15: THE LONE ISSUE RAISED BY THE ASSESSEE IN HIS APPEA L IS THAT THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ORDER OF THE LD.AO WHO HAD MADE ADDITION TOWARDS CASH CREDIT RS.10,91,34,125/- INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT WITH RESPECT TO THE SUM FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE A GAINST WHICH NO SATISFACTORY EXPLANATION WAS OFFERED. 6. REVENUES APPEAL, ASSESSMENT YEAR 2013-14:- THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF SERVICIN G AND REPAIRING RIGS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 18.09.2013 ADMITTING TOTAL INCOME OF RS.31,83,01,09 0/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND THEREAFT ER ASSESSMENT WAS COMPLETED VIDE ORDER DATED 29.02.2016, WHEREIN THE LD.AO INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, MADE ADDITION OF RS.1.40 CRORES IN THE HANDS OF THE ASSE SSEE. 4 ITA NOS. 1699, 1132 & 1133/CHNY/2018 6.1 DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEE DINGS IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE COMPANY HAD RECEIVED LOANS FROM RELATED COMPANIES DETAILED AS F OLLOWS:- (I) M/S. GINGER ESTATE DEVELOPERS PVT. LTD., - RS.4 0 LAKHS (II) M/S. TUTICORIN POWER COMPANY LTD., - RS .1.40 CRORES. IT WAS FURTHER REVEALED THAT M/S. GINGER ESTATE DEV ELOPERS PVT. LTD., DID NOT HAVE ANY RESERVES AS ON THE DATE OF RECEIPT OF LOAN OF RS.40 LAKHS BY THE ASSESSEE FROM M/S. GINGE R ESTATE DEVELOPERS PVT. LTD. HOWEVER M/S. TUTICORIN POWER C OMPANY LTD., HAD CAPITAL RESERVES OF RS.1,59,00,000/- RESU LTING FROM THE SALE OF LAND POSSESSED BY THE COMPANY AS ON THE DAT E OF RECEIPT OF LOAN OF RS.1.40 CRORES BY THE ASSESSEE FROM M/S. TUTICORIN POWER COMPANY LTD. FURTHER IT WAS ALSO REVEALED THA T MR. REJI ABRAHAM HAD 97% SHAREHOLDING IN THE ASSESSEE COMPAN Y AND 32% OF SHARES IN M/S. TUTICORIN POWER COMPANY LTD. ON QUERY, AS TO WHY THE PROVISIONS OF SECTION 2(22)(E) OF THE AC T BE INVOKED IN THE CASE OF THE ASSESSEE COMPANY, THE ASSESSEE CAME OUT WITH THE SUBMISSION THAT M/S. TUTICORIN POWER COMPANY LT D., DID NOT HAVE RESERVES FOR DISTRIBUTION OF PROFIT AND THAT T HE AVAILABLE RESERVES WAS CAPITAL RESERVES ARISING OUT OF SALE O F THE LAND POSSESSED BY THE ASSESSEE. IT WAS THEREFORE STATED THAT THE 5 ITA NOS. 1699, 1132 & 1133/CHNY/2018 PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE COMPANY. HOWEVER THE LD.AO REJ ECTED THE SUBMISSION OF THE ASSESSEE AND WAS OF THE VIEW THAT THE ASSESSEE HAD ASSIGNED DIFFERENT NOMENCLATURE AS CAP ITAL RESERVE IN ORDER TO ESCAPE FROM THE AMBIT OF SECTION 2(22)( E) OF THE ACT, WHICH IS NOT PERMISSIBLE. FURTHER RELYING