The DCIT, Circle-2(1)(1), Ahmedabad V. Shri Shekhar G. Patel, Ahmedabad

ITA 2314/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3372 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 08-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Sale consideration of property below Jantri Value; Maximum Marginal Rate; Notional interest; Reason to believe
• Section: 143(3); 50C

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2314/AHD/2016 WITH CO NO.164/AHD/2016 / ASSTT. YEAR: 2008-09 DCIT, CIR.2(1)(1) AHMEDABAD. VS. SHRI SHEKHAR G. PATEL GANESH CORPORATE HOUSE 100 FT. HEBATPUR-THALTEJ ROAD NR. SOLA BRIDGE OFF S.G. HIGHWAY AHMEDABAD. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI S.K. DEV, SR.DR ASSESSEE BY : SHRI NUPUR SHAH, AR ! / DATE OF HEARING : 14/02/2019 '#$ ! / DATE OF PRONOUNCEMENT: 21 /02/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-2, AHMEDABAD DATED 22.6.2016 PASSED FOR T HE ASSTT.YEAR 2008-09. ON RECEIPT OF NOTICE ON REVENU ES APPEAL, THE ASSESSEE HAS ALSO FILED CROSS OBJECTION BEARING NO. 164/AHD/2016. 2. IN THE FIRST GROUND OF APPEAL, REVENUE HAS PLEAD ED THAT THE LD.CIT(A) HAS ERRED IN QUASHING RE-ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 19 61. ITA NO.2314/AHD/2016 WITH CO 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 27.3.2010 DECLARING TOTAL INCOM E AT RS.49,53,850/-. AN ASSESSMENT ORDER WAS PASSED UND ER SECTION 143(3) ON 23.12.2010. THE LD.AO DID NOT MAKE ANY A DDITION TO THE INCOME DECLARED BY THE ASSESSEE AND ACCEPTED DE CLARED INCOME. THE ASSESSEE WAS A DIRECTOR IN A COMPANY N AMED GANESH HOUSING CORPORATION LTD.(GHCL FOR SHORT). RECORDS OF GHCL WERE SUBJECT TO AUDIT SURVEY AND EXAMINED BY THE REVENUE DEPARTMENT. THE REVENUE AUTHORITIES FOUND THAT GHC L HAS DISALLOWED A SUM OF RS.80,38,101/-. IN THE COMPUTA TION OF TOTAL INCOME, IT MADE REFERENCE TO THE AUDIT REPORT AND O BSERVED THIS AMOUNT RELATES TO PERSONAL EXPENDITURE, HENCE, IT W AS CONSTRUED THAT EXPENDITURE INCURRED ON PERSONAL NEEDS OF THE DIRECTOR OUGHT TO HAVE BEEN SHOWN BY THE DIRECTOR AS PERQUISITE IN THE RETURN. ACCORDING TO THE AO, THE ASSESSEE FAILED TO RECOGNI ZE THAT EXPENDITURE AS HIS INCOME WHICH HAS ESCAPED ASSESSM ENT. THEREFORE, HE RECORDED REASONS AND REOPENED THE ASS ESSMENT. THE REASONS RECORDED BY THE AO HAS BEEN REPRODUCED BY THE LD.CIT(A), WHICH READS AS UNDER: 'REASONS FOR INVOKING PROVISIONS OF SECTION 147 OF THE I. T. ACT 1. THE ASSESSEE IS ONE OF THE DIRECTORS IN GANESH H OUSING CORPORATION LIMITED. THE RETURN OF INCOME WAS FILED ON 27/03/2010 