ITO, Ward - 8(3), Kolkata, Kolkata V. Shri Gautam Agarwala, Kolkata

ITA 185/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54759 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: D S DAMLE
• Keywords: Gift; Salary income; Deemed dividend
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 185/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-8(3), KOLKATA. V SHRI GAU TAM AGARWALA (PAN:ADDPA 3539 J) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 15.11.2011 DATE OF PRONOUNCEMENT: 29.12.2011 FOR THE APPELLANT: SHRI D. J. MEHTA FOR THE RESPONDENT: SHRI D. S. DAMLE '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-VII1, KOLKATA IN APPEAL NO.359/CIT(A)-VIII/KOL/08-09 VIDE DATED 20.11.2009. ASSESSMENT WAS FRAMED BY ITO, WARD- 8(3), KOLKATA U/S. U/S. 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 29 .12.2008. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF DEDUCTION OF EXPENDITURE OF RS.1,65 ,531/- AGAINST SALARY INCOME WHEREAS THESE EXPENSES ARE INCURRED AGAINST INCOME FROM OTHER SOU RCES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)-VIII, KOLKATA, HAS ERRED IN DELETING THE ADDITION OF RS.1 ,65,531/- WHEN SUCH EXPENDITURE IS NOT ALLOWABLE AS DEDUCTION FROM SALARY U/S. 71(2A) AND IT IS NOT SPENT FULLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF INCOME FROM OTHER SOU RCES OF RS.6,101/- ONLY. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO MADE DISALLOWANCE OF EXPENDITUR E AS THE ASSESSEE COULD NOT FILE ANY EXPLANATION TO BE SHOW CAUSE NOTICE. DURING THE APP ELLATE PROCEEDINGS THE CIT(A) REQUIRED THE ASSESSEE TO EXPLAIN AND THEREAFTER HE ASKED FOR COM MENTS OF THE AO. CIT(A) FOUND THAT THE INTEREST DISALLOWANCE IS ON BORROWED CAPITAL TO THE EXTENT OF RS.1,58,481/- AND ASSESSEES CLAIM WAS THAT THE CAPITAL WAS BORROWED FOR GRANTING OF A DVANCES AND MAKING INVESTMENTS IN 2 ITA 185/K/2010 GAUTAM AGGARWALA. A.Y.06-07 COMPANIES CONTROLLED BY HIM. THE AO IN HIS REMAND REPORT DATED 20-8-09 STATED THAT THE EXPENDITURE WAS OUT OF MIXED FUNDS I.E PART FINANC E OF OPERATIONS OF CONTROLLED OF THESE COMPANIES AND PART FOR INVESTING IN EQUITIES GRANT ING OF LOANS TO THESE COMPANIES. CIT(A) AFTER GOING THROUGH DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE CIT VS. RAJEEVA LOCHAN KANORIA (1994) 208 ITR 616(CAL) ALLOWED THE CLAIM O F ASSESSEE. HONBLE CALCUTTA HIGH COURT LAID DOWN THAT THE ACTIVITY OF CONTROLLING, MANAGIN G, ADMINISTERING AND FINANCING COMPANIES IS NOTHING BUT A BUSINESS/PROFESSIONAL/VOCATIONAL ACTI VITY. ACCORDING TO HONBLE HIGH COURT A BUSINESSMAN DID NOT PURCHASE SHARES OF DIFFERENT CO MPANIES FOR ACQUIRING CONTROLLING INTEREST THEREIN ONLY FOR EARNING DIVIDENDS BUT FOR MANAGING , ADMINISTERING, FINANCING AND REHABILITATING UNDER CONTROLLED FOR BUSINESS AND/ OR PROFESSIONAL PURPOSES. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COU RT, WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE. THIS ISSUE OF REVENUE IS DISMISSED. 4. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF UN EXPLAINED UNSECURED LOAN. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: 2 .THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A)-VIII, KOLKATA ERRED IN DELETING RS.11,29,934/- (EQUIVALEN T TO U.S. $24545) WHEN THE ASSESSEE COULD NOT SUBMIT ANY EXPLANATION OF THE RECEIPT OF THE SAME FROM M/S. APEX RESOURCES OF USA AND THE EXPLANATION THAT IT WAS LOAN FROM AS SESSEES SISTER SMT. VINITA GUPTA WAS FOUND TO BE INCORRECT. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO DURING THE ASSESSMENT PROCEEDIN GS MADE ADDITION OF RS.11,29,934/- BEING UNDISCLOSED INCOME OF ASSESSEE. THE ASSESSEE CONTEN DED BEFORE ASSESSING OFFICER THAT IT IS A LOAN TAKEN FROM HIS SISTER, WHO IS NON-RESIDENT. TH E ASSESSING OFFICER IN HIS SAID REMAND REPORT STATED THAT THIS IS NEITHER A LOAN NOR A GIFT. CIT( A) NOTED THAT IN THE ASSESSMENT ORDER OF LEVANA PRODUCTS PVT. LTD, THIS TRANSACTION IS TO BE TREATE D AS LOAN BY THE ASSESSING OFFICER. IT IS ALSO A FACT THAT THE TRANSACTIONS HAVE BEEN TAKEN THROUGH BANKING CHANNEL. IT IS ALSO A FACT THAT FIRC ISSUED BY ICICI BANK WAS BEFORE ASSESSING OFFICER A ND THE ASSESSING OFFICER HAS NOT COMMENTED ADVERSELY ON THE ABOVE. SINCE IDENTITY, C REDITWORTHINESS AND GENUINENESS IS NOT IN DOUBT, THIS CANNOT BE ADDED AS UNDISCLOSED INCOME O F ASSESSEE. HENCE, WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE. THIS ISSUE OF REVENUE IS DISM ISSED. 6. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT BEING DEEMED DIVIDEND. FOR THIS, REVENUE HAS RAISE D FOLLOWING GROUND NO.3: 3 ITA 185/K/2010 GAUTAM AGGARWALA. A.Y.06-07 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-VIII, KOLKATA ERRED IN DELETING THE ADDITION OF RS.45,000 /- U/S. 2(22)(E) OF THE I. T. ACT, 1961 ON THE GROUND THAT IT WAS ADVANCE SALARY WHEN THERE IS NO DIFFERENCE BETWEEN AN ADVANCE AND AN ADVANCE SALARY IN SECTION 2(22)(E) OF THE I. T. ACT, 1961. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER DURING THE COUR SE OF ASSESSMENT PROCEEDINGS MADE ADDITION BY INVOKING THE PROVISION OF SECTION 2(22)(E) OF TH E ACT ON ACCOUNT OF ADVANCE RECEIPT FROM ASSESSEE BY M/S. HIGH RISE EXPORT PVT. LTD. THE ASS ESSEES CONTENTION WAS THAT THIS AMOUNT WAS ADVANCE OF SALARY FROM M/S. HIGH RISE EXPORTS P VT. LTD AND THAT CANNOT BE TREATED ANY LOAN OR ADVANCE. ONCE, THIS IS NOT A LOAN OR ADVANCE, IT CANNOT TREATED AS DEEMED DIVIDEND AND FOR THAT INVOCATION OF SECTION 2(22)(E) BY ASSESSING OF FICER IS WRONG. HENCE, WE CONFIRM THE ORDER OF CIT(A). THIS ISSUE OF REVENUE IS ALSO DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. ORDER PRONOUNCED IN OPEN COURT ON 29.12.2011. SD/- SD/- . ! . , '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED 29TH DECEMBER, 2011 /0 %12 3 JD.(SR.P.S.) '. 4 , 5''6- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WARD-8(3), KOLKATA 2 ,-*+ / RESPONDENT, SHRI GAUTAM AGARWALA, 305, VARDAN, 25 A, CAMAC ST., KOLKATA-700 016. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . => ,% / DR, KOLKATA BENCHES, KOLKATA - ,/ TRUE COPY, '.%?/ BY ORDER, 2 /ASSTT. REGISTRAR .