A.C.I.T. Cir - 28,Kol., Kolkata V. MANISH CHUGH, Kolkata

ITA 1768/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75050 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 10-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2012
• Court: TRIBUNAL
• Department Lawyers: SABOORUL HASAN USMANI
• Assessee Lawyers: CROSS OBJECTOR SHRI K M ROY
• Keywords: Deemed dividend; Reason to believe
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 1768/KOL/2012 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2009-10 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. MANISH CHUGH CIRCLE-28, KOLKATA. (PAN:ACTPC7069E) (,- /APPELLANT ) (./,-/ RESPONDENT ) & C.O. NO.159/KOL/2012 IN & & & & / I.T.A NO. 1768/KOL/2012 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2009-10 MANISH CHUGH VS. ASSISTANT COMMISSIONER OF INC OME TAX, CIRCLE-28, KOLKATA. (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 14.02.2014 DATE OF PRONOUNCEMENT: 19.02.2014 FOR THE REVENUE: SHRI SABOORUL HASAN USMANI, JCIT, SR. DR FOR THE ASSESSEE/CROSS OBJECTOR : SHRI K. M. ROY, FCA $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSES SEE ARE ARISING OUT OF ORDER OF CIT(A)-XIV, KOLKATA IN APPEAL NO. 750/CIT(A)-XIV/11 -12 DATED 07.09.2012. ASSESSMENT WAS FRAMED BY JCIT, RANGE-28, KOLKATA U/S. 143(3) O F THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009- 10 VIDE HIS ORDER DATED 29.12.2011. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITION OF UNDISCLOSED HOARDING CHARGES. FOR THIS , REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.27,97,58 3/- MADE UNDER THE HEAD OF UNDISCLOSED HOARDING CHARGES BY HOLDING THAT THE AMOUNT WAS NOT ACTUALLY RECEIVED BY THE ASSESSEE IGNORING THE FACT THAT THE TDS CREDIT ON THE CORRES PONDING AMOUNT HAS BEEN CLAIMED BY THE ASSESSEE IN HIS RETURN. SIMILARLY, THE ASSESSEE IN HIS CROSS OBJECTION HAS ALSO RAISED THE ISSUE OF DOUBLE DISALLOANCE OF TDS CREDIT OF RS.18,070/- AND FOR TH IS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 2 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 1. THAT THE LD. CIT(A) HAS ERRED IN DISALLOWING CR EDIT OF TDS OF RS.18,070/- PERTAINING TO INTEREST INCOME OF RS.1,75,424/- AS SUCH TDS WAS ALREADY INCLUDED IN THE FIGURE OF RS.63,468/- WHICH WAS DISALLOWED TOWARDS HOARDING D ISPLAY CHARGES AND THUS NO SEPARATE DISALLOWANCE IS CALLED FOR RS.18,070/-. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF ADVERTISING AGENCY AND IS ALSO DIRECTOR IN SPOT ADMEDIA PVT. LTD. (IN SHORT SAPL). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT PREVIOU SLY ASSESSEE WAS PROPRIETOR OF THE CONCERN VIZ., SPOT. HE NARRATED THE FACT IN THE ASSESSM ENT ORDER THAT THIS CONCERN WAS TAKEN OVER BY THE PRIVATE LIMITED COMPANY NAMELY, SAPL W.E.F. 01.04.2007. THE AO FURTHER NOTED THAT ALL THE ASSETS AND LIABILITIES OF PROPRIETARY CONCE RN SPOT WAS TRANSFERRED IN THE NAME OF COMPANY FROM MANISH CHUGH TO SAPL. HE VERY CLEARLY RECORDED THIS FACT THAT THERE IS NO EXISTENCE OF SPOT ANY FURTHER. THE AO NOTED THE FA CT FURTHER THAT CERTAIN CLIENTS OF SAPL DEDUCTED TDS AND ISSUED TDS CERTIFICATE DURING FY 2 008-09 RELEVANT TO THIS AY 2009-10 IN THE NAME OF ASSESSEE INDIVIDUAL MANISH CHUGH ALTHOU GH THE BILLS WERE RAISED BY THE COMPANY SAPL. THE ASSESSEE FILED THE FOLLOWING DOCUMENTS: I) MEMORANDUM AND ARTICLE OF ASSOCIATION II) BOARD RESOLUTION, III) COPY OF FORM NO. 23 & COPY OF TAKEOVER AGREEM ENT IV) FORM 26AS V) BANK STATEMENT RELATING TO CONVERSION OF F.D VI) RECONCILIATION OF TDS WITH FORM 26AS VII) DETAILS OF TDS RS.63,468/- DEDUCTED BY PARTY WITH BILL WISE BREAK UP VIII 30 NOS. BILL ISSUED BY SPOT ADMEDIA PVT. LTD. BUT, THE AO MADE ADDITION OF RS.28,06,169/- ONLY ON THE BASIS THAT THE TDS WAS DEDUCTED IN THE NAME OF THE ASSESSEE AND THE ENTIRE CREDIT OF T DS IS ALSO CLAIMED BY THE ASSESSEE AMOUNTING TO RS.65,015/- BY OBSERVING AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE. ON PERUSAL OF THE XEROX COPIES OF THE BILLS OF SPOT ADMEDIA PVT. LTD. IT IS SEEN THAT AT THE BOTTOM OF THE BILLS VAT NO. SERVICE TAX REG. NO. AND PAN ARE PRINTED. THE PAL: AAICS3109H IS CLEARLY PRINTED IN ALL THE BILLS. SO THERE IS NO REASON TO BELIEVE TH AT THE DEDUCTORS HAVE FAILED TO INDICATE THE CORRECT NAME OF THE COMPANY AS WELL AS PAN AS ARGUED BY THE ASSESSEE. SO THE ENTIRE AMOUNT OF CONTRACT PAYMENT OF RS.44,67,385/- CREDITED TO THE ASSESSEE AS PER 26AS DETAILS IS TO BE TREATED AS RECEIVED BY THE AS SESSEE. MOREOVER, THE ASSESSEE HAS CLAIMED CREDIT OF THE CORRESPONDING TDS AMOUNT OF R S.65,015/-. SO AS PER SEC. 199 THIS AMOUNT OF RS.44,67,385/- IS TO BE CONSIDERED AS INC OME OF THE ASSESSEE. THE ASSESEE HAS DISCLOSED HOARDING DISPLAY CHARGES RECEIPT AT RS.16,61,216/- WHEREAS AS PER AIR INFORMATION HE HAS RECEIVED PAYMNTS OF R S.44,67,385/-. HENCE, THE DIFFERENCE OF RS.28.06,169/- (RS.44,67,385 RS. 16 ,61,216) IS NOT DISCLOSED BY THE ASSESSEE. HENCE RS.28,06,169/- IS ADDED TO THE TOT AL INCOME AS UNDISCLOSED HOARDING CHARGES. PENALTY PROCEEDINGS U/S. 271(1)(C) IS BEI NG INITIATED SEPARATELY FOR COBNCEALMENT OF INCOME OR FURNISHING INACCURATE PAR TICULARS OF INCOME. 3 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING IN PARA 5 AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AND THE SUBMISSION OF THE APPELLANT. IT IS SEEN THAT THE ASSESSING OFFICER HAD MADE THE ADDITION OF RS.28,06,169/- FOR THE REASON THAT THE DEDUCTORS HAD MENTIONED THE P.A.NO. OF THE APPELLANT AND THEY HAD MENTIONED THE NAME OF MANISH CHUGH OF SPOT IN PLACE OF SPOT ADM EDIA PVT. LTD. IN THE TDS CERTIFICATE. HOWEVER, THE APPELLANT SUBMITTED RECON CILIATION BEFORE THE ASSESSING OFFICER. IT IS SEEN THAT THE FOLLOWING