DECLARING TOTAL INCOME OF RS.49,53,850/- . THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(2 3) ON 23/12/201DETERMINING TOTAL INCOME AT RS.49,53,850/ -. DURING THE COURSE OF VERIFICATION OF RECORDS OF THE GANESH HOUSING CORPORATION LIMITED, IT HAS BEEN NOTICED TH AT GANESH HOUSING CORPORATION LIMITED HAS DISALLOWED A SUM OF RS.80,38,101/- IN THE COMPUTATION OF TOTAL INCOME. IN THE ITA NO.2314/AHD/2016 WITH CO 3 ANNEXURE - 6 OF THE TAX AUDIT REPORT THE DETAILS OF EXPENDITURE OF PERSONAL NATURE HAVE BEEN GIVEN WHIC H INCLUDES EXPENDITURE ON TELEPHONE, ELECTRICITY, MOT OR CAR USAGE, FOREIGN TRAVELLING AND OTHER EXPENSES ON BEH ALF OF THE DIRECTORS ETC. THE AUDITOR OF THE GANESH HOUSING CO RPORATION LIMITED HAS DISALLOWED SUCH EXPENSES SINCE IT WAS T REATED EXPENDITURE OF PERSONAL NATURE. IT WAS AISO CERTIFI ED THAT SUCH EXPENDITURES WERE FOR THE BENEFIT OF DIRECTORS . AS PER THE SECTION 2(24) (IV) THE VALUE OF ANY BENE FIT OF PREREQUISITE WHETHER CONVERTIBLE INTO MONEY OR NOT OBTAINED FROM A COMPANY EITHER BY A DIRECTOR OR BY A PERSON WHO HAS A SUBSTANTIAL INTEREST IN THE COMPANY OR BY A RELAT IVE OF THE DIRECTOR OR SUCH PERSON AND ANY SUM PAID BY ANY SUC H COMPANY IN RESPECT OF ANY OBLIGATION WHICH, BUT FOR SUCH PAYMENT WOULD HAVE BEEN PAYABLE BY THE DIRECTOR OR OTHER PERSON AFORESAID. IN VIEW OF THE ABOVE PROVISION, THE SUM PAID BY THE COMPANY ON BEHALF OF THE DIRECTOR SHOULD HAVE BEEN REFLECTE D AS INCOME IN THE HANDS OF THE DIRECTOR. IN THE CASE OF SHRI SHEKHAR G. PATEL, AN AMOUNT OF RS.26,79,366/-BEING L/3RD OF AMOUNT OF RS.80,38,101/- HAVE TO BE INCLUDED IN THE INCOME OF THE ASSESSEE WHICH HAS BEEN ESCAPED FROM THE ASSESSMENT IN THE HANDS OF THE DIRECTOR SHRI SHEKHA R G. PATEL. 2. FURTHER SHRI SHEKHAR G. PATEL HAS TAKEN INTEREST FREE LOANS FROM UMNESH COMPLEX PVT, LTD. AND MIHIKA BUIIDCON PVT . LTD. IN WHICH HE IS ONE OF THE DIRECTORS. THE NON L EVY OF INTEREST BY UNMESH COMPLEX PVT. LTD. AND MIHIKA BUII DCON PVT. LTD. ON THE SUMS ADVANCED TO MR. SHEKHAR G. PA TEL IS A BENEFIT ENJOYED BY SHRI SHEKHAR G, PATEL BY VIRTUE OF BEING A DIRECTOR. HENCE, AS PER PROVISIONS OF SECTION 2(24) (IV), THE VALUE OF SUCH BENEFITS IS TO BE ADDED IN THE INCOME OF THE SHRI SHEKHAR G. PATEL. AS PER THE RECORDS, AVERAGE OF THE BENEFIT ENJOYED BY SHRI SHEKHAR G. PATEL AS LOAN CO MES TO RS.31849700/- ON WHICH INTEREST @ 15% COMES TO RS.4777455/-. THUS AN INCOME OF RS.4777455/- HAS ES CAPED ASSESSMENT IN THE HANDS OF SHRI SHEKHAR G. PATEL. ITA NO.2314/AHD/2016 WITH CO 4 3. ON GOING THROUGH THE SALE DEEDS