ON THE FI NANCE MINISTERS SPEECH, THE PROVISIONS OF THE ACT AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NATIONAL TR AVEL SERVICES REPORTED IN 347 ITR 305, THE LD.AO INVOKED THE PROV ISIONS OF SECTION 2(22)(E) OF THE ACT AND MADE ADDITION OF RS .1.40 CRORES IN THE HANDS OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) RELYING IN THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E CIT VS. ANKITECH PVT. LTD., & OTHERS WHICH WAS FURTHER UPHE LD BY THE HONBLE SUPREME COURT IN THE CASE OF MADHUR HOUSING & DEVELOPMENT COMPANY (CIVIL APPEAL NO.3961 OF 2013 D ATED 05.10.2017) DELETED THE ADDITION MADE BY THE LD.AO BECAUSE THE ASSESSEE COMPANY DID NOT HOLD SHARES OF M/S. TUTICO RIN POWER COMPANY LTD., AND THEREFORE NO DIVIDEND WOULD HAVE BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. 6.2 SINCE THE LD.CIT(A) HAD ONLY FOLLOWED THE RATIO LAID DOWN IN DECISION OF HONBLE DELHI HIGH COURT AND HONBLE A PEX COURT 6 ITA NOS. 1699, 1132 & 1133/CHNY/2018 CITED SUPRA WHILE DECIDING THE CASE OF THE ASSESSEE WHEREIN THE FACTS ARE IDENTICAL WE DO NOT FIND IT NECESSARY TO INTERFERE IN HIS ORDER. HENCE APPEAL OF THE REVENUE IS DEVOID OF MER ITS. 7. ASSESSEES APPEAL THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN BUSINESS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 ON 30.07.2013 & 30.01.2015 ADMITTING INCOME OF RS.1,20,09,730/- AND RS.4,50,08,115/- RES PECTIVELY. THEREAFTER FOR BOTH THE ASSESSMENT YEARS, THE CASE WAS TAKEN UP FOR SCRUTINY THROUGH CASS AND FINALLY ASSESSMENT WA S COMPLETED ON 29.02.2016 & 28.12.2016 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY. 8. ASSESSEES APPEAL, ASSESSMENT YEAR 2013-14: THE FACTS OF THE CASE WITH RESPECT TO DEEMED DIVIDE ND U/S.2(22)(E) OF THE ACT IS VIVIDLY BROUGHT OUT IN T HE REVENUES APPEAL HEREIN ABOVE. THEREFORE IN ORDER TO AVOID DU PLICITY, WE RESTRAIN FROM REITERATING THE FACTS ONCE AGAIN. 8.1 IN THE CASE OF THE ASSESSEE, WITHOUT PREJUDICE TO THE ASSESSMENT IN THE CASE OF M/S. ABAN VENTURES PVT. L TD., DISCUSSED 7 ITA NOS. 1699, 1132 & 1133/CHNY/2018 HEREIN ABOVE, THE LD.AO HAD MADE ADDITION OF RS.1.4 0 CRORES INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IN THE CASE OF THE ASSESSEE BY RELYING IN THE DECISION OF THE HON BLE APEX COURT IN THE CASE CIT VS. MUKUNDRAY K.SHAH REPORTED IN 29 0 ITR 433 AND THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CIT VS. L. ALAGU SUNDARAM CHETTIYAR REPORTED I N 109 ITR 508. WHILE DOING SO, THE LD.AO WAS OF THE VIEW THAT M/S. ABAN VENTURES LTD., WAS USED AS A CONDUIT COMPANY TO TRA NSFER FUNDS FROM M/S. TUTICORIN POWER COMPANY LTD., TO MR. REJI