FACTS ERNERGED (I) TH E BILLS WERE RAISED ON THE CLIENTS BY THE COMPANY, SPOT ADRNEDIA PVT. LTD. THE ASSESSEE HAD P RODUCED BILLS (30 NOS.) BEFORE THE ASSESSING OFFICER. (II) THE PAYRNENTS OF HOARDING D ISPLAY CHARGES FROM THE CONCERNED CLIENTS WERE RECEIVED BY THE COMPANY, SPOT ADMEDIA PVT. LTD. AND NOT BY THE ASSESSEE. THIS FACT IS EVIDENCED BY THE COPY OF LEDGER ACCOUN T OF THE CONCERNED CLIENTS IN THE BOOKS OF ACCOUNT OF THE COMPANY, SPOT ADMEDIA PVT. LTD (I II) THE CLIENTS HAVE DONE TRANSACTION WITH THE COMPANY AND THE HOARDING DISPLAY CHARGES H AVE BEEN RECEIVED BY THE COMPANY. THIS FACT IS EVIDENCED BY THE BANK STATEMENT OF THE COMPANY WHEREIN THE CHEQUES RECEIVED FROM THE CLIENTS ON ACCOUNT OF HOARDING DISPLAY CHA RGES HAVE BEEN CREDITED. (IV) THE CLIENTS HAVE CONFIRMED THAT THE P.A.NO. OF MANISH C HUGH WAS ERRONEOUSLY MENTIONED IN THE TDS CERTIFICATES. THE CLIENTS HAVE SUBMITTED TH AT IN RESPECT OF SPECIFIED TRANSACTIONS WITH M/S. SPOT ADMEDIA PVT. LTD. TAX HAS BEEN DEDUC TED AND REMITTED AT THE PRESCRIBED RATE OF .2.06% DURING THE F.Y. 2008-09. HOWEVER, WH ILE FILING THE QUARTERLY RETURN, P.A.NO. WAS ERRONEOUSLY CONSIDERED AS ACTPC7069E IN PLACE OF AATCS3109H. THE CLIENTS NAMELY HANSA VISION, TITAN INDUSTRIES LIMIT ED, SPECTS WORLD PVT. LTD., VISION WORLD PVT. LTD. HAVE SUBMITTED 1ETTES IN THIS BEHA LF. (V) IT ISSEEN THAT IN RESECT OF SOME OF THE BILLS, THE TDS CERTIFICATES WERE ISSUED IN THE NAME OF THE SPOT ADMEDIA PVT. LTD.; HOWEVER THE P.A.NO. OF MANISH CHUGH WAS ERRONEOUSLY MENNTIONED. (VI) THE COMPANY, SPOT ADMEDIA PVT. LTD. HAS ALSO TCERTIFIED THAT THE AMOUNT OF RS.27,97,583/- ON WHICH TAX HAD BEEN DEDUCTED BY VARIOUS CUSSTOMERS DURING THE F.Y. 2008-09 IN THE NAME OF MANISH CHUGH WRONGLY HAS BEEN INCLUDED IN THE BOOKS OF ACC OUNT OF THE COMPANY, (VII) IT IS SEEN THAT IN THE BALANCE SHEET OF THE APPELLANT AS ON 31 .3.2009 THE AMOUNT OF TDS OF RS.63,468/- DUE TO THE COMPANY HAD BEEN DULY ACKNOW LEDGED AS LIABILITY. IN LIGHT OF THE AFORESAID FACTS, I AM OF THE CONSIDERED VIEW THAT T HE CLIENTS/CUSTOMERS HAVE CONFIRMED THATL THEY HAVE CARRIED OUT TRANSACTIONS WITH THE COMPANY NAMELY SPOT ADMEDIA PVT. LTD. THE COMPANY HAS ACCOUNTED FOR THE RECEIPTS IN ITS BOOKS OF ACCOUNTS. THE RECEIPTS HAVE BEEN RECEIVED BY THE COMPANY FROM THE CLIENTS DIRECTLY THROUGH BANKING CHANNEL. THEREFORE, MERELY FOR THE REASONS THAT THE CLIENTS MENTIONED WRONG P.A.NO WHILE ISSUING TDS CERTIFICATES CANNOT BE A GROUND FOR TAXING THE INCOME OF THE COMPANY IN THE HANDS OF THE APPELLANT. IN VIEW OF THESE FACTS AND DOUMENTS AVAILABLE BEFORE ME, I FIND THAT THE APPELLANT CANNOT BE SADDLED WITH TAX LIABILITY ON I NCOME WHICH WAS NEITHER PAID NOR ACCRUED TO HIM, AND ON WHICH THE APPELLANT NEVER HA D ANY RIGHT TO RECEIVE. FOR WHATSOEVER REASON, ANY DEDUCTOR OF TAX WHO MAKES A PAYMENT TO