SUBMITTED BY SHR I SHEKHAR G. PATEL, IS SEEN THAT PROVISIONS OF SECTIO N 50C HAS NOT BEEN COMPLIED WITH. MR. SHEKHAR G. PATEL HAS SO LD NON - AGRICULTURE LAND (50% SHARE) SITUATED AT SHILAJ VIL LAGE FOR RS. 15,00,000/-. THE STAMP DUTY PAID THEREON IS RS.89,5 00/-. BY APPLYING JANTRY RATE @ 4.9% ON STAMP DUTY PAID, THE COST OF THE PROPERTY WORKS OUT TO BE RS. 18,26,530/-. THERE FORE, THERE IS UNDER VALUATION OF PROPERTY TO THE EXTENT OF RS.3,26,530/-. SINCE, SHRI SHEKHAR G. PATEL HAD S HARE IN THE PROPERTY, UNDER ASSESSMENT COMES TO RS. 1,63,26 5/- IN THE HANDS OF SHRI SHEKHAR G. PATEL. 4. SIMILARLY A PROPERTY SITUATED AT SHILAJ VILLAGE, BLOCKNO. 737 WAS SOLD AT RS. 15,00,0007-. SHRI SHEKHAR G. PA TEL HAD 173RD SHARE IN THE SAID PROPERTY. THE STMP DUTY PAI D THEREON IS RS.87,200/-. BY APPLYING JANTRI RATE @ 4. 9% ON STAMP DUTY, THE COST OF PROPERTY SHOULD HAVE BEEN RS.17,79,590/-, SO THERE IS UNDERVALUATION OF PROPE RTY OF RS.2,79,590/- U7S. 50C OF THE ACT, SINCE SHRI SHEKH AR G. PATEL HAS 173RD SHARE IN THE PROPERTY UNDER ASSESSM ENT COMES TORS.93,195/-. IN VIEW OF ABOVE, I HAVE REASON TO BELIEVE THAT INC OME OF RS.77,13,281 /-(RS.26,79,366/- + RS.47,77,455/- + RS.1,63,265/- + RS.93,195/-) HAS ESCAPED ASSESSMENT FOR A. Y. 2008-09 AND THEREFORE, I AM OF THE OPINION THAT THIS A FIT CASE FOR ASSESSMENT BY INVOKING THE PROVISIONS OF S ECTION 147 OF THE INCOME TAX ACT, 1961.' 4. DISSATISFIED WITH THIS REOPENING, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT( A) HAS MADE A DETAILED ANALYSIS OF THE REASONS RECORDED BY THE AO VIS--VIS INFORMATION AVAILABLE TO HIM. ACCORDING TO THE LD. CIT(A) THE ASSESSMENT HAS BEEN REOPENED AFTER EXPIRY OF FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, AND THEREFORE, PROVISO APPENDED TO SECTION 147 WOULD COME IN THE WAY OF AO FOR REOPENING OF THE ASSESSMENT, UNLESS IT IS ESTABLISH ED THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO ITA NO.2314/AHD/2016 WITH CO 5 DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. IN TH E OPINION OF THE LD.CIT(A), THE AO FAILED TO REFER TO ANY MATERIAL W HICH CAN BE ALLEGED THAT THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY, AND ACCORDINGLY, THE LD.CIT(A) HAS QUASHED THE RE-ASSES SMENT ORDER. 