ABRAHAM. WHEN THE MATTER CROPPED UP BEFORE THE LD.CIT(A), TH E ASSESSEE REITERATED HIS SUBMISSION BEFORE THE LD.A.O THAT M/ S. TUTICORIN POWER COMPANY LTD., ONLY HAD CAPITAL RESERVES WHICH CANNOT BE DISTRIBUTED AS DIVIDEND AND THEREFORE PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE INVOKED. HOWEVER THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS FOLLOWS: THE APPELLANTS CONTENTION IS CONSIDERED. THE POSI TION OF LAW IS FAIRLY CLEAR THAT EVEN CAPITAL GAINS EARNED BY THE COMPANY FORMS PART OF ITS ACCUMULATED PROFITS. THE ONLY APPRECIATION IN THE CAPITAL VALUE OF AN ASSET WHICH IS NOT TAKEN INTO ACCOUNT IS A CAPITAL GAIN THAT IS NOT LI ABLE TO TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT. IN THE PRESENT CA SE, THE PROFIT ON SALE OF LAND REFERRED TO BY THE APPELLANT IS UNDOUBTEDLY LI ABLE TO TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT WHICH IS ALSO EVID ENT FROM THE OPINION PLACED ON RECORD BY THE APPELLANT IN THE COURSE OF APPEAL PROCEEDINGS. THEREFORE, IT IS HELD THAT THE ACCUMULATED PROFITS OF A COMPANY FOR THE PURPOSE OF DETERMINING THE EXISTENCE OF DEEMED DIVI DEND WILL INCLUDE ANY PROFIT ON SALE OF LAND SO LONG AS THE SAME IS CHARG EABLE TO TAX UNDER THE PROVISIONS OF INCOME TAX ACT. 8 ITA NOS. 1699, 1132 & 1133/CHNY/2018 8.2 BEFORE US ALSO THE LD.AR REITERATED THE SUBMISS ION MADE BEFORE THE LD.REVENUE AUTHORITIES AND FURTHER PLEAD ED BY STATING THAT THE AMOUNT ADVANCED BY M/S. TUTICORIN POWER CO MPANY LTD., TO M/S. ABEN VENTURES PVT. LTD., WAS ARISING OUT OF COMMERCIAL EXIGENCIES AND NOT A LOAN. THEREFORE THE PROVISIONS OF SECTION 2(22)(E) CANNOT BE INVOKED. THE LD.AR ALSO TOOK THE PLEA THAT THE ACCUMULATED PROFIT OF M/S. TUTICORIN POWER COMPANY WAS ARISING OUT OF SALE OF ITS LAND AND THEREFORE IT IS A CAPIT AL RESERVE WHICH CANNOT BE DISTRIBUTED AS DIVIDEND. IT WAS THEREFORE PLEADED THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE INVOKED. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES. 8.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. AS OBSERVED BY THE LD.AO, THE DECISION OF THE HONBLE APEX COURT IN THE CASE CIT VS. MUKUNDRA Y K.SHAH CITED SUPRA IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE, WHEREIN THE HONBLE APEX COURT HAS HELD AS FOLLOWS: HELD, REVERSING THE DECISION OF THE HIGH COURT AND AFFIRMING THAT OF THE APPELLATE TRIBUNAL, (I) THAT THE DEPARTMENT WAS RIGHT IN INVO KING THE PROVISIONS OF CHAPTER XIV-B OF THE INCOME-TAX ACT, 1961. THE ASSESSMENT O RDER ORIGINATED ON ACCOUNT OF A SEARCH CONDUCTED UNDER SECTION 132(1), IN WHICH THE DIARY WAS IDENTIFIED. THE DIARY MADE THE ASSESSING