THIRD PARTIES, IF WRONGLY UPLOADS TAX DEDUCTON INFORMATION IN 26AS, THAT CAN NOT TANTAMOUNT TO BE INCOME IN THE HANDS OF ALLEGED DEDUCTEE WHO IS NOT RECIPIENT OF T HE INCOME AND DOES NOT EXERCISE ANY CONTROL OVER THE DEDUCTOR. THEREFORE, I AM OF THE C ONSIDERED VIEW THAT THE ASSESSING OFFICER WAS NOT RIGHT IN LAW AND ON FACTS IN TAXING THE RECEIPTS OF THE COMPANY IN THE HANDS OF THE APPELLANT. THE COMPANY HAS CONFIRMED THAT IT HAS SHOWN RECEIPTS AMOUNTING TO RS.27,97,583/- IN TS BOOKS OF ACCOUNTS AND HAS PRO DUCED DOCUMENTARY EVIDENCE IN ITS SUPPORT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRE CTED TO DELETE RS.27,97,583/- OUT OF TOTAL ADDITION OF RS.28,06,169/-. THE ASSESSING OFFICER I S FURTHER DIRECTED TO WITHDRAW THE CREDIT OF TDS OF RS 63,468/- GRANTED TO THE APPELLANT. GRO UND NO.1 OF THE APPEAL IS PARTLY ALLOWED. CIT(A) ALSO DIRECTED THE AO TO WITHDRAW THE CREDIT OF TDS OF RS.63,468/-. AGGRIEVED, REVENUE PREFERRED APPEAL BEFORE US. 4 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE FACTS AND FOUND THAT THE A O NOTICED FROMFORM NO. 26AS THAT TAX HAS BEEN DEDUCTED AT SOURCE FOR A SUM OF RS.65,015/ - IN THE NAME OF THE ASSESSEE INDIVIDUAL I.E. MANISH CHUGH RELATING TO CONTRACT RECEIPT ON ACCOUN T OF HOARDING CHARGES AT RS.44,67,385/-. NOW, ASSESSEE SHRI MANISH CHUGH IS A PROPRIETOR OF PLAK ADD. THE ASSESSEE IN INDIVIDUAL CAPACITY OFFERED TOTAL CONTRACTUAL RECEIPT AT RS.16 ,61,216/- AND BEING THE DIFFERENCE (RS.44,67,385 16,61,216 = RS.28,06,169), THE AO REQUIRED THE ASSESSEE TO EXPLAIN, THOUGH PREVIOUSLY ASSESSEE HAD PROPRIETORY CONCERN STYLED SPOT, HOW THIS AMOUNT WAS ACCOUNTED FOR BY ASSESSEE. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THE SAID CONCERN SPOT WAS TAKEN OVER BY SAPL W.E.F. 01.04.2007 BUT CERTAIN CLIENTS OF SA PL DEDUCTED TDS AND ISSUED TDS CERTIFICATES DURING THIS FY 2008-09 RELEVANT TO AY 2009-10 IN THE NAME OF THE ASSESSEE, INDIVIDUAL, ALTHOUGH BILLS WERE RAISED BY THE COMPA NY. THE ASSESSEE BEFORE THE AO, BEFORE CIT(A) AND EVEN NOW BEFORE US PRODUCED COMPLETE BIL LS RAISED BY THE ASSESSEE COMPANY BEING 30 IN NUMBERS, COMPLETE RECONCILIATION STATEMENT AN D LIST OF DOCUMENTS AS NARRATED IN PARA 3 PAGE 2 OF THIS ORDER. THE ASSESSEE EXPLAINED BEFOR E THE LOWER AUTHORITIES AND EVEN NOW BEFORE US THAT THE CLIENTS HAVE ERRONEOUSLY DEDUCTED TDS I N THE NAME OF SPOT I.E. THE ASSESSEE IN INDIVIDUAL CAPACITY AND THE PAN OF ASSESSEE WAS MEN TIONED THEREIN INSTEAD OF COMPANYS. THE ASSESSEES COUNSEL BEFORE US SUBMITTED THAT THE AO HAD FAILED TO RECOGNIZE THIS FACT THAT THE DEDUCTOR HAD FAILED TO INDICATE CORRECT NAME OF THE COMPANY AND THE PAN WHILE FILLING UP THE TDS CERTIFICATE WHILE FILING THE TDS RETURNS. ACCO RDING TO LD. COUNSEL FOR THE ASSESSEE, NOW BEFORE US, THE FIGURES OF CONTRACTUAL RECEIPT APPEA RING IN FORM NO. 26AS WERE