5. BEFORE US, WHILE IMPUGNING THE ORDER OF THE LD.CI T(A), THE LD.DR CONTENDED THAT GHCL IN ITS AUDIT REPORT HAS I TSELF MADE DISALLOWANCE OF RS.80,38,101/-. IF THIS EXPENDITUR E WERE OF PERSONAL IN NATURE, THEN PERQUISITE VALUE OF THIS E XPENDITURE OUGHT TO HAVE BEEN DISCLOSED BY THE ASSESSEE. HE FAILED TO DISCLOSE THIS, THEREFORE, THIS PROVISO WILL NOT COME IN THE WAY OF THE AO, BECAUSE THE ASSESSEE FAILED TO DISCLOSE MATERIAL FACTS FULL Y AND TRULY. HE FURTHER OBSERVED THAT THE ASSESSEE HAS ALSO OBTAINE D INTEREST FREE LOANS FROM UMNESH COMPLEX PLTD., AND MIHIKA BUILDCON P.LTD. IF INTEREST AT THE RATE OF 15% IS BEING CALCULATED ON THOSE LOANS, THEN BENEFIT IN TERMS OF NOTIONAL INTEREST WOULD CO ME TO RS.47,77,455/- WHICH HAS A PERQUISITE VALUE IN THE HANDS OF THE ASSESSEE, AND IT SHOULD HAVE BEEN SHOWN AS HIS INCO ME. 6. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE RELIED UPON THE ORDER OF THE LD.CIT(A). SHE POINTED OUT T HAT AO NOWHERE APPLIED HIS MIND AND MADE ANALYSIS OF THE NATURE OF THE EXPENDITURE, AND WHETHER ANY PERSONAL ELEMENT WOULD INVOLVE IN THIS EXPENDITURE. THERE CAN BE DIFFERENT REASONS F OR THE COMPANY TO MAKE A DISALLOWANCE, OUT OF ITS CLAIM ON EXPENDI TURE. IN THE OPINION OF THE MANAGEMENT, CERTAIN EXPENDITURE WERE NOT FOR THE PURPOSE OF BUSINESS AND THE COMPANY WANTS TO PAY TA XES ON THIS COUNT, THAT WOULD NOT BECOME AUTOMATIC AS PERQUISIT E IN THE HANDS OF THE ASSESSEE. ITA NO.2314/AHD/2016 WITH CO 6 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE THAT ORI GINAL ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT. THERE IS ALSO NO DISPUTE THAT FOUR YEARS HAS LAPSED FROM THE END OF THE ASSESSMENT YEAR. THE QUESTION IS, WHETHER PROVISO APPENDED TO SECTION147 PUTS AN EMBARGO IN THE POWER OF THE AO FOR REOPENIN G OF AN ASSESSMENT ORDER, WHERE A SCRUTINY ASSESSMENT HAS B EEN MADE, AND FOUR YEARS HAS EXPIRED, WHICH WOULD COME TO THE RESCUE OF THE ASSESSEE OR NOT ? ON THE OTHER HAND, VIEW OF THE R EVENUE IS THAT THERE WAS NO DISCLOSURE OF MATERIAL FACTS FULLY AND TRULY, THEREFORE, PROVISO WILL NOT COME IN WAY OF THE AO. ON THE OTHER HAND , THE STAND OF THE ASSESSEE IS THAT AO FAILED TO ANALYSIS THE NATURE OF EXPENDITURE, AND THEREFORE, THERE IS NO LIVE-LINK B ETWEEN FORMATION OF OPINION SHOWING ESCAPEMENT OF INCOME VIS--VIS I NFORMATION AVAILABLE WITH THE LD.AO. LET US TAKE INTO CONSIDE RATION BIFURCATION OF THOSE EXPENDITURE. THESE HAVE BEEN REPRODUCED BY THE LD.CIT(A). THEY READ AS UNDER: A) ADVERTISEMENT EXPENSES : RS.46,29,768/- B) PRINTING & STATIONARY : RS.18,00,000/- C) BOOKS AND MAGAZINES : RS. 2,50,000/- D) BEING 1/5 TH OF RS.67,91,665/- : RS.13,58,333/- 8. A PERUSAL OF THE ABOVE WOULD INDICATE THAT THERE CANNOT BE ANY BENEFIT OF PERSONAL NATURE IN ADVERTISEMENT EXP ENDITURE. SIMILARLY, PRINTING AND STATION EXPENSES WERE RELAT ED TO THE COMPANY. OUT