OFFICER HOLD AN ENQUIRY AND IN T HE ENQUIRY THE CASH FLOW STATEMENT EMERGED AND RESULTED IN THE DETECTION OF UNDISCLOSED INCOME OF RS. 5.99 CRORES. UNDISCLOSED INCOME IN THE NATURE OF DEEMED DIVIDEND DID NOT ARISE FROM ANY SCRUTINY PROCEEDINGS, TAX EVASION PETITIONS, SURVEY S, INFORMATION RECEIVED FROM 9 ITA NOS. 1699, 1132 & 1133/CHNY/2018 EXTERNAL AGENCY, ETC. THE UNDISCLOSED INCOME WAS DE TECTED BY THE ASSESSING OFFICER WHOLLY AND EXCLUSIVELY AS A RESULT OF A SEARCH AND, THEREFORE, THE ASSESSMENT ORDER WAS RIGHTLY PASSED UNDER SECTION 158BC . (II) THAT, ON THE FACTS, THE PAYMENTS HAD DIRECT RE LATION WITH RS. 5.99 CRORES PAID BY MKSEPL TO MKF AND MKI AND PAYMENTS BY THE TWO FIRMS TO THE ASSESSEE WHO USED THE MONEY TO BUY RBI RELIEF BONDS. THE PAYMENTS MAD E BY THE COMPANY THROUGH THE TWO FIRMS WERE FOR THE BENEFIT OF THE ASSESSEE. THE REFORE, THE FUNDS WERE NOT REPAYMENT OF LOANS, THEY WERE FOR THE PURCHASE OF B ONDS BY THE ASSESSEE. (III) THAT, ON THE MERGER OF SCPL WITH MKSEPL IN 19 98, THE ACCOUNTS OF THE TWO COMPANIES HAD MERGED AND, THEREFORE, THE RESERVES H AD TO BE TAKEN ON THE BASIS OF THE MERGED ACCOUNT. (IV) THAT THE QUESTION WHETHER THE PAYMENTS MADE BY THE COMPANY WERE FOR THE BENEFIT OF THE ASSESSEE (SHAREHOLDER) WAS A QUESTIO N OF FACT. THE TRIBUNAL HAD CONCLUDED THAT THE PAYMENTS ROUTED THROUGH MKF AND MKI WERE FOR THE BENEFIT OF THE ASSESSEE. THAT WAS A FINDING OF FACT ; IT WAS N OT PERVERSE. (V) THAT THE CONCEPT OF DEEMED DIVIDEND UNDER SECTI ON 2(22)(E) POSTULATED TWO FACTORS : WHETHER THE PAYMENT WAS A LOAN AND WHETHE R ON THE DATE OF PAYMENT THERE EXISTED ACCUMULATED PROFITS. THESE TWO FACTORS HAD TO BE CORRELATED AND THIS CORRELATION HAD BEEN DONE BY THE APPELLATE TRIBUNAL COUPLED WITH THE FACT THAT ALL WITHDRAWALS WERE DEBITED IN THE CAPITAL ACCOUNT OF THE FIRM LEADING TO THE DEBIT BALANCE OF RS. 8.18 CRORES. (VI) THAT, THEREFORE, THE HIGH COURT OUGHT NOT TO H AVE DISTURBED THE FINDING OF FACT ARRIVED AT BY THE APPELLATE TRIBUNAL. COMPANIES HAVING ACCUMULATED PROFITS AND COMPANIES IN WHICH SUBSTANTIAL VOTING POWER LIES IN THE HANDS OF A PERSON OTHER THAN PUBL IC (OR CONTROLLED) COMPANIES ARE REQUIRED TO DISTRIBUTE ACCUMULATED PROFITS AS DIVID ENDS TO THE SHAREHOLDERS. IN SUCH COMPANIES, THE CONTROLLING GROUP CAN DO WHAT IT LIK ES WITH THE MANAGEMENT OF THE COMPANY, ITS AFFAIRS AND ITS PROFITS. IT IS FOR THI S GROUP TO DECIDE WHETHER THE PROFITS SHOULD BE DISTRIBUTED OR NOT. THE DECLARATION OF DI VIDENDS IS ENTIRELY WITHIN THE DISCRETION OF THIS GROUP. THEREFORE, THE LEGISLATUR E REALISED THAT THOUGH FUNDS WERE AVAILABLE WITH THE COMPANY IN THE FORM