ALREADY ACCOUNTED FOR IN THE HANDS OF THE COMPANY AND DULY ACKNOWLEDGED AS LIABILITY OF RS.63,468/- I.E. THE TDS WITH CORRESPONDING DEBIT TO TDS CLAIME D BY THE ASSESSEE. THE ASSESSEE HAS FILED DETAILS OF TDS OF RS.63,468/- DEDUCTED BY THE PARTI ES BILL WISE AND EVEN THE BREAK UP IS NOW AVAILABLE IN ASSESSEES PAPER BOOK ALONG WITH RECON CILIATION, TDS CERTIFICATES ALONG WITH FORM NO. 26AS. ACCORDING TO LD. COUNSEL FOR THE ASSESSE E, THE SUM OF RS.28,06,169/- WERE THE RECEIPTS OF THE COMPANY SAPL AND THESE ARE NOT THE RECEIPTS OF THE ASSESSEE. WE HAVE GONE THROUGH THE DOCUMENTS AND ARGUMENTS. WE FIND THAT THIS CONTENTION OF THE ASSESSEE THAT THE SUM OF RS.28,06,169/- WERE THE RECEIPTS IN THE HAND S OF THE COMPANY SAPL AND IT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE INDIVIDUAL. WE F IND NO INFIRMITY IN THE DIRECTION OF THE CIT(A) THAT IT IS THE AO WILL DELETE TO THE EXTENT OF RS.27,97,883/- OUT OF THE TOTAL ADDITION OF RS.28,06,161/-. THE CIT(A) HAS ALSO RIGHTLY DIRECT ED TO WITHDRAW THE CREDIT OF TDS OF RS.63,468/- GRANTED TO THE ASSESSEE. AS REGARDS TO CLAIM OF THE ASSESSEE IN HIS CO, WHETHER THE AMOUNT OF RS.18,070/- IS INCLUDED IN THE TOTAL CLAI M OF RS.63,468/- OR NOT, NEEDS VERIFICATION. THIS CAN BE VERIFIED BY THE AO WHILE GIVING APPEAL EFFECT TO THIS ORDER. THE ASSESSEE WILL FILE 5 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 EVIDENCE IN SUPPORT OF HIS CLAIM BEFORE THE AO QUA THIS CREDIT ONLY. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. 5. THE ONLY COMMON ISSUE IN THIS APPEAL OF REVENUE AND CROSS OBJECTION OF ASSESSEE IS AS REGARDS TO THE ORDER OF CIT(A) RESTICTING THE ADDIT ION AT RS.10,20,000/- OUT OF THE TOTAL ADDITION OF RS.60,39,906/- UNDER THE HEAD DEEMED DIVIDEND BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT BY THE AO. FOR THIS, REVENUE H AS RAISED FOLLOWING GROUND NO.2 AND ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: REVENUES GROUND NO.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.50,19,906/- MADE UNDER THE HEAD OF DEEMED DIVIDEND 2(22)(E) BY HOLDING THAT THE ASSESSEE HAS ACTUALLY RECEIVED RS.10,20,000/- AS LOAN IN THE F.Y UNDER ASSESSMENT FROM A COMPANY IN WHICH HE HAD SUBSTANTIAL INTEREST WHEREAS THE ACTUAL AMOUNT OF LOAN WAS ESTABLISHED B Y THE AO AT RS.50,19,906/-. ASSESSEES GROUND NO.2. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW IN TREATIN G THE LOAN OF RS.10,20,000/- RECEIVED DURING THE YEAR AS DEEMED DIVIDEND PARTICULARLY WHE N SUCH LOAN IS NOT GRATUITOUS AND IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON T HE COMPANY BY SUCH SHAREHOLDER. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO NOTED THE WRONG FACTS THAT ASSE SSEE HAS OBTAINED LOAN FROM SAPL AT RS.60,66,772/-. THE RELEVANT OBSERVATION OF THE AO IN HIS ASSESSMENT ORDER READS AS UNDER: IN THE PERSONAL BALANCE SHEET AS ON 3.03.2009, THE ASSESSEE IS SHOWING UNSECURED LOAN OF RS.67,49,772/-. LOAN CONFIRMATIONS OF THE SAME HAVE BEEN FILED. THE LOANS ARE FROM THRE PARTIES. LOAN OF RS.60,66,772/- IS FROM SPOT ADMEDIA PVT. LTD. AS PER THE LOAN CONFIRMATION THE OPENING BALANCE OF RS.50,19,906/- AS ON 1.4.2008. INTEREST OF RS.7,07,966/- HAS BEEN PROVIDED AND RS.6,81,100/- H AS BEEN REPAID. IN THE I. T. RETURN FOR A.Y. 2008-09 NO SECURED OR UNSECURED LOAN ARE S HOWN IN PART-A-BS OF THE ITR-4 RETURN FILED. SO IT IS EVIDENT THAT THE ASSESSEE H AS TAKEN LOAN IN THE CURRENT YEAR. THE ASSESSEE HAS TAKEN TOTAL LOAN OF RS.60,39,906/- FRO M SPOT ADMEDIA PVT. LTD. THE ASSESSEE IS ONE OF THE SHAREHOLDERS OF SPOT ADMEDIA PVT. LTD. HAVING 75% SHARE. THEREFORE, AS PER SECTION 2(22)(E) THE AMOUNT OF LO AN RS.60,39,906/- IS TREATED AS DEEMED DIVIDEND RECEIVED BY THE ASSESSEE FROM THE C OMPANY AND IS ASSESSED AS SUCH. THE AO HAS NOT GONE INTO THE ACCOUNT OF SAPL IN THE BOOKS OF ASSESSEE WHEREIN THERE IS CLEAR CUT OPENING BALANCE AS ON 01.04.2008 FOR AN AMOUNT OF RS.50,19,906/- AND IT HAS RECEIVED A FURTHER SUM OF RS.10.20 LACS DURING THE YEAR. THE CIT(A) NOTED THIS FACT AND RESTRICTED THE ADDITION AT RS.10.20 LACS BY OBSERVING IN PARA 8 OF HIS APPELLATE ORDER AS UNDER: 8. AS REGARDS GROUND NOS. 4 & 5 OF THE APPEAL, THE APPELLANT HAS CONTESTED THE ADDITION OF RS.60,39,906/- MADE ON ACCOUNT OF DEEMED DIVIDEN D. THE APPELLANT IS HAVING 75% SHARES IN SPOT ADMEDIA PVT. LTD. THE APPELLANT HAS RECEIVED LOAN FROM SPOT ADMEDIA PVT. LTD. AS UNDER: 6 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 RS. 01.04.08 OPENING BALANCE ... 50,19,906.00 ADD: RECEIVED DURING THE YEAR ... 10,20.000.00 60,39,906.00 LESS: REPAYMENT DURING THE YEAR ... 6,81,100.00 53,58,806.00 ADD: INTEREST CHARGED BY COMPANY ... 7.07,966.0 0 31.03.09 CLOSNG BALANCE ... 60,66.772.00 FROM THE ABOVE, IT IS CRYSTAL CLEAR THAT DURING THE YEAR THE ASSESSEE HAD RECEIVED LOAN OF RS.10,20,000/- FROM THE COMPANY WHEREIN HE IS SUBST ANTIALLY INTERESTED. THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) ARE APPLICABLE ON TH E FACTS OF THE PRESENT CASE. HOWEVER, THERE IS FORCE IN THE CONTENTION OF THE APPELLANT T HAT OPENING BALANCE OF RS.50,19,906/- CANNOT BE CONSIDERED AS DEEMED DIVIDEND FOR THE CUR RENT YEAR SINCE SUCH PAYMENT WAS NOT MADE DURING THE CURRENT FINANCIAL YEAR. THIS CONTEN TION OF APPELLANT IS IN ACCORDANCE WITH LAW. HOWEVER, THE APPELLANTS CONTENTION THAT THE L OAN HAS BEEN TAKEN ON INTEREST AND IT IS PURE1Y BUSINESS TRANSACTION AND THEREFORE IT CANNOT BE TREATED AS DEEMED DIVIDEND IS NOT ACCEPTABLE IN MY CONSIDERED OPINION. EVEN IF THE AP PELLANT HAS TAKEN LOAN ON INTEREST FROM THE COMPANY, THIS IS HIT BY THE PROVISION OF SECTIO N 2(22)(E) BECAUSE THE COMPANY IS NOT ENGAGED IN MONEY LENDING BUSINESS. AFTER EXCLUDING