OF THE ABOVE EXPENDITURE, HOW IT COUL D BE CONSTRUED THAT ELEMENT OF PERSONAL NATURE IS INVOLV ED, AND ITS PERQUISITE VALUE IN THE HANDS OF THE DIRECTOR. THE AO HAS NOT ITA NO.2314/AHD/2016 WITH CO 7 ANALYSED DETAILS OF THESE EXPENDITURE WHILE FORMING A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. TAKING INTO CONSIDE RATION NATURE OF EXPENDITURE, WE ARE OF THE VIEW THAT THERE WAS N O SPECIFIC EXPENDITURE WHICH CAN BE TERMED AS INCURRED EXCLUSI VELY FOR THE PERSONAL NEEDS OF THE DIRECTORS. IF COMPANY WANTS TO PAY TAXES, THAT IS ITS DISCRETION, BUT FOR THAT A COMPLETED AS SESSMENT OF THE DIRECTOR AFTER FOUR YEARS CANNOT BE REOPENED. 9. OTHER REASON WHICH HAS BEEN ASSIGNED BY THE AO I S AVAILMENT OF LOANS FROM TWO COMPANIES WITHOUT PAYIN G INTEREST. WE FIND THAT THE ASSESSEE WAS HAVING SHARE HOLDING OF 9% AND 4.3% IN THE AFORESAID TWO COMPANIES VIZ. UMNESH COMP LEX PLTD., AND MIHIKA BUILDCON P.LTD. HE WAS NOT HAVING SUBST ANTIAL INTEREST IN THESE COMPANIES. IT WAS BROUGHT TO THE NOTICE O F THE LD.CIT(A) THAT ASSESSEE HAS NOT OBTAINED ANY LOAN FROM MIHIKA BUILDCON P.LTD. DURING THIS YEAR. IT WAS OPENING BALANCE. IT WAS ALSO CONTENDED THAT NON-CHARGING OF INTEREST ON THE DEBI T BALANCE IN THE RUNNING ACCOUNT OF THE DIRECTORS WOULD NOT CONS TITUTE A PERQUISITE. JUDGMENT OF HONBLE SUPREME COURT IN T HE CASE OF V.M. SALGAOCAR & BROS. PVT. LTD. VS. CIT, 243 ITR 38 3 (SC) WAS PRESSED INTO SERVICE. AGAIN, THOUGH THE LD.AO HAS TO FORM A PRIMA FACIE BELIEF ONLY, BUT HAS NOT ANALYSED ANY OF THESE DET AILS WHILE FORMING A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT , MORE PARTICULARLY, WHEN HE IS LEVELING ALLEGATIONS THAT IT WAS ESCAPED ON ACCOUNT OF NON-DISCLOSURE OF FACTS FULLY AND TRULY. TO OUR MIND, THE AO HAS NOT DEMONSTRATED THIS ASPECT IN THE REAS ONS RECORDED BY HIM. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS ITA NO.2314/AHD/2016 WITH CO 8 RIGHTLY QUASHED THE REASSESSMENT ORDER. WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS DISMISSED. 10. IN GROUND NO.2, REVENUE HAS PLEADED THAT THE LD .CIT(A) HAS ERRED IN DELETING ADDITION OF RS.26,79,366/-. AS O BSERVED EARLIER, THE ASSESSEE IS A DIRECTOR IN GHCL. THE GHCL HAS D ISALLOWED A SUM OF RS.80,38,101/-. ACCORDING TO THE AO, 1/3 RD OF THIS AMOUNT I.E. OF RS.26,79,366/-HAS A PERQUISITE VALUE IN THE HANDS OF THE ASSESSEE, WHICH OUGHT TO HAVE BEEN SHOWN BY HIM AS INCOME. THE LD.CIT(A) HAS CONSIDERED THIS ASPECT AND NOTICE D THE BREAK-UP OF THIS EXPENDITURE. THEREAFTER OBSERVED THAT, THI S IS NOT AN EXPENDITURE WHICH