OF PROFITS, THE CONTROLLING GROUP REFUSED TO DISTRIBUTE ACCUMULATED PRO-FITS AS DIVIDENDS TO THE SHAREHOLDERS BUT ADOPTED THE DEVICE OF ADVANCING THE SAID PROFITS BY WAY OF LOAN TO ONE OF ITS SHAREHOLDERS TO AVOID PAYMENT OF TAX ON ACCUMULATED PROFITS. THIS W AS THE MAIN REASON FOR ENACTING SECTION 2(22)(E) . FURTHER THE PLEA OF THE LD.AR THAT M/S. TUTIC ORIN POWER COMPANY LTD., HAS ONLY CAPITAL RESERVE AND THEREFOR E PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE INVOKED IS ER RONEOUS. THE 10 ITA NOS. 1699, 1132 & 1133/CHNY/2018 HONBLE APEX COURT IN THE CASE CIT VS. URMILA RAMES H REPORTED IN 230 ITR 422, THE HONBLE APEX COURT HELD AS FOLLOWS : SECTION 2(22) HAS USED THE EXPRESSION ACCUMULATED PROFITS WHETHER CAPITALIZED OR NOT. THIS EXPRESSION TENDS TO SHOW T HAT UNDER SECTION 2(22) IT IS ONLY THE DISTRIBUTION OF THE ACCUMULATED PROFITS WH ICH ARE DEEMED TO BE DIVIDENDS IN THE HANDS OF THE SHAREHOLDERS. BY USIN G THE EXPRESSION WHETHER CAPITALIZED OR NOT THE LEGISLATIVE INTENT CLEARLY IS THAT THE PROFITS WHICH ARE DEEMED TO BE DIVIDEND WOULD BE THOSE WHICH WERE CAP ABLE OF BEING ACCUMULATED AND WHICH WOULD ALSO BE CAPABLE OF BEIN G CAPITALIZED. THE AMOUNT SHOULD, IN OTHER WORDS, BE IN THE NATURE OF PROFITS WHICH THE COMPANY COULD HAVE DISTRIBUTED TO ITS SHAREHOLDERS. THIS WO ULD CLEARLY EXCLUDE RETURN OF PART OF A CAPITAL TO THE COMPANY AS THE SAME CAN NOT BE REGARDED AS PROFIT CAPABLE OF BEING CAPITALIZED, THE RETURN BEING OF C APITAL ITSELF. PROFITS MEAN ONLY COMMERCIAL PROFIT. (SOURCE - TAXMANNS DIRECT TAX MANU AL 43 RD EDITION VOL.3) FROM THE ABOVE, IT IS ABUNDANTLY CLEAR THAT EVEN IF THE COMPANY ADVANCING LOAN HAS CAPITAL RESERVE, PROVISIONS OF S ECTION 2(22)(E) OF THE ACT, CAN BE INVOKED. MOREOVER THE LD.AR HAS NOT BROUGHT OUT ANY CONVINCING MATERIALS / EXPLANATION BEFORE U S TO ESTABLISH THAT THE ADVANCE MADE BY M/S. TUTICORIN POWER COMPA NY LTD. TO M/S. ABEN VENTURES PVT. LTD. WAS OUT OF COMMERCIAL EXIGENCIES. IN THIS SITUATION WE DO NOT FIND IT NECESSARY TO INTER FERE IN THE ORDERS OF THE LD.REVENUE AUTHORITIES. HENCE THE APPEAL OF THE ASSESSEE IS DEVOID OF MERITS AND THE ORDER OF THE LD.AO IS HERE BY CONFIRMED ON THIS ISSUE. 11 ITA NOS. 1699, 1132 & 1133/CHNY/2018 9. ASSESSEES APPEAL, ASSESSMENT YEAR 2014-15: THE ASSESSEE HAD RECEIVED RS.11,65,43,082/- DURING THE RELEVANT ASSESSMENT YEAR WHICH WAS EXPLAINED TO BE RECEIVED ON BEHALF OF THE ERSTWHILE SHAREHOLDERS OF M/S. ABEN C ONSTRUCTION COMPANY LTD., WHICH WAS THEIR SHARE OF COMPENSATION FROM THE JOINT VENTURE. THE DETAILS OF THE TRANSACTION NARRA TED BEFORE THE LD.AO IS EXTRACTED HEREIN BELOW FOR REFERENCE:- 'M/S. ABAN CONSTRUCTIONS A PARTNERSHIP FIRM ENTERED INTO A JV AGREEMENT WITH M/S.KOYA& CO. A PARTNERSHIP FIRM AND MIS. THAH IR ALI AND THE AGREEMENT 'WAS REGISTERED AS DOC.NO.2875 OF 1994 FO R THE PURPOSE OF TENDERING FOR THE WORK OF NARMADA PIPE LINE PROJECT WITH GUJARAT STATE CONSTRUCTION COMPANY LTD.. THE JOINT VENTURE WAS SU CCESSFUL IN GETTING TENDER OF PROJECT NO.4 & 5 OF GUJARAT STATE CONSTRU CTION CO. LTD. THE 'WORK ORDER FOR PROJECT WAS ISSUED ON 13/02/1995 BUT THE CONSTRUCTION WAS SUSPENDED ON 2810411995 AND THE TENDER WAS TERMINAT ED ON 31/07/1995. THE PROJECT DID NOT MATERIALIZE AND GUJARAT WATER SUPPL Y AND SEWERAGE BOARD WAS ENTRUSTED WITH TASK OF COMPLETING THE SAID PROJ ECT. THE SAID ____________ ON 27/04/1998, THE JOINT VENTURE WAS INFORMED THAT CWSSB WAS CONTEMPLATING CHANGES IN THE PIPE LINE ALIGNMENT. T HEREFORE THE JOINT VENTURE COULD NOT PROCEED WITH WORK. AGAIN BOARD ABANDONED THE PROJECT AND THE JOINT VENTURE PARTNERS APPROACHED THE GUJARAT HIGH COURT FOR COMPENSATION AND DAMAGES. THE FOLLOWING ARBITRATORS WERE APPOINT ED THE GUJARAT BOARD, HOWEVER DID NOT ACCEPT THE AWARD OF THE ARBITRATORS . A) MR.B.J.DIWAN B) MR.P.H.CHAUHAN C) MR.A. T.DOSHI 2. AFTER A PROLONGED LEGAL BATTLE THE JOINT 'VENTUR E AGREED TO RECEIVE FROM THE BOARD RS.37,67,62,404/- BY SETTLING THE DISPUTE OUT OF THE COURT. THE GUJARAT GWSSB RELEASED RS.37,67,62,404/- IN FULL AND FINAL SETTLEMENT OF THE DISPUTE. AN AMOUNT OF RS.3,76,76,240/- WAS DEDUCTED AS TDS F OR THE ABOVE PAYMENT. THE AMOUNT WAS CREDITED IN THE SOUTH INDIAN BANK, H YDERABAD. OUT OF THE SAID AMOUNT RS.11,65,43,082/- WAS RECEIVED BY MR. R EJI ABRAHAM ON BEHALF OF M/S.ABAN CONSTRUCTION. THE PARTNERSHIP FIRM OF M RS.ABAN CONSTRUCTION WAS CONVERTED INTO PRIVATE LIMITED CO. ON 18/04/200 1 UNDER CHAPTER IX OF 12 ITA NOS. 1699, 1132 & 1133/CHNY/2018 THE COMPANIES ACT AND ALL THE ASSETS AND LIABILITIE S OF THE PARTNERSHIP FIRM WAS TAKEN OVER BY THE PVT. LTD. CO. THE RIGHT TO CL AIM DAMAGES IS ONE OF THE ASSETS TAKEN OVER BY M/S.ABAN CONSTRUCTIONS (P) LTD . AT THE TIME OF THE SALE OF SHARES OF M/S.ABAN CONSTRICTIONS (P) LTD., BY TH E SHARE HOLDERS TO M/S.KIRLOSKAR BROTHERS LTD., BY A SHARE PURCHASER A GREEMENT DATED 2910912006 THE RIGHT TO CLAIM DAMAGED FROM GUJARAT GWSSB WAS RETAINED BY THE SELLING SHARE HOLDERS, ITEM NO.15 UNDER THE HEAD A TL LTD. IN SCHEDULE 1 AS PER CLAUSE 9 C OF THE AGREEMENT AND MR.REJI ABRAHAM HAS RECEIVED THE RS.11,65,43,082/- AS REPRESENTATIVE OF AOP WHICH CONSISTS OF SELLING SHARE HOLDERS. HENCE, THIS AMOUNT HAS NOT SHOWN IN HIS MEMO OF INCOME. ALL OTHER ITEMS IN FOR M 26AS HAS