THE OPENING BALANCE OF RS.50,19,906/- IT IS SEEN THAT THE APPELLANT HAS RECEIVED LOAN DUR ING THE YEAR FROM THE COMPANY TO THE TUNE OF RS.10,20,000/- OUT OF WHICH THE REPAYMENT O F RS.6,81,100/- CLAIMED TO BE DEDUCTIBLE FROM THE LOAN RECEIPT IS NOT ACCEPTABLE BECAUSE THE WHOLE AMOUNT OF LOAN RECEIVED FROM THE COMPANY DURING THE RELEVANT PREVI OUS YEAR WILL FALL UNDER THE AMBIT OF DEEMED DIVIDEND WITHIN THE MEANING OF SECTON 2(22) (E). FURTHER, THE ACCUMMULATED PROFIT OF THE COMPANY AS ON 31.3.2008 WAS ADMITTEDLY RS.3 1,56,655/- WHICH IS MORE THAN THE LOAN RECEIVED DURING THE YEAR OF RS.10,20,000/-. TH EREFORE, IT IS HELD THAT THE LOAN RECEIVED DURING THE YEAR OF RS.10,20,000/- AS DEEMED DIVIDEN D U/S. 2(22)(E) IN THE HANDS OF THE APPELLANT. THEREFORE, THE ADDITION TO THE EXTENT O F RS.10,20,000/- IS CONFIRMED. HOWEVER, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN LAW IN TAXING THE OPENING BALANCE OF RS.50,19,906/- WHICH WAS NOT RECEIVED BY THE APPELL ANT IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009-10 S IT PERTAINS TO THE EARLIE R YEARS. THE AFORESAID SUM IS NOT TAXABLE AS DEEMED DIVIDEND FOR THE CURRENT YEAR IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE (A) OF SECTION 8 OF THE I. T. ACT, 1961. TH ERFORE, THE ADDITION MADE TO THE EXTENT OF RS.50,19,906/- U/S. 2(22)(E) IS DELETED. HENCE, GR OUND NOS. 4 & 5 OF THE APPEAL ARE PARTLY ALLOWED. AGGRIEVED, BOTH CAME IN APPEAL BEFORE US. 7. WE FIND THAT THIS IS A FACTUAL POSITION AS NOTED BY CIT(A) THAT THE SUM OF RS.50,19,906/- BEING OPENING BALANCE AS ON 01.04.2008 CAN NEVER BE COME THE SUBJECT MATTER OF ADDITION BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT BEING DEEMED DIVIDEND FOR THE REASON THAT THIS IS MERELY AN OPENING BALANCE AND THE SAME CANNOT BE ADDED IN THIS YEAR. HOWEVER, THE ASSESSEE HAS RECEIVED A SUM OF RS.10.20 LACS DURING THE YEAR AND ALSO CHARGED INTEREST AT RS.7,07,966/- AND THE SAME HAS RIGHTLY BEEN RESTRIC TED BY CIT(A) AND DELETED THE BALANCE ADDITION OF RS.50,19,906/-. WE FIND NO INFIRMITY I N THE ORDER OF CIT(A) AND BOTH THE ISSUES THAT OF REVENUE AND ASSESSEE ARE DISMISSED. 7 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 8. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF UNDISCLOSED BANK INTEREST OF RS.1,75,42 9/-. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.3: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.1,75,429 /- MADE UNDER THE HEAD OF UNDISCLOSED BANK INTEREST BY HOLDING THAT THE FDS ON WHICH THE SAID INTEREST ACCRUED WERE NOT HELD BY THE ASSESSEE IGNORING THE FACT THAT THE TDS CRED IT ON THE CORRESPONDING AMOUNT HAS BEEN CLAIMED BY THE ASSESSEE IN HIS RETURN. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ASSESSMENT ORDER THAT THE AO HIMSE LF HAS RECORDED THIS FACT THAT THE ASSESEE HAS RECEIVED THIS INCOME OF RS.1,75,424/- FROM ORIE NTAL BANK OF COMMERCE BUT IN PAGE 2 THE ASSESSEE CLEARLY CONTRADICTED THAT THE FIXED DEPOSI T IN THE NAME OF SPOT AND MANISH CHUGH WAS TRANSFERRED IN THE NAME OF SAPL ON 22.10.2008 B Y ORIENTAL BANK OF COMMERCE AND THEREAFTER TDS WAS DEDUCTED AGAINST INTEREST ON FIX ED DEPOSIT AS RECORDED IN 26AS OF THE ASSESSEE COMPANY. THE ASSESSEE PRODUCED THE COPY O F 26AS BEFORE THE AO AS WELL AS BEFORE CIT(A) AND NOW IN HIS PAPER BOOK BEFORE US. THE COM PANY SAPL ALSO CERTIFIED THAT THIS INTEREST OF RS.1,75,422/- HAS ALREADY BEEN INCLUDED IN THE P&L ACCOUNT OF THE COMPANY AND ON THAT BASIS CIT(A) DELETED THE ADDITION BY OBSERVING IN PARA 6 AS UNDER: 6. GROUND NO. 2 OF THE APPEAL IS DIRECTED AGAINST THE ADDITION OF INTEREST ON FD OF RS.1,75,429/-. THE APPELLANT HAS CONTENDED THAT TH E FACT OF TAKEOVER OF THE ASSETS AND LIABILITIES OF SPOT AND MANISH CHUGH BY THE COMPA NY WITH EFFECT FROM 01.04.2007 WAS DULY INFORMED TO THE ASSESSING OFFICER ALONG WI TH DOCUMENTARY EVIDENCES NOTED IN THE PAPER BOOK. THE APPELLANT CONTENDED THAT IT WA S PROVED THAT THE APPELLANT WAS NOT THE OWNER OF FIXED DEPOSITS, THEREFORE MERELY BECAU SE OF TDS ERRONEOUSLY DEDUCTED IN THE NAME OF MANISH CHUGH WOULD NOT MAKE THE INTERES T ON FD, THE INCOME OF MANISH CHUGH, WHEN THE OWNERSHIP OF FD WAS WITH THE COMPAN Y. THE COMPANY, SPQT ADMEDIA PVT. LTD. HAS ALSO CERTIFIED AS UNDER: IT IS ALSO CERTIFIED THAT THE INTEREST OF RS.1,75, 424/- ON WHICH TAX HAS BEEN DEDUCTED BY ORIENTAL BANK OF COMMERCE, NEW AHPORE B RANCH ERRONEOUSLY IN THE NAME OF THE MANISH CHUGH HAS BEEN INCLUDED IN T HE ITEM INTEREST ON FIXED DEPOSIT REECEIVED OF OUR PROFIT & LOSS ACCOUNT AMOU NTING TO RS.5,43,592/-FOR THE FINANCAL YEAR 2008-09. SINCE THE INTEREST INCOME OF RS.1,75,424/- HAS ACCR UED ON THE FDS OWNED BY THE COMPANY, THE INTEREST INCOME ARE TO BE TAXED IN THE HANDS OF THE COMPANY. THE COMPANY HAS INCLUDED THE AFORESAID INTEREST INCOME IN ITS P & L ACCOUNT FOR THE F.Y. 2008-09 RELEVANT TO A.Y. 2009-10. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.1,75,424/-. THE AO IS ALSO DIRECTED TO WITHDRAW THE CREDIT OF TDS OF RS.18,070/- PERTAINING TO THE INTEREST INCOME OF RS .1,75,424/-. ACCORDINGLY GROUND NO.2 IS PARTLY ALLOWED. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND WE CONFRIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 8 ITA NO.1768/K/2012 & CO 159/K/2012 MANISH CHUGH , AY:2009-10 10. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED AND CO OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2014 SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH FEBRUARY, 2014 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT ACIT, CIR-28, KOLKATA 2 ./,- / RESPONDENT SHRI MANISH CHUGH, 470A, BLOCK-K, NE W ALIPORE, KOLKATA-700 053 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .