The ACIT, Circle-1(2), Baroda V. Shri Rakesh S. Agrawal, Baroda

ITA 1432/AHD/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1900 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-09-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 23-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: SUNIL TALATI AR
• Keywords: Gift; Capital receipt; Condonation of delay; Reason to believe; Reassessment proceedings
• Section: 234B; 143(1); 195; 147; 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' (BEFORE S/SHRI MAHAVIR SINGH,JM AND A N PAHUJA,AM) ITA NO.1432/AHD/2008 WITH C O NO.118/AHD/2008 (ASSESSMENT YEAR: 2000-01) THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-1(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S SHRI RAKESH S AGRAWAL, 61- ALKAPURI, R C DUTT ROAD, BARODA [PAN: AAQPA 3487 P] (APPELLANT) (RESPONDENT) ITA NO.2420/AHD/2008 (ASSESSMENT YEAR: 2000-01) SHRI RAKESH S AGRAWAL, 61- ALKAPURI, R C DUTT ROAD, BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-1(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA (APPELLANT) (RESPONDENT) REVENUE BY :- SHRI C K MISHRA, DR ASSESSEE BY:- SHRI SUNIL TALATI,AR O R D E R A N PAHUJA : THESE CROSS APPEALS AND CROSS OBJECTION FILED AGA INST AN ORDER DATED 28-01-2008 OF THE LEARNED COMMISSION ER OF INCOME- TAX (APPEALS)-V, BARODA, RAISE THE FOLLOWING GROUND S: ITA NO.1432/AHD/2008[REVENUE] 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AN IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.15,77,8 58/- ON ACCOUNT OF FAIR RENTAL VALUE OF THE PROPERTY AT 6, JANTAR M ANTAR ROAD, NEW DELHI. 1(B) THE LD. CIT(A) FAILED TO APPRECIATE THAT AS PE R THE AGREEMENT DATED 11-08-1999 PLACED ON RECORD, THE NAME OF THE PURCHA SER APPEARING IN THE DOCUMENTS IS THAT OF THE ASSESSEE SHRI RAKES H S AGRAWAL. NOWHERE THE AGREEMENT REFERS TO THE HUF OF SHRI R S AGRAWAL AS THE OWNER OF THE PROPERTY AND NOWHERE THE AGREEMENT REGISTERS THAT ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 2 SHRI RAKESH AGRAWAL HAS ACTED ON BEHALF OF THE HUF AS ITS KARTA FOR PURCHASING THE PROPERTY IN THE NAME OF HUF. 1(C) THE LD. CIT(A) FURTHER FAILED TO APPRECIATE TH AT AS PER PROVISIONS OF SECTION 27(IIIA), EVEN A PERSON WHO IS ALLOWED TO T AKE OR RETAIN POSSESSION OF ANY BUILDING OR PART THEREOF IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), SHALL BE DEEMED TO BE THE OWNER OF THAT BUILDING OR PART THEREOF. WHEREAS, IN THE INST ANT CASE THE PROPERTY IS REGISTERED IN THE NAME OF THE ASSESSEE AND THE ASSESSEE IS THE EFFECTIVE OWNER OF THE PROPERTY AT 6, JANTAR MANTAR ROAD, NEW DELHI . 2. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY . C O NO.118/AHD/2008 & ITA NO.2420/AHD/2008[ASSESSEE ] 1 THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING RE-OPENING THE ASSESSMENT INVOKING PROVI SIONS OF SECTION 147 OF THE I.T. ACT. IT IS SUBMITTED THAT PROVISION S OF SECTION 147 ARE NOT APPLICABLE. IT BE HELD SO NOW AND ORDER PASSED BE C ANCELLED. 2 THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING TAXING GIFT RECEIVED OF RS.50,00,000/- F ROM GEETGANGA LEASING & FINANCE PVT. LTD. TREATING THE SAME AS IN COME OF ASSESSEE BY WRONGLY INVOKING THE PROVISIONS OF SECTION 28(IV ) OF THE ACT. IT IS SUBMITTED THAT AMOUNT OF RS.50,00,000/- BEING GIFT IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE. IT BE HELD SO NOW AND AD DITION MADE BE DELETED NOW. 3 THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B / 234D OF THE ACT. THE LEVY OF INTEREST BE HELD AS INCORRECT AND SAME BE DELETED N OW. 4 THE ORDER PASSED BY THE HONBLE COMMISSIONER OF I NCOME-TAX (APPEALS) IS BAD IN LAW, CONTRARY TO LEGAL PRONOUNC EMENTS TO THE EXTENT HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. T HE ADDITIONS / DISALLOWANCES CONFIRMED BY HIM ARE UNWARRANTED AND SAME BE DELETED NOW. 5 THE ASSESSEE CRAVES LEAVE TO ADD ,ALTER AND/OR TO AMEND ALL OR ANY OF GROUNDS BEFORE THE FINAL HEARING. ITA NO.2420/AHD/2008[ASSESSEE] 2. AT THE OUTSET, THE LD. AR ON BEHALF OF THE AS SESSEE POINTED OUT THAT THE APPEAL FILED BY THE ASSESSEE IS DELAYED B Y 62 DAYS. WE ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 3 FIND THAT THE ASSESSEE DID NOT FILE ANY APPLICATIO N FOR CONDONATION OF DELAY, DULY SIGNED BY HIM. INSTEAD, SHRI S.R.PARIK H, PARTNER OF M/S TALATI & TALATI IN THEIR LETTER DATED 23.6.2008 POI NTED OUT THAT ASSESSEE HAD DECIDED TO FILE APPEAL AND ACCORDINGLY PAID REQUISITE FEES OF RS. 10,000 ON 28.2.2008.IT WAS FURTHER MENT IONED THAT THE ASSESSEE HANDED OVER THE RELEVANT PAPERS INCLUDING FORM 36 TO SOMEBODY IN TALATI & TALATI EITHER IN PERSON OR THR OUGH COURIER . SHRI S.R.PARIKH ADMITTED THAT THE RELEVANT PROOF OF HAND ING OVER THE PAPERS IS NOT AVAILABLE. IN THESE CIRCUMSTANCES, IT WAS FURTHER MENTIONED THAT APPEAL COULD NOT BE FILED FOR NO FAU LT OF HE ASSESSEE. AS SOON AS APPEAL MEMO FILED BY THE DEPARTMENT WAS RECEIVED, IT WAS REALIZED BY THE PARTNER OF TALATI & TALATI,CAS THAT FORM NO. 36 HAD NOT BEEN FILED. THEREFORE, LOSS OF PAPERS IN TH E OFFICE OF TALATI & TALATI EITHER AT BARODA OR AT AHMEDABAD IS REASONAB LE AND GENUINE AND IT WAS SUBMITTED THAT DELAY OF ABOUT TWO MONTH S IN FILING THE APPEAL MAY BE CONDONED. 2.1 TO A QUERY BY THE BENCH, THE LD. AR CONCED ED THAT THEY HAVE NOTHING TO SUPPORT THE SUBMISSIONS IN THE AFORESAID APPLICATION DATED 23.6.2008 NOR THERE IS ANY EVIDENCE OF HANDIN G OVER OF PAPERS IN THE OFFICE OF TALATI & TALATI,CAS. HE ADDED THAT SINCE THE ISSUE RAISED IN THIS APPEAL HAVE ALSO BEEN RAISED IN CO N O.118/AHD/2008 ARISING OUT OF THE REVENUES APPEAL IN ITA NO.1432/ AHD/2008, EVEN IF THIS APPEAL IS DISMISSED AS BARRED BY LIMITATION , THE ASSESSEE WILL HAVE NO GRIEVANCE. ON THE OTHER HAND, LD. DR VEHEMENTLY OPPOSED THE AFORESAID APPLICATION FOR CONDONATION OF DELAY IN FILING THE APPEAL. 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. IN THE LIGHT OF AFORESAID UNDISPUTED FACTS, ESPECI ALLY WHEN ADMITTEDLY THE ASSESSEE DID NOT HAVE ANY EVIDENCE O F SUBMITTING THE RELEVANT PAPERS IN M/S TALATI & TALATI,CAS NOR THE PARTNER OF SAID FIRM PLACED BEFORE US ANY EVIDENCE OF HANDING OVER THE RELEVANT APPEALS PAPERS T0 THEM, APPARENTLY THE ASSESSEE HAS NOT COME WITH CLEAN HANDS BEFORE US. IN THESE CIRCUMSTANCES, THE ASSESSEE HAVING ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 4 FAILED TO ESTABLISH WITH COGENT AND PROPER EVIDENCE THAT THERE EXISTED SUFFICIENT CAUSE FOR NOT PRESENTING THE A PPEAL WITHIN THE STIPULATED PERIOD WHILE THE PARTNER OF M/S TALATI & TALATI,CAS HAS NOT SUBSTANTIATED HIS STATEMENTS IN THE APPLICATION DAT ED 23.6.2008, DELAY OF 62 DAYS IN FILING THE APPEAL, CAN NOT BE CONDONED .SINCE THE ASSESSEE HAS FAILED TO MAKE OUT A CASE THAT THE RE WAS SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL, THE APPLICATI ON FOR CONDONATION OF DELAY FILED BY THE PARTNER OF THE AFORESAID CA F IRM IS, ACCORDINGLY, REJECTED. AS THE APPEAL IS BARRED BY LIMITATION, IT DESERVES TO BE REJECTED ON THIS GROUND ALONE. THEREFORE , WE DECLI NE TO ADMIT THE APPEAL FILED BY THE ASSESSEE, THERE BEING NO SUFFIC IENT CAUSE FOR DELAY IN FILING THE APPEAL. ITA NO.1432/AHD/2008[REVENUE] 4. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENU E IN THIS APPEAL RELATES TO DELETION OF THE ADDITION OF RS.15,77,858 /- ON ACCOUNT OF FAIR RENTAL VALUE[FRV] OF THE PROPERTY AT 6,JANTAR MANTAR ROAD, NEW DELHI. ON PERUSAL OF THE BANK ACCOUNT NO.01-1052 OF THE ASSESSEE WITH ICICI BANKING CORPORATION LTD., BARODA, THE AS SESSING OFFICER[AO IN SHORT]NOTICED THAT THE ASSESSEE HAD P AID MUTATION CHARGES FOR HIS FLAT AT DELHI TO THE TUNE OF RS.6,6 2,980/- TO NEW DELHI MUNICIPAL CORPORATION. ON FURTHER INQUIRY, AO FOUND THAT THE ASSESSEE HAD PURCHASED A FLAT AT JANTAR MANTAR RO AD, NEW DELHI FOR A SUM OF RS.1,32,59,615/- AND INCURRED FURTHER COST OF IMPROVEMENTS , RESULTING IN TOTAL VALUE OF THE PROP ERTY AT RS.1,57,78,578/- ACCORDING TO THE AO, THE SAID PROP ERTY, HAVING AN AREA OF 1961.33 SQ. FT. WITH A CAR PARKING SPACE AN D AN OPEN TERRACE OF AREA OF 561.97 SQ. FT., WAS BOUGHT BY THE ASSESS EE IN HIS OWN NAME FROM M/S ANSAL PROPERTIES AND INDUSTRIES LTD. NEW DELHI AS PER THE AGREEMENT DATED 11 TH AUGUST, 1999. SINCE THE ASSESSEE WAS FOUND TO BE THE OWNER OF HOUSE PROPERTY AS PER THE DEED OF PURCHASE, TO A QUERY BY THE AO, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT SINCE THE INVESTMENT WAS MADE IN THE NAME OF HUF, IT WAS NOT DECLARED IN THE RETURN OF THE ASSESSEE. HOWEVER, THE AO WAS OF THE VIEW THAT THE FUNDS FOR ACQUIRING THE P ROPERTY IN QUESTION ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 5 WERE MET FROM THE PERSONAL SOURCES OF SHRI RAKESH A GARWAL AND THEREFORE, CALCULATED RETURN @ 12.5% ON THE INVEST MENT MADE BY THE ASSESSEE AND DETERMINED THE ANNUAL LETTING VALU E OF THE PROPERTY AT RS.19,72,322/-, RESULTING IN ADDITION O F RS.15,77,858/- . 5 ON APPEAL, THE LD. CIT(A) DIRECTED THE AO TO CON SIDER THE ANNUAL LETTING OUT VALUE OF THE PROPERTY IN THE HAN DS OF THE HUF AND DELETED THE ADDITION OF RS.15,77,858/- ,HOLDING AS UNDER:- 7.1 THE LEARNED AR HAS MADE ELABORATE SUBMISSIONS IN THIS REGARD. HE HAS POINTED OUT THAT THE AO HAS DISREGAR DED A VITAL EVIDENCE I.E. THE WEALTH TAX RETURN OF THE APPELLANT WHERE I N THE AMOUNT INVESTED IN THE PROPERTY HAS BEEN SHOWN AS LOAN TO THE R S AGAR WAL HUF. THIS IS SO FOR FY 1998-99 AND 1999-2000. 7.2 I HAVE CONSIDERED THE FACTS OF THE CASE, THE A RGUMENTS OF THE AO AND THE SUBMISSIONS MADE BY THE LEARNED AR. I FI ND THAT THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED FOR THE FOLLOWIN G REASONS: THE APPELLANT HAS ADVANCED LOAN TO HIS HUF AND THE PROP ERTY IS PURCHASED BY THE HUF. THIS FACT IS APPARENT FROM THE BALANCE SHE ET OF THE APPELLANT AND ALSO FROM THE W.T. RECORDS WHERE THE AMOUNT INVESTE D APPEARS AS LOAN. THE W.T. RETURNS FOR FY 1998-99 AND FY 1999-2000 SU PPORT THIS FACT. THE AR HAS ALSO POINTED OUT THAT FOR PROPERTY TRANSACTI ONS, THE OWNERSHIP REGISTRATION IS NORMALLY DONE IN THE NAME OF THE IN DIVIDUAL AND THE STATUS OF HUF IS ONLY CONFINED TO THE I.T. PROCEEDINGS. IT HA S ALSO BEEN ARGUED THAT THE LOAN TO THE HUF HAS BEEN FULLY PAID BACK IN THE LATER YEARS. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE PROPERTY CA N ONLY BE CONSIDERED IN THE HANDS THE HUF. THE AO IS THEREFORE DIRECTED TO CONSIDER THE ANNUAL LETTING OUT VALUE OF THE PROPERTY IN THE HANDS OF T HE HUF. 7.3 AS REGARDS THE ANNUAL LETTING OUT VALUE, THE F INDING OF THE AO ALSO DOES NOT APPEAR TO BE CORRECT. THE BARE STRUCT URE OF THE PROPERTY WAS TAKEN OVER BY THE APPELLANT IN AUGUST, 1999. THE DE TAILS OF TOTAL INVESTMENTS MADE, WHICH WERE FURNISHED BEFORE THE A O INCLUDES PAYMENTS FOR MARBLE, GRANITES AND PAYMENTS TO MASON UPTO A PERIOD AS LATE AS 9 TH MARCH, 2000. THEREFORE, THE CONTENTION OF THE AR T HAT THE PROPERTY WAS NOT READY FOR LETTING OUT IS ALSO CRED IBLE. IN VIEW OF ALL THESE FACTS, AS THE PROPERTY IN QUESTION BELONGS TO THE H UF, THE ADDITION MADE BY THE AO AMOUNTING TO RS.15,77,858/- AS NOTIONAL I NCOME FROM THE SAME IS DELETED. THIS GROUND OF APPEAL IS ALLOWED . 6. THE REVENUE IS NOW IN APPEAL BEFORE US. THE LE ARNED DR SUPPORTED THE ORDER OF THE AO AND CONTENDED THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT AS PER THE AGREEMENT DATE D 11-08-1999 PLACED ON RECORD, THE NAME OF THE PURCHASER APPEARI NG IN THE ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 6 DOCUMENTS IS THAT OF THE ASSESSEE SHRI RAKESH S AGR AWAL. NOWHERE THE AGREEMENT REFERS TO THE HUF OF SHRI R S AGRAWAL AS THE OWNER OF THE PROPERTY OR THAT SHRI RAKESH AGRAWAL ACTED ON BEHALF OF THE HUF AS ITS KARTA FOR PURCHASING THE PROPERTY. ON TH E OTHER HAND, THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE CIT(A) AND CONTENDED THAT THE PROPERTY IN QUESTION IS OWNED BY RAKESH S AGRAWAL HUF AND NOT BY THE ASSESSEE INDIVI DUAL. IN SUPPORT, THE ASSESSEE SUBMITTED COPIES OF WEALTH-TA X RETURNS AND ASSESSMENT ORDERS, COPY OF AGREEMENT AND THE DETAIL S OF PAYMENTS MADE BY HUF, PLACED AT PAGES 30, 31 AND 32 OF PAPER BOOK. THE LD. AR ADDED THAT IF THE H.U.F. CAN BORROW FROM BANKS O R OTHER OUTSIDERS IT CAN EQUALLY BORROW FROM INDIVIDUAL. T HERE IS NO NECESSITY OR REQUIREMENT UNDER THE LAW TO SPECIFICA LLY MENTION IN THE DOCUMENT OF PURCHASE OR SALE THAT OWNERSHIP IS OF H .U.F. PARTICULARLY WHEN THE FUNDS ARE PROVIDED BY THE H.U .F. THE H.U.F. HAS PROVIDED THE FUNDS FOR REPAYMENT OF LOAN TO IND IVIDUAL RAKESH AGARWAL IS NOT IN DISPUTE AND IT IS THEREFORE SUBMI TTED THAT THE FINDINGS OF CIT(A) BASED ON THE INCOME TAX AND WEAL TH TAX RETURNS OF INDIVIDUAL AND HUF MUST BE ACCEPTED . 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE DOCUMENTS PLACED AT PAGES-3 AND 6 OF ASSESSEES PAPER BOOK REVEAL STATEMENT OF ASSETS & LIABILITIES OF SHRI RAKESH AGARWAL, INDIVIDUAL, AS ON 31-03-1999 AND 31-03-200 0, WHERE IN THE ASSESSEE IS STATED TO HAVE ADVANCED A SUM OF RS.1,11,58,650/- A ND RS.1,57,78,578/- TO HIS HUF FOR MAKING. PAYMENTS TO ANSAL PROPERTIES OUT O F ICICI BANK, BARODA ON FOLLOWING DATES BETWEEN MARCH, 1997 AND JULY, 1997[ PG. 30 OF THE PB]: IN MATTER OF SHRI RAKESH S AGRAWAL DETAILS OF AMOUNT. PAID FOR DELHI FLAT ON BEHALF OF R.S. AGRAWAL HUF FROM BANK A/C. NO. 000301001052 ICICI BANK, RACE COURSE, BARODA DATE PARTY NAME CHQ. NO. AMOUNT 25 MAR-97 ANSAL PROPERTIES, DELHI 045106 11,158,650 7-JUL-99 ANSAL PROPERTIES, DELHI 507763 2,277,485 26-JUL-99 ANSAL PROPERTIES, DELHI DD 400,000 26-JUL-99 ANSAL PROPERTIES, DELHI DD 65,000 16 AUG-99 ANSAL PROPERTIES, DELHI DD 662, 981 ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 7 THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL TO CONTROVERT THE FINDINGS OF FACT RECORDED BY THE LD. CIT(A) THAT THE CONCER NED AO HAS ACCEPTED THE WEALTH TAX RETURNS FOR ASSESSMENT YEARS 1999-00 AND 2000-01 OF THE ASSESSEE, INDIVIDUAL, WHEREIN LOANS ADVANCED TO HU F AND INVESTED IN THE PURCHASE OF THIS PROPERTY, HAD BEEN ACCEPTED . IT WAS ALSO NOTED BY THE LD. CIT(A) THAT THE HUF HAS FULLY REPAID THE LOAN IN S UBSEQUENT YEARS. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE REVENUE DID NOT PLACE BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIE W IN THE MATTER, WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE. THER EFORE, GROUND NOS. 1(A),(B) & (C) IN THIS APPEAL ARE DISMISSED . 8. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERM S OF RESIDUARY GROUND NO.2 IN THE APPEAL OF THE REVENUE, ACCORDING LY, THE SAID GROUND IS ALSO DISMISSED. C O NO.118/AHD/2008 [ASSESSEE]: 9. NOW ADVERTING TO GROUNDS RAISED IN THE CO, GROU ND NO.1 IN THE CO RELATING TO VALIDITY OF RE-OPENING OF THE ASSESS MENT, WAS NOT PRESSED BEFORE US BY THE LEARNED AR AT THE TIME OF HEARING. THEREFORE, THE SAID GROUND IS DISMISSED. 10 GROUND NO.2 IN THE CO RELATES TO CONFIRMATION O F THE ADDITION OF RS.50,00,000/- ON ACCOUNT OF GIFT RECEI VED FROM GEETGANGA LEASING & FINANCE PVT. LTD, INVOKING THE PROVISIONS OF SEC. 28 (IV) OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRE D TO AS THE ACT]. THE AO NOTICED THAT THAT DURING THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE WAS MANAGING DIRECTOR OF ABS INDUSTRIES LTD. BESIDES CH AIRMAN AND DIRECTOR OF GEETGANGA LEASING FINANCE PVT. LTD., A COMPANY, PRO MOTED BY THE ASSESSEE AND HIS FAMILY MEMBERS AND CARRYING ON THE BUSINESS OF INVESTMENT IN SHARES OF GROUP COMPANIES, JEWELLERY AND PAINTINGS. THE AO R EOPENED THE ASSESSMENT COMPLETED U/S 143(1) OF THE ACT AFTER RECORDING THE FOLLOWING REASONS:- THE ASSESSEE FILED RETURN INCOME DECLARING INCOME OF RS. 1233080/- ON 26-06-2000. THE RETURN WAS PROCESSED AND ACCEPTED U/S. 143(1) OF THE ACT. ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 8 DURING THE COURSE OF REASSESSMENT PROCEEDINGS IN TH E CASE OF GEETGANGA LEASING & FINANCE PVT.LTD. FOR A.Y. 2000- 2001 IT WAS NOTICED THAT THE COMPANY HAS GIVEN A GIFT OF RS 50 LACS TO ONE OF THE DIRECTORS OF THE COMPANY VIDE GIFT DEED DATED 19-1-2000. THE COMPANY HAS DEBITED EXPENSES OF RS. 50 LACS AS MISC . EXPENDITURE IN THE BALANCE SHEET. IT WAS FOUND THAT THE SAID G IFT IS GIVEN TO SHRI RAKESH S. AGARWAL WHO IS THE MANAGING DIRECTOR OF T HE COMPANY AND HAVING SUBSTANTIAL SHARE HOLDING IN THE SAID CO MPANY. IN THE RETURN OF INCOME FILED BY THE ASSESSEE ON 26 -06-2000, SHRI RAKESH AGARWAL, IN NOTE TO THE COMPUTATION MENTIONS THAT HE HAS RECEIVED THE SAID GIFT. NO DETAILS OF THE GIFT WER E FURNISHED. SINCE SHRI RAKESH AGARWAL IS THE MANAGING DIRECTOR OF GEE TGANGA LEASING & FINANCE PVT.LTD AND HAVING ABOUT 45% OF S HARE HOLDING, THE AFORESAID AMOUNT IS NOTHING BUT THE DIVIDEND WI THIN THE MEANING OF SECTION 2(22) OF THE IT ACT 1961. SINCE THE ASSESSEE HAS NOT OFFERED THE AMOUNT OF RS . 50 LACS FOR THE YEAR UNDER CONSIDERATION AS HIS INCOME, I HAVE REASON TO BELIEVE THAT INCOME OF RS.50 LACS HAS ESCAPED ASSES SMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT. 10.1 DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO SHOW CAUSED THE ASSESSEE VIDE NOTICE DATED 06-01-2006 AS TO WHY INC OME OF RS.50 LAKHS BE NOT ASSESSED IN HIS HANDS. IN RESPONSE, THE ASSESSEE ST ATED THAT IN THE CASE OF COMPANYS ASSESSMENT THE ACTION OF GIFT BY THE COMP ANY HAS BEEN ACCEPTED BY THE REVENUE AS IT IS. THE ELEVENTH ANNUAL REPORT O F THE COMPANY CLEARLY SHOWS THE GIFT GIVEN BY THE COMPANY APPEARING IN THE BAL ANCE SHEET UNDER THE HEAD MISCELLANEOUS EXPENDITURE . IT WAS STATED BEFORE THE AO THAT THIS HAS PASSED THE TEST OF VERIFICATION AND SCRUTINY BY THE REGIS TRAR OF COMPANIES AND NO QUERY OR INQUIRY HAS BEEN MADE WITH REGARD TO THE GIFT GI VEN BY THE COMPANY. HE FURTHER STATED THAT GIFT UNDER THE GIFT TAX ACT IS DEFIN ED TO BE AN AMOUNT GIVEN BY A DONOR WITHOUT CONSIDERATION TO THE DONEE AND SUCH RECEIPT IS ALWAYS A CAPITAL RECEIPT . THE ASSESSEE EXPLAINED BEFORE THE AO THAT EARLIER THE GIFT WAS TAXABLE IN THE HANDS OF THE DONOR.THEREAFTER AMENDMENT TO T AX GIFT AS INCOME IN THE HANDS OF DONEE WAS PROPOSED BUT NEVER INTRODUCED. N OW FROM THE A.Y 2005-06, SECTION 56(2)(V) OF THE ACT PROVIDES THAT ANY SUM O F MONEY EXCEEDING RS.25,000/- RECEIVED WITHOUT CONSIDERATION BY AN I NDIVIDUAL FROM ANY PERSON ON OR AFTER 01-09-2004, IS TAXABLE SUBJECT TO EXEMPTIO N PROVIDED THEREIN. THIS GIFT HAVING BEEN RECEIVED PRIOR TO 01-09-2004, IT IS NOT THE INCOME FROM OTHER ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 9 SOURCES. HOWEVER, THE AO DID NOT ACCEPT THE EXPLAN ATION OF THE ASSESSEE,OBSERVING IN PARA-8 OF HIS ORDER AS UNDER: - B. DURING THE COURSE OF REASSESSMENT PROCEEDINGS SPECI FIC INQUIRY WAS MADE WITH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, IF THERE WAS A SPECIAL REASON FOR WHICH T HE SAID COMPANY DECIDED TO GIFT A SUM OF RS. 50 LACS TO ITS CHAIRMA N AND DIRECTOR. IT WAS STATED IN THIS REGARD THAT IT WAS DECIDED BY TH E BOARD OF DIRECTORS OF THE SAID COMPANY TO FELICITATE ITS CHA IRMAN SHRI RAKESH AGARWAL WITH A GRATUITOUS ENDOWMENT OUT OF COMPANY S RESOURCES RESULTING IN THE GIFT OF RS. 50 LACS. IT IS EVIDEN T THROUGH CIRCUMSTANTIAL EVIDENT THROUGH CIRCUMSTANTIAL EVIDE NCES THAT THE REINS OF THE COMPANYS AFFAIRS HAVE BEEN YOKED UNDE R THE SUPERVISION AND CONTROL OF THE ASSESSEE. ALL MAJOR DECISION FOR HOLDING FINANCIAL RESOURCES OF GEETGANGA LEASING AN D FINANCE PVT. LTD. FOR ACTIVE PARTICIPATION IN THE FINANCIAL AND SECURITIES MARKETS HAVE BEEN APPARENTLY EMANATING FROM THE THINK TANK OF THE ASSESSEE. THIS IN TURN OBVIOUSLY FOMENTS A DEPENDE NCE OF OTHER BENEFICIAL SHAREHOLDER DIRECTORS ON THE MARKET KNOW LEDGE AND INVESTING PRUDENCE OF THE ASSESSEE TO HOLD FORT ON BEHALF OF THE COMPANY THROUGH VOLATILE MARKETS. THEREFORE THE SA ID COMPANY IN ITS PERSPECTIVE HAS BEEN REGARDING THE ASSESSEE AS ITS BENEFACTOR. THE OTHER ASPECT IS THAT THE ASSESSEE HAS BEEN WITH GROWING POPULARITY ACCELERATING HIS OWN ACUMEN AND EXPERTI SE IN THE WORLD OF ART AND ART COLLECTION, IF THE BALANCE SHEET FI GURE OF RS. 16170114/- REFLECTING AS INVESTMENTS IN JEWELLERY AND PAINTINGS AS AT 31-03-2000 WAS ANY INDICATION TO GO BY, THEN I T WAS EVIDENT THAT THE ASSESSEE COMPANY HAS BEEN ENTRUSTING MAJOR PART OF ITS RESOURCES TO THE PROFESSIONAL CARE AND EXPERTISE O F THE ASSESSEE FOR PARKING THEM IN LONG TERM REMUNERATIVE ASSETS W HICH THE DYNAMICS OF THE EMERGING MARKETS OF THE PRESENT WOU LD HAVE BEEN RECOGNIZING AS VALUABLE INVESTMENTS. C. THE ASSESSEE HAS ALSO SUBSTANTIAL SHARE HOLDING S IN THE SAID COMPANY AS STATED ABOVE ALONGWITH THE OTHER MEMBERS OF THE FAMILY. APART FROM THE FACT THAT THE PERSONAL INTEREST OF T HE ASSESSEE IN THE SAID COMPANY WAS LOCKED WITH HIS OWN INVESTMENTS TH EREIN, IT WAS ALSO CLEAR THAT THE ASSESSEE WAS ENTRUSTED WITH THE RESPONSIBILITY OF HANDLING THE COMPANYS RESOURCES WITH DUE DILIGENCE AND PRUDENCE AS WOULD BE EXPECTED OF ANY MANAGER ENTRUSTED WITH THE SAME RESPONSIBILITY. THUS FOR BEING BURDENED WITH SUCH RESPONSIBILITY, ANY PROFESSIONAL WOULD ALSO BEGET A RIGHT TO BE REMUNER ATED WITH EITHER SALARY OR PROFESSIONAL FEES DEPENDING UPON THE SITU ATION IN WHICH HE FINDS HIMSELF OF EITHER BEING AN EMPLOYEE OR A PRO FESSIONAL MANAGER. VIEWED FROM THIS PERSPECTIVE, THE CASE OF THE ASSES SEE AGREEABLY WOULD NOT MERIT A DIFFERENT TREATMENT. IN THE CASE OF THE ASSESSEE THERE IS ABSENCE OF MASTER SERVANT OR EMPLOYER EMPL OYEE RELATIONSHIP, AND THEREFORE THE CIRCUMSTANCES OF TH E CASE IMPEL AN INFERENCE THAT THE DEMEANOR OF THE ASSESSEE VIS--V IS HIS RELATIONSHIP WITH THE COMPANY WAS THAT OF A PROFESSIONAL MANAGER . FURTHER IN THE ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 10 ABSENCE OF ANY INDICATION AS TO THE PURPOSE FOR WHI CH SUCH GIFT WAS GIVEN TO THE ASSESSEE, REVENUE WOULD NOT BE INCORRE CT IN BROOKING A PRESUMPTION THAT THE GIFT INDEED WAS THE COMPANYS WAY OF RECOGNIZING ITS OBLIGATION TO REMUNERATE THE PROFE SSIONAL MANAGER IN THE ASSESSEE FOR HIS CONTRIBUTION TOWARDS THE WELFA RE OF ITS BUSINESS. THE ASSESSEE HAS CAUSED TO EMPHASIZE ON ALL OCCASIO NS THAT HE HAD RECEIVED GIFT UNDER A GIFT DEED WHICH WAS CAPITAL R ECEIPT BY ITS VERY NOMENCLATURE DEFINING IT AND THEREFORE WOULD NOT AT TRACT ANY LIABILITY UNDER THE INCOME-TAX ACT. D. DURING THE COURSE OF PROCEEDINGS, IT WAS ALSO RE ITERATED THAT THE ASSESSEE DID NOT RECEIVE THE SAID GRATUITOUS PAYME NT BY VIRTUE OF GIFT OF THE SAID SUM OF RS. 50 LACS ON ACCOUNT OF RENDER ING PROFESSIONAL SERVICES TO THE COMPANY. HAVING REGARD TO THE FACT AND CIRCUMSTANCES OF THE CASE AND THE EXPLANATION OF TH E ASSESSEE IN THIS REGARD THE PERCEPTION OF THE NATURE OF THE REC EIPT THAT PERVADES IN THE CASE OF THE ASSESSEE ENABLES A VIEW THAT THE C OMPANY M/S. GEETGANGA LEASING AND FINANCE LTD. HAD PAID THE SUM OF RS. 50 LACS AS REMUNERATION TO THE ASSESSEE THROUGH THE CO NDUIT OF A SUBTERFUGE IN THE VIRTUE OF GIFT AS TO RENDER THE S AID GIFT NOT EXIGIBLE TO TAX UNDER THE IT ACT. 10.2. IN VIEW OF THE ABOVE REASONS, THE AO WHILE IN VOKING THE PROVISIONS OF SECTION 28(IV) OF THE ACT HELD THE AMOUNT OF RS.50 LAKHS AS TAXABLE AS PROFESSIONAL FEE. IT WAS STATED BY THE AO THAT THE GIFT RECEIVED BY THE ASSESSEE FROM THE COMPANY IS EXIGIBLE TO THE TAX IN VIEW OF THE RESOLUTION ENDORSED BY THE BOARD OF DIRECTORS, TO WHICH ASSESSEE ALSO HAPPENS TO BE ONE OF THE SIGNATORIES AMONGST OTHER DIRECTORS AND THE MAJOR SHARE HOLDING OF THE COMPANY IS VESTED IN THE ASSESSEE. THE AO WHILE REFERRING TO A NUMBER OF DECISIONS FURTHER CONCLUDED AS UNDER:- FROM THE ABOVE DISCUSSION AND THE RATIO OF VARIOUS DECISIONS RELIED UPON BY THE REVENUE TO DRIVE HOME ITS POINT THAT TH E GIFT OF RS. 50 LACS RECEIVED BY THE ASSESSEE WAS INDEED REMUNERATION IN DISGUISE. IT IS CLEAR THAT THE SAID RECEIPT OF RS. 50 LACS IS TAXAB LE AS INCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR UNDER ASSESSMENT. I T IS ALSO REITERATED IN THIS REGARD THAT THE SAID AMOUNT OF RS. 50 LACS IS VERY MUCH INTIMATELY CONNECTED WITH THE OFFICE OR VOCATION PU RSUED BY THE ASSESSEE VIS--VIS HIS POSITION WITH THE SAID COMP ANY WHICH BENEFITED THE ASSESSEE BY THE SUM OF RS. 50 LACS IN RECOGNITI ON OF HIS SERVICES RENDERED TO IT. SINCE NOTHING HAS BEEN PLACED ON RECORD TO SUBSTANTIATE THAT THE GIFT BY THE COMPANY WAS MADE PURELY FOR PERSONAL REASONS, IT IS ONLY AXIOMATIC TO INFER WIT H REASONABLE PRESUMPTION THAT THE GIFT HAS NOT BEEN MADE ON ACCO UNT OF ANY PERSONAL REASONS BUT IN CONNECTION WITH THE HOLDIN G OF THE OFFICE BY THE SAID ASSESSEE. THE RESOLUTION WHICH WAS PASSED BY THE BOARD OF DIRECTORS IN THE MATTER OF CONFERRING THE GIFT OF RS. 50 LACS TO THE ASSESSEE DOES NOT REFLECT ANY INDICATION TO THE EF FECT THAT THE GIFT IS ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 11 MADE FOR ANY PARTICULAR REASON, MUCH LESS FOR ANY PERSONAL REASON. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE SAID R ECEIPT OF RS. 50 LACS IS HELD TO BE THE INCOME OF THE ASSESSEE EXIGIBLE T O TAX FOR THE PREVIOUS YEAR UNDER ASSESSMENT. 11. ON APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF THE AO IN THE FOLLOWING TERMS: 5.5 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ARGUMENTS OF THE AO AND THE SUBMISSIONS MADE BY THE LEARNED AR AS WE LL. I FIND THAT THE ARGUMENTS OF THE LEARNED AR ARE NOT ACCEPTABLE LOOKING AT THE FACTS OF THE CASE. GEETGANGA LEASING & FINANCE PVT .LTD IS A COMPANY MOSTLY CONTROLLED BY THE APPELLANT AND HIS FAMILY MEMBERS. THE AFFAIRS OF THE COMPANY ARE MANAGED ENTIRELY BY THE APPELLANT. THE ACCUMULATED INCOME OF THE COMPANY AND ITS PROFITS ARE SOLELY ATTRIBUTABLE TO THE EFFORTS OF THE APPELLANT. THE FINDING OF THE AO THAT GIFT OF RS. 50,00,000/- IS ONLY A DIFFERENT METHOD OF COMPENSATING OR REMUNERATING THE APPELLANT FOR HIS EFFORTS APPEARS ABSOLUTELY REASONABLE. THE APPARENT CAN BE TAKEN AS REAL UNTI L IT IS SEEN OR THERE IS REASON TO BELIEVE THAT THE APPARENT IS NOT REAL, AS IS HELD BY SC IN THE CASES OF I) CIT VS. DURGA PRASAD MORE 82 ITR 54 0 (SC) AND (II) JUGILAL KAMALPAT VS. CIT 73 ITR 702 (SC). IN THESE SET OF CIRCUMSTANCES, THE AO IS ENTITLED TO GO BEYOND THE LEGAL FORM OF TRANSACTION AND TO EXAMINE THE SUBSTANCE. THE AO H AS RIGHTLY REFERRED TO THE OBSERVATIONS OF SC IN THE CASE OF P.KRISHNAM ENON VS. CIT 35 ITR 48 (SC) WHERE THE COURT HELD THAT IN THE CASE OF VOLUNTARY PAYMENT, NO TAX CAN BE LEVIED ON IT IF IT HAD BEEN TO THE DONEE FOR REASONS PURELY PERSONAL TO AND UNCONNECTED WITH HIS OFFICE OR VOCATION, WHILE IT WILL BE TAXABLE IF IT WAS MADE BECAUSE OF THE OFFICE OR VOCATION OF THE DONEE. IN THE PRESENT CASE, THE GIFT IS N OTHING BUT REMUNERATION RECEIVED BY THE DIRECTOR FOR THE EFFORTS HE MADE AN D PROFITS EARNED BY THE COMPANY. SINCE THE COMPANY ITSELF IS WHOLLY CO NTROLLED BY THE APPELLANT AND HIS FAMILY MEMBERS, THE AO HAS RIGHTL Y GONE BEYOND THE SUBTERFUGE OF THE GIFT. THEREFORE THE ACTION OF TH E AO IS UPHELD AND THIS GROUND OF APPEAL IS DISMISSED. 12. THE ASSESSEE IS NOW IN APPEAL BEFORE US. TH E LD. AR ON BEHALF OF THE ASSESSEE, SHRI SUNIL TALATI SUBMITTED THAT THE SEC TION 4 OF THE ACT HAS TO BE KEPT IN MIND WHILE LEVYING INCOME TAX ON ANY ASSESSEE. REFERRING TO AN OLD DECISION OF PRIVY COUNCIL IN THE CASE OF SHAW WALLACE, IT WA S SUBMITTED THAT EVERY RECEIPT IS NOT AN INCOME AND IT IS FOR THE ASSESSING OFFICE R TO CONCLUSIVELY PROVE THAT WHAT IS RECEIVED BY THE ASSESSEE IS IN THE NATURE O F INCOME AS ENVISAGED UNDER THE ACT. THE CONCEPT OF INCOME IS EXTREMELY IMPORTA NT BEFORE TAX IS LEVIED ON ANY RECEIPT AND QUESTION WHETHER ANY PARTICULAR RECEIPT IS INCOME OR NOT, DEPENDS ON NATURE OF THE RECEIPT AND TRUE SCOPE AND EFFECT OF THE RELEVANT TAXING PROVISION. UNLESS A RECEIPT IS TAXABLE UNDER A SPECIFIC PROVI SION OF THE ACT, THE AO CANNOT ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 12 TREAT SUCH RECEIPT AS INCOME, THE LD. AR ADDED. CON TINUING, THE LD. AR POINTED OUT THAT REASONS RECORDED FOR REOPENING U/S. 147 OF THE ACT MENTION THAT THE AMOUNT OF RS.50 LAKH RECEIVED BY THE ASSESSEE IS NO THING BUT DIVIDEND WITHIN THE MEANING OF PROVISIONS OF SECTION 2(22) OF THE ACT WHEREAS, THE AO WHILE DETERMINING THE TOTAL INCOME, ASSESSED THE RECEIPT OF RS.50 LAKH AS REMUNERATION U/S. 28 (IV) OF THE INCOME TAX ACT. RELYING ON THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GARGARASI 173 TAX MAN PAGE 46, IT WAS ARGUED THAT IF THE ASSESSMENT IS DONE ON A TOTALLY DIFFERENT GROUND THAN THAT ON WHICH REOPENING IS MADE THEN SUCH ORDER CANNOT BE U PHELD AND REQUIRES TO BE QUASHED. LASTLY, THE LD. AR SUBMITTED THAT THE AUDI TED ACCOUNTS OF GEETGANGA LEASING & FINANCE PVT. LTD.REVEAL THAT THE COMPANY HAD MADE A GIFT OF RS. 50 LAKHS VIDE GIFT DEED DATED 19 TH JANUARY, 2000, SHOWN UNDER THE HEAD MISCELLANEOUS EXPENDITURE IN THE BALANCE SHEET. EMPHASISING ON THE POINT THAT THE COMPANY CAN GIVE GIFT, THE LD. AR SUBMITTE D AS UNDER: A COMPANY IS A TAXABLE ENTITY UNDER THE PROVISIONS OF GIFT TAX ACT, 1958 INASMUCH AS ACCORDING TO SECTION 2(XVIII) PER SON INCLUDES A HINDU UNDIVIDED FAMILY OR A COMPANY OR AN ASSOCIATION OR A BODY OF INDIVIDUAL OR PERSONS, WHETHER INCORPORATED OR NOT. AGAIN UNDER SECTION 2(VII) THE EXPRESSIONS COMPANY, INDIAN COMPANY AND COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTE RESTED SHALL HAVE THE MEANING ASSIGNED IN OF SECTION 2 OF THE I. T. ACT. THE DEFINITION OF TERM GIFT IS GIVEN IN SECTION 2 (XII) OF THE GIFT TAX ACT, 1958 AND IT MEANS THE TRANSFER BY ONE PERSON T O ANOTHER OF ANY EXISTING MOVABLE OR IMMOVABLE PROPERTIES MADE VOLUN TARILY AND WITHOUT CONSIDERATION IN MONEY OR MONEYS WORTH AND INCLUDES THE TRANSFER OR CONVERSION OF ANY PROPERTY REFERRED TO IN SECTION 4 DEEMED TO BE A GIFT UNDER THAT SECTION. THEREFORE, A COMPANY IS COMPETENT TO MAKE GIFT INASMUCH AS IT IS A PERSON AS WELL AS WHEN ANY TRANSFER IS MADE OF ANY PROPERTY WITHOUT CONSID ERATION, IT IS CONSIDERED TO BE A GIFT MADE BY THE PERSON CONCERNE D. EVEN UNDER THE PROVISIONS OF TRANSFER OF PROPERTY ACT, 1882, THE TERM GIFT IS DEFINED TO MEAN A TRANSFER OF CERTAI N EXISTING MOVABLE OR IMMOVABLE PROPERTIES MADE VOLUNTARILY AND WITHOU T CONSIDERATION, BY ONE PERSON, CALLED THE DONOR TO A NOTHER, CALLED THE DONEE AND ACCEPTED BY OR ON BEHALF OF THE DONEE . SUCH ACCEPTANCE MUST BE MADE DURING THE LIFE TIME OF THE DONOR AND WHILE HE IS STILL CAPABLE OF GIVING. SECTION 123 O F THE TRANSFER OF PROPERTY ACT PROVIDES MODE OF EFFECTING TRANSFER BY WAY OF GIFT AND UNDER THE SAID SECTION A GIFT OF MOVABLE PROPERTY C AN BE AFFECTED EITHER BY REGISTERED INSTRUMENT OR BY MERE DELIVERY . ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 13 UNDER THE PROVISIONS OF GIFT TAX ACT, A RETURN OF G IFT WAS REQUIRED TO BE MADE IN FORM A IN WHICH THE STATUS OF THE ASS ESSEE IS MENTIONED AS INDIVIDUAL/HINDU UNDIVIDED FAMILY / CO MPANY / FIRM AND ASSOCIATION OF PERSONS. IT IS THEREFORE CLEAR B EYOND DOUBT THAT A COMPANY AS SUCH IS CAPABLE OF MAKING GIFT AND A G IFT CAN BE MADE BY THE COMPANY BY TRANSFERRING THE PROPERTY BE LONGING TO IT WITHOUT CONSIDERATION. IT IS ALSO WELL SETTLED THA T IF A GIFT IS MADE IN APPRECIATION OF PERSONAL QUALITIES OF DONEE AND NO T IN APPRECIATION OF ANY OF HIS SERVICE SUCH GIFTS ARE NOT TREATED AS INCOME PRIOR TO THE AMENDMENT BROUGHT OUT BY THE LEGISLATURE BY INS ERTING CLAUSE (V) IN SEC. 56 WITH EFFECT FROM 1-4-2005. THIS ALS O GIVES FULL SUPPORT AND IT IS ALSO BORNE OUT FROM SEVERAL CASE LAWS THA T GIFT IS NOT INCOME. IN THE CASE OF PARIMISETTI SEETHARAMAMMA V S. CIT 57 ITR 532 (S.C.) WHEREIN IT HAS BEEN HELD AS UNDER: . THE ACT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED A S INCOME LIABLE TO TAX. IN ALL CASES IN WHICH A RECE IPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES UPON THE DEP ARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. W HERE HOWEVER A RECEIPT IS OF THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WITHIN AN E XEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSEE. THE DECISION IN THE CASE OF C.I.T. VS. PROF. P.G.A. NATH 234 ITR 854 TAKES IN TO CONSIDERATION THE ABOVE REFERRE D DECISION OF THE SUPREME COURT TO HOLD THAT GIFT IS NOT INCOME 12.1 THE LD. AR WHILE CITING JUDGMENTS IN CASE OF D.C.I.T. VS. TOSHA INTERNATIONAL LTD. (2008) 116 TTJ (DEL) 941 AND MA HINDRA AND MAHINDRA LTD. VS. CIT REPORTED IN 261 ITR 501 SUBMITTED THAT THE P ROVISIONS OF SEC. 28(IV) APPLY TO THE VALUE OF BENEFIT OR PERQUISITES WHETHER CONV ERTIBLE INTO MONEY OR NOT, ARISING FROM BUSINESS, BUT DO NOT APPLY FOR BENEFIT RECEIVED IN CASH OR MONEY. RELYING UPON ANOTHER DECISION IN THE CASE OF NIRMA LA P. ATHAVALE VS. ITO ITAT, MUMBAI `A BENCH (2008) 117 TTJ (MUM.) 353, IT WAS SUBMITTED THAT GIFT MADE BY FOLLOWERS, WITHOUT BEING UNDER ANY CONTRACTUAL O R LEGAL OR CUSTOMARY OBLIGATION TO DO SO COULD NOT BE TREATED AS INCOME. THE LEARNE D A.R. FURTHER RELIED UPON DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT V S. ALCHEMIC PVT. LTD. 130 ITR 168 (GUJ.) AND ARGUED THAT THE WORDINGS OF SECTION 28(IV) ARE VERY CLEAR. WHAT CAN BE TAXED AS REMUNERATION COULD BE ONLY THE VA LUE OF ANY BENEFIT OR PERQUISITE, WHETHER CONVERTIBLE IN TO MONEY OR NOT ARISING FROM BUSINESS OR THE EXERCISE OF THE PROFESSION. IT WAS ARGUED BY THE L D. AR THAT WHAT IS RECEIVED IS ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 14 NOT ANY MONETARY VALUE BUT CASH I.E. ACCOUNT PAYEE CHEQUE AND AS HELD BY GUJARAT HIGH COURT, WHEN THE AMOUNT HAS BEEN RECEIV ED IN CASH, THE SAME JUST CANNOT BE TAXABLE UNDER SEC. 28(IV) OF THE ACT. 12.2 ARGUING FURTHER THAT NOT ONLY THE AMOUNT WAS RECEIVED IN CASH BUT WAS NOT RECEIVED IN LIEU OF ANY REMUNERATION OR SERVICES, I T WAS POINTED OUT THAT FROM THE AUDITED ACCOUNTS AND INCOME COMPUTATION IT CAN BE S EEN THAT THE ASSESSEE IS A CHAIRMAN AND DIRECTOR SIMPLICITER IN GEETGANGA LEAS ING & FINANCE PVT. LTD. . HE IS NOT A MANAGING DIRECTOR NOR RENDERED ANY SERVICE S TO THE COMPANY. IN FACT, THE ASSESSEE WAS FULL TIME MANAGING DIRECTOR IN LAN XESS ABS LTD. AND WAS NOT CAPABLE TO DEVOTE ANY TIME FOR GIVING ANY SERVICES TO GEETGANGA LEASING & FINANCE PVT. LTD. MOREOVER, THE INCOME OF GEETGANG A LEASING & FINANCE PVT. LTD. FOR THE YEAR UNDER CONSIDERATION IS RS. 15 LA KHS, COMPRISING 8 LAKHS AS DIVIDEND AND RS. 7 LAKHS AS INTEREST, WHICH DO NOT REQUIRE ANY PROFESSIONAL SKILL OR SERVICES. REFERRING TO THE BOARD RESOLUTION AND THE GIFT DEED IT WAS ARGUED THAT THE GIFT HAS BEEN GIVEN WITHOUT CONSIDERATION AND ALSO HAS BEEN ACCEPTED SO SPECIFICALLY. SUCH RECEIPT BY WAY OF GIFT CANNOT B E DRAGGED UNDER ANY OTHER SECTION FOR MAKING IT TAXABLE AND STATED THAT SUCH KIND OF RECEIPTS HAVE BEEN MADE TAXABLE SPECIFICALLY FROM THE AY2005-06 U/S. 56(V) OF THE ACT. AS SUCH, RECEIPT OF GIFT BEING CAPITAL IN NATURE CANNOT BY A NY STRETCH OF IMAGINATION BE TAXED AS REMUNERATION U/S. 28(IV) OF THE INCOME TAX ACT. HE THEREFORE SUBMITTED THAT THE ORDER OF ASSESSING OFFICER AND C.I.T.(A) B E REVERSED AND AMOUNT BE TREATED AS CAPITAL RECEIPT ONLY . 13. ON THE OTHER HAND, THE LEARNED D.R. WHILE REF ERRING TO THE IMPUGNED ORDERS SUBMITTED THAT THE AMOUNT OF RS.50 LAKHS RECEIVED BY THE ASSESSEE, A DIRECTOR IN THE COMPANY HAS TO BE TAXE D AS REMUNERATION. THE LEARNED D.R. ALSO ARGUED THAT HOW CAN A COMPANY, AN ARTIFICIAL JURIDICAL PERSON HAVE LOVE AND AFFECTION TOWARDS ANOTHER PERSON AND THEREFORE, A COMPANY CANNOT MAKE SUCH GIFT. HE, THEREFORE, SUBMITTED TH AT THE INCOME HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE AS REMUNERATION. TO A QUERY RAISED BY THE BENCH AS TO HOW THE AMOUNT CAN BE TAXED U/S. 28(IV), THE LEARNED D.R. REPLIED THAT THE PROVISIONS OF THE SAID SECTION ARE ATTRACTED ONLY IF THE BENEFIT OR PERQUISITE IS RECEIVED IN KIND, WHETHER OR NOT CONVERTIBLE IN TO MONEY AND NOT IN CASE OF RECEIPT IN CASH OR BY CHEQUE. ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 15 14. IN HIS REJOINDER, THE LEARNED A.R. SUBMITTED T HAT A COMPANY CAN MAKE A GIFT AND IS CONSIDERED AS A DONOR UNDER GI FT TAX ACT AND RULES. IT WAS ARGUED THAT GIFT CAN BE GIVEN WITHOUT CONSIDERATION AND NOT NECESSARILY OUT OF LOVE AND AFFECTION. HE REITERATED THAT EVERY REC EIPT CANNOT BE TAXED UNLESS SPECIFICALLY PROVIDED UNDER THE RELEVANT PROVISION S OF THE ACT AND SUCH GIFTS ARE TAXABLE U/S 56(V) OF THE ACT ONLY W.E.F. 1-4-2005,W HEREUNDER ANY SUM OF MONEY RECEIVED WITHOUT CONSIDERATION BY AN INDIVIDUAL / H UF FROM ANY PERSON ON OR AFTER 1-9-2004, IN EXCESS OF RS.25,000/- IS SPECIFICALLY TAXED AS INCOME. BUT THE SAID SECTION BEING APPLICABLE FROM 2005-06 CANNOT BE STR ETCHED BACK TO AY 2000-01 AND THEREFORE, SUCH RECEIPT OF GIFT HAS TO BE TREAT ED AS CAPITAL RECEIPT AND CANNOT BE BROUGHT TO TAX. 15. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AND THE DECISIONS RELIED UPON. UNDISPUTEDLY, THE AMOUNT OF RS.50,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE, A CHAIRMAN & DIRECTO R IN M/S GEETGANGA LEASING & FINANCE PVT. LTD. VIDE GIFT DEED DATED 19 .01.2000 EXECUTED BY THE SAID COMPANY. THE AO AND THE LD. CIT(A) CONCLUDED T HAT THE RECEIPT OF RS.50,00,000/- IS PROFESSIONAL FEES FOR THE SERVICE S RENDERED BY THE DIRECTOR AND IS TAXABLE WITHIN THE MEANING OF PROVISIONS OF SEC .28 (IV) OF THE ACT. THE AO WAS OF THE VIEW THAT ALTHOUGH ASSESSEE WAS CHAIRMAN AND MANAGING DIRECTOR OF GEETGANGA LEASING & FINANCE PVT. LTD COMPANY, HE DI D NOT RECEIVE ANY SALARY, COMMISSION OR REMUNERATION FROM THE COMPANY. THE IN VESTMENT OF THE COMPANY IN SHARES, SECURITIES, JEWELLERY AND PAINTINGS ROSE SHARPLY FROM RS.5.94 CRORES IN FY1998-99 TO RS.6.94 CRORES IN FY1999-2000 DUE TO T HE MANAGERIAL SKILL AND EXPERTISE OF THE ASSESSEE. REFUTING THIS CLAIM OF THE AO, THE LD. AR PLEADED BEFORE US THAT THE ASSESSEE IS SIMPLY CHAIRMAN AND DIRECTOR AND NOT A MANAGING DIRECTOR OF THE AFORESAID COMPANY. MOREOVER, THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE RENDERED ANY KIND OF SERVICES TO THE SAID COMPANY. THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL SUGGESTING THAT T HE ASSESSEE ACTUALLY RENDERED ANY KIND OF SERVICES TO THE SAID COMPANY. THERE IS NO MATERIAL BEFORE US ESTABLISHING THE NEXUS BETWEEN THE GIFT OF RS.50,0 0,000/- AND MANAGEMENT OF THE AFFAIRS OF THE COMPANY BY THE ASSESSEE. IN THE ABSENCE OF ANY EVIDENCE , THE FINDINGS OF THE AO AND THE LD. CIT(A) THAT THE ACC UMULATED PROFITS OF THE COMPANY ARE SOLELY ATTRIBUTABLE TO THE EFFORTS OF T HE ASSESSEE OR THAT AFFAIRS OF THE ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 16 COMPANY ARE MANAGED BY THE ASSESSEE ,ARE BASELESS AND DEVOID OF MERIT. WE FIND THAT THE AO BROUGHT THE AMOUNT TO TAX, HAVING RECOURSE TO PROVISIONS OF SEC. 28(IV) OF THE ACT. THE RELEVANT PROVISIONS OF SEC. 28(IV) OF THE ACT READ AS UNDER: 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO I NCOME-TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSI ON',- .. (IV) THE VALUE OF ANY BENEFIT OR PERQUISITE, WHETHE R CONVERTIBLE INTO MONEY OR NOT, ARISING FROM BUSINESS OR THE EXERCISE OF A PROFESSION ; 15.1 AS IS EVIDENT FROM THE AFORESAID PROVISIONS, THE CONDITION OF INVOKING S. 28(IV) IS THAT THE CHARGEABLE INCOME OF THE ASSESSE E SHOULD ARISE FROM THE BUSINESS OR THE EXERCISE OF PROFESSION. THERE MUST BE A NEXUS BETWEEN THE BUSINESS OF THE ASSESSEE AND THE BENEFIT THE ASSESS EE DERIVED. IN OTHER WORDS SUCH BENEFIT OR PERQUISITE SHOULD BE IN THE NATURE OF INCOME FROM THE VERY BEGINNING OR IT MUST HAVE CHARACTERISTICS OF INCOME BEFORE IT BECOMES CHARGEABLE AT A LATER STAGE IF THE ORIGINAL TRANSACTION IS COM PLETED AS DESIGNED. MOREOVER,THE WORDS 'BENEFIT' OR 'PERQUISITE' HAVE BEEN USED IN T HE SAID SECTION AND HAVE TO BE READ TOGETHER AND WOULD DRAW COLOUR FROM EACH OTHER . NORMALLY THE TERM 'PERQUISITES' DENOTES MEETING OUT OF AN OBLIGATION OF ONE PERSON BY ANOTHER PERSON EITHER DIRECTLY OR INDIRECTLY OR PROVISION O F SOME FACILITY OR AMENITY BY ONE PERSON TO ANOTHER PERSON OR FROM THE VERY BEGINNING THE PERSON PROVIDING SUCH FACILITY OR CONCESSION KNOWS THAT WHATEVER IS BEING DONE IS IRRETRIEVABLE TO HIM, AS IT HAS BEEN GRANTED TO A PERSON AS A PRIVILEGE OR R IGHT OF THAT PERSON. THUS, THE WORD 'BENEFIT' HAS TO BE INTERPRETED IN THE SAME MA NNER, THAT IS, AT THE TIME OF EXECUTION OF THE BUSINESS TRANSACTION ONE PARTY SHO ULD GIVE TO THE OTHER PARTY AN IRRETRIEVABLE BENEFIT OR ADVANTAGE, AS AN OBLIGATIO N OR FACILITY OR A CONCESSION. IN THE CASE UNDER CONSIDERATION, THE REVENUE HAS NOT D EMONSTRATED BEFORE US AS TO WHAT IS THE BUSINESS CONNECTION OR THE BUSINESS DONE BETWEEN THE ASSESSEE AND THE AFORESAID COMPANY. NO CASE HAS BEEN MADE OU T THAT PRIVILEGE OR BENEFIT OR CONCESSION HAS BEEN PASSED ON BY THE COMPANY TO THE ASSESSEE AS PART AND PARCEL OF A BUSINESS TRANSACTION .THERE IS NO EVENT WHICH CAN BE SAID TO HAVE RESULTED IN ACCRUAL OF INCOME TO THE ASSESSEE. IN T HE ABSENCE OF ANY MATERIAL BEFORE US THAT THE ASSESSEE ACTUALLY RENDERED SERVI CES TO THE COMPANY FOR WHICH AMOUNT HAS BEEN PAID BY WAY OF GIFT , THE SAID AMO UNT CANNOT BE BROUGHT TO TAX, ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 17 AS A BENEFIT OR PERQUISITE UNDER S. 28(IV) OF THE A CT. I N SCHOLARLY TREATISE OF SAMPAT IYENGARS 'LAW OF INCOME-TAX' 9TH EDN., P. 4 82,THE LEARNED AUTHOR REFERRED TO THE JUDGMENT IN THE CASE OF LACHIT FILM VS. CIT (1992) 195 ITR 402 (GAU) WHEREIN IT WAS HELD THAT FOR APPLICABILITY O F PROVISIONS OF S. 28(IV) THE RECEIPT SHOULD SIGNIFY 'INCOME' AND SHOULD BE A PRO DUCT OF THE NORMAL WORKING OF THE BUSINESS. WE WOULD FURTHER LIKE TO ADD THAT AS FAR AS PROVISIONS OF INCOME-TAX ACT ARE CONCERNED EVERY RECEIPT IS NOT INCOME THOUG H THE TERM 'INCOME' HAS BEEN DEFINED IN AN INCLUSIVE MANNER.HENCE, SUCH RECEIPT MUST NECESSARILY FALL UNDER THE SPECIFIC CHARGING PROVISIONS. THE REVENUE AUTHO RITIES HAVE APPLIED THE PROVISIONS OF SECTION 28(IV) OF THE ACT WHEREIN IT IS PROVIDED THAT ANY BENEFIT OR PERQUISITE ARISING OUT OF EXERCISE OF BUSINESS OR P ROFESSION WOULD BE TREATED AS INCOME. THESE TWO WORDS HAVE BEEN USED IN THIS PROV ISION I.E., 'BENEFIT' OR 'PERQUISITE' AND OTHER CONDITION IS THAT SUCH BENEF IT OR PERQUISITE SHOULD ARISE OUT OF EXERCISE OF BUSINESS OR PROFESSION. IN THE FACTS OF THE CASE, THE REVENUE HAS NOT ESTABLISHED CONCLUSIVELY THAT THE AMOUNT OF GIF T AROSE TO THE ASSESSEE AS A CONSEQUENCE OF EXERCISE OF BUSINESS OR PROFESSION B ECAUSE SUCH GIFTS HAVE GOT NO ELEMENT OF CONSIDERATION BEING PAID FOR SERVICES OBTAINED BY THE COMPANY. IT IS ALSO NOTED THAT BOTH THE WORDS 'BENEFIT' AND 'PE RQUISITE' REFER TO SPECIFIC SITUATIONS WHEREIN, GENERALLY RECEIPT OF REVENUE NA TURE HAVING ATTRIBUTES OF INCOME WOULD BE COVERED AND SUCH ATTRIBUTE SHOULD E XIST FROM THE VERY BEGINNING. TO ILLUSTRATE THIS ASPECT, WE STATE THAT WHERE A GIFT IS MADE IN LIEU OF PAYING CONSIDERATION FOR SERVICES OBTAINED AND THIS FACT IS ESTABLISHED, THEN, SUCH AMOUNT OF GIFT CAN FALL WITHIN THE PROVISIONS OF SE CTION 28(IV) OF THE ACT. WE WOULD ALSO LIKE TO ADD THAT THESE TWO WORDS USED IN THIS SECTION WOULD DERIVE COLOUR FROM EACH OTHER AND IN THIS REGARD. WE DEEM IT FIT TO REPRODUCE THE FINDINGS OF THE ORDER OF THE TRIBUNAL IN THE CASE OF HELIOS FOOD IM PROVERS (P.) LTD. V. DY. CIT [2007] 14 SOT 546 (MUM.) WHEREIN PROVISIONS OF SECT ION 28(IV) HAVE BEEN EXPLAINED AS UNDER: 'NOW THE QUESTION FOR CONSIDERATION AROSE AS TO WHE THER THE RECEIPT IN QUESTION COULD BE SAID TO HAVE ARISEN FROM THE BUSINESS OF T HE ASSESSEE AS CONTEMPLATED UNDER SECTION 28(V). SECTION 28 IS A CHARGING SECTI ON FOR PROFITS AND GAINS OF BUSINESS OR PROFESSION AND IT TAKES INTO ACCOUNT TH E RECEIPTS OF SPECIFIED CATEGORIES AS OF INCOME AS WELL AS THE RECEIPTS WHI CH CAN BE GENERALLY CONSTRUED AS INCOME IN THE ORDINARY SENSE. BUT THE FACT REMAI NS THAT ALL THE RECEIPTS MENTIONED IN SECTION 28 ARE INHERENTLY OF INCOME NA TURE EXCEPT IN CASE OF RECEIPT UNDER A KEY MAN INSURANCE POLICY WHICH IS A RECOVER Y OF EXPENDITURE ALREADY ALLOWED AS DEDUCTION. HENCE, PRIMA FACIE THE LOAN R ECEIVED BY AN ASSESSEE IN ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 18 THE COURSE OF BUSINESS IS NOT ENVISAGED AS INCOME. NOW, COMING TO SPECIFIC PROVISIONS OF SUB-SECTION (IV) OF SECTION 28 IT IS ALSO IN CONNECTION WITH THE VALUE OF ANY BENEFIT OR PERQUISITE ARISING FROM BUSINESS, WHICH MEANS THAT SUCH BENEFIT OR PERQUISITE SHOULD BE IN THE NATURE OF INCOME FRO M THE VERY BEGINNING OR IT MUST HAVE CHARACTERISTICS OF INCOME BEFORE IT BECOMES CH ARGEABLE AT A LATER STAGE, IF THE ORIGINAL TRANSACTION IS COMPLETED AS DESIGNED. . 15.2 MOREOVER, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ALCHEMIC PVT. LTD. 130 ITR 168 (GUJ.) WHILE INTERPR ETING PROVISIONS OF SEC. 28(IV) HELD THAT IT IS OBVIOUS THAT IF WHAT IS RECEIVED EITHER BY W AY OF BENEFIT OR PERQUISITE IS MONEY, THERE IS NO QUESTION OF CONSIDERING THE VALU E OF SUCH MONETARY BENEFIT OR PERQUISITE UNDER CL. (IV) AND INCLUDING THE VALUE O F SUCH BENEFIT OR PERQUISITE UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS OR P ROFESSION '. IT IS ONLY IF THE BENEFIT OR THE PERQUISITE IS NOT IN CASH OR MONEY B UT IS NON-MONETARY BENEFIT OR NON-MONETARY PERQUISITE THAT THE QUESTION OF INCLUD ING THE VALUE OF SUCH BENEFIT OR PERQUISITE WOULD EVER ARISE. 15.21 FOLLOWING THE AFORESAID DECISION, A SIMIL AR VIEW WAS TAKEN IN MAHINDRA AND MAHINDRA LTD. VS. CIT REPORTED IN 261 ITR 501(B OM 16. IN VIEW OF THE FOREGOING, WE ARE OF THE OP INION THAT THE GIFT OF RS. 50 LACS IS NOT OF THE NATURE OF ANY BENEFIT OR PERQUISITE AS C ONTEMPLATED UNDER SECTION 28 (IV) OF THE ACT. CONSEQUENTLY, WE DELETE THE ADDI TION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A), ESPECIALLY WH EN REVENUE HAVE NOT BROUGHT TO OUR NOTICE ANY EVIDENCE OF SERVICES RENDERED BY THE ASSESSEE TO THE AFORESAID COMPANY NOR PLACED ANY MATERIAL SUGGESTING THAT THE AFORESAID AMOUNT OF RS. 50 LACS WAS ATTRIBUTABLE TO EFFORTS MADE BY THE ASSESS EE .THEREFORE, GROUND NO. 2 IN THE CO IS ALLOWED. 17. . AS REGARDS GROUND NO.3 RELATING TO LEVY OF INTEREST U/S 234B AND 234D OF THE ACT RAISED IN THE CO, THE LD. AR ON BEHALF OF THE ASSESSEE DID NOT MAKE ANY SUBMISSIONS BEFORE US. LEVY OF INTEREST U/S 234B & 234D OF THE ACT, BEING MANDATORY [COMMISSIONER OF INCOME TAX.VS ANJUM M. H. GHASWALA AND OTHERS,252 ITR 1(SC)] AND NO INFIRMITY HAVING BEEN POINTED OUT IN ITS LEVY, THIS GROUND IS DISMISSED. HOWEVER, THE AO SHALL ALLOW C ONSEQUENTIAL RELIEF WHILE GIVING EFFECT TO THIS ORDER. 18. GROUND NO. 4 BEING GENERAL IN NATURE DOES NOT R EQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY ITA NO.1432&2420/AHD/2008 WITH CO NO.118/AHD/2008 19 GROUND NO.5 IN THE APPEAL OF THE ASSESSEE, ACCORDIN GLY, THESE GROUNDS ARE DISMISSED. 19. IN THE RESULT, APPEALS OF THE ASSESSEE AND THE REVENUE ARE DISMISSED WHILE CROSS-OBJECTION IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 -12-2009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 4 -12 -2009 COPY OF THE ORDER FORWARDED TO : 1. SHRI RAKESH S AGRAWAL, 61- ALKAPURI, R C DUTT RO AD, BARODA 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA 3. THE CIT CONCERNED 4. THE CIT(A)-V, BARODA 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, ITAT, AHMEDABAD