BEEN SHOWN AS INCOME. M/S.KOYA & COMPANY CONSTRUCTION LIMITED HAS SHOWN R S.2,94,92,314/- AS THE AMOUNT PAID AS CONTRACT TO THE ASSESSE AND THEY HAVE DEDUCTED RS. 74,08,957/- AS TDS. THE SAID COMPANY HAS NOT PAID A NY AMOUNT AS CONTRACT TO THE ASSESSE HENCE THE ASSESSE HAS NOT INCORPORATED THE SAID RECEIPT IN HAS ACCOUNT HOWEVER SINCE TDS HAS BEEN SHOWN AS CREDIT IN THE ASSESSEE ACCOUNT THE SAID AMOUNT RS.74,08,957/- HAS SHOWN AS HIS INC OME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND THE ASSESSEE HAS TA KEN CREDIT FOR THE TDS PAID IN HIS INCOME TAX MEMO. THERE IS NO CONTRACT BETWEEN M/S. KOYA& CO. AND MR. REJI ABRAHAM AND THE ASSESSEE WAS SURPRISED TO SEE THE ENTRY IN 26AS IN HIS NAME FROM M/S.KOYA& CO. AND PROTESTED TO M/S.KOYA& CO., AND THEY HAVE N OT DONE ANYTHING TILL NOW TO REMOVE THE ENTRY. THE ASSESSEE PROTESTED AND INFORMED M/S.KOYAS & CO. THAT THERE IS NO AGREEMENT FOR DOING ANY CONTRA CT FOR M/S.KOYA& CO. AND THE ASSESEE HAS NOT EXECUTED ANY WORK O~ELJ.C;J1.OF THE M/S.KOYA& CO. THE AMOUNT OF RS.33,90,86,164/- HAS BEEN RECEIVED BY M/ S.KOYAABAN, JOINT VENTURE. AND OUT OF THIS, RS.11,65,43,082/- HAS BEE N RECEIVED BY THE ASSESSEE AS THE REPRESENTATIVE OF SELLING SHARE HOLDERS OF M /S.ABAN CONSTRUCTION (P) LTD. THE M/S.ABANKOYA, J. V. HAS DEPOSITED THE WHOL E AMOUNT IN THE SOUTH INDIAN BANK, HYDERABAD BRANCH AS A/C. NO.0128030000 01873. COPY OF THE CHEQUE RECEIVED BY THE ASEESSEE IS ENCLOSED HEREWIT H. IT IS THE DUTY OF THE JOINT VENTURE TO FILE THE RETURN. THE GUJARAT BOARD HAS ALREADY DEDUCTED TDS AMOUNTING TO RS.3,76,76,240/-. SINCE THE SUBMISSION OF THE ASSESSEE WAS NOT BACKE D WITH ANY CONCRETE EVIDENCE, THE LD.AO ADDED AN AMOUNT OF RS.10,91,34,125/- (RS.11,65,43,082/- LESS INCOME OF FERED 13 ITA NOS. 1699, 1132 & 1133/CHNY/2018 RS.74,08,957/-) AS THE INCOME OF THE ASSESSEE BY IN VOKING THE PROVISIONS OF SECTION 68 OF THE ACT. 9.1 ON APPEAL, THE LD.CIT(A) ALSO CONFIRMED THE ORD ER OF THE LD.AO BECAUSE EVEN BEFORE HER, THE ASSESSEE HAD NOT EXPLAINED THE TRANSACTION WITH SUFFICIENT EVIDENCE. 9.2 EVEN BEFORE US, THE ASSESSEE HAS NOT FURNISHED ANY MATERIALS TO SUBSTANTIATE HIS CLAIM. THEREFORE WE D O NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LD.REVEN UE AUTHORITIES. HENCE THE APPEAL OF THE ASSESSEE IS DEVOID OF MERIT S. 10. IN THE RESULT THE APPEAL OF THE REVENUE AND THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 11 TH SEPTEMBER, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED 11 TH SEPTEMBER, 2018 14 ITA NOS. 1699, 1132 & 1133/CHNY/2018 RSR & () *) /COPY TO: 1. / ASSESSEE 2. /0 /REVENUE 3. 1 ( )/CIT(A) 4. /CIT 5. /DR 6. /GF