CAN BE TERMED AS PERSONAL IN NATU RE. THE FINDING RECORDED BY THE LD.CIT(A) READS AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE REASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF TH E APPELLANT. THE AO HAS MADE THE ADDITION OF RS.26,79 ,366/- BEING L/3RD OF THE AMOUNT OF RS.80,38,101/- IN RESP ECT OF THE TOTAL EXPENDITURES DISALLOWED IN THE CASE OF M/S.GA NESH HOUSING CORPORATION LTD. IN WHICH THE APPELLANT WAS ONE OF THE DIRECTORS. THIS ADDITION HAS BEEN MADE BY THE A .O. AS A PERQUISITE AS PER SECTION 2(24) (IV) BEING THE VALU E OF BENEFIT OR PERQUISITE OBTAINED BY THE APPELLANT FROM THE AF ORESAID COMPANY AS INCOME. THE AO OBSERVED THAT IN THE CASE OF M/S. GANESH HOUSING CORPORATION IN WHICH THE ASSESS EE WAS A DIRECTOR, HAS DISALLOWED CERTAIN SUMS WHICH WERE OBSERVED TO BE OF PERSONAL IN NATURE BY THE TAX AUDITORS AND AS A CONSEQUENCE THE SAID AMOUNTS WERE TO BE ASSESSED IN THE HANDS OF THE DIRECTORS. 4.4. ON THE OTHER SIDE, THE APPELLANT HAS SUBMITTED THAT IN THE CASE OF GANESH HOUSING CORPORATION LTD. A TOTAL OF EXPENDITURE OF RS.80,38101/-WAS DISALLOWED IN THE COMPUTATION OF INCOME OF WHICH DETAILS ARE NOTED AS UNDER:- (A) ADVERTISEMENT EXPENSES - RS.46,29 ,768/- ITA NO.2314/AHD/2016 WITH CO 9 (B) PRINTING AND STATIONERY - RS. 18 ,00,000/- (C) BOOKS AND MAGAZINES - RS. 2,50,0 00/- (D) BEING 1/5TH OF RS.67,91,665/- - RS. 13,58,333/- (WHICH INCLUDES MOTOR CAR EXPENSES, MOBILE PHON E EXPENSES, ELECTRICITY EXPENSES, SECURITY SERVICE CH ARGES AND DIRECTOR FOREIGN TRAVEL). 4.5. THE APPELLANT SUBMITTED THAT IRRESPECTIVE OF T HE TREATMENT ANY EXPENDITURE GETS IN THE BOOKS OF ACCO UNTS OF THE COMPANY THE SAME CANNOT BE TAKEN AS A BASE FOR PROPOSING THE SAME TO BE TAXED IN THE HANDS OF THE INDIVIDUAL ONLY FOR THE REASON THAT HE WAS A DIRECT OR IN THE SAID COMPANY, FURTHER STRETCHING IT ON THE GROUND T HAT THE EXPENSE WAS INCURRED TO BENEFIT THE DIRECTOR AND BE ING PERSONAL IN NATURE. 4.6. AS PER THE DEFINITION OF THE INCOME U/S.2(24)( IV), THE VALUE OF ANY BENEFIT OF PERQUISITE IS TO BE ADDED T O THE INCOME OF THE DIRECTOR FOR WHICH THE ORIGINAL OBLIG ATION TO PAY FOR THE SAME WAS THAT OF THE DIRECTOR IN HIS INDIVI DUAL CAPACITY. BUT IN THE PRESENT CASE PAYING FOR ADVERTI SEMENT EXPENSES OR PRINTING AND STATIONERY EXPENSES OR BOO KS AND MAGAZINES WAS NEVER BEEN AN OBLIGATION OF THE APPEL LANT IN HIS INDIVIDUAL CAPACITY. WHEN THE OBLIGATION IN THE INDIVIDUAL CAPACITY OF THE APPELLANT ITSELF DID NOT ARISE, THE RE IS NO QUESTION OF MAKING ANY ADDITION OF THE SAID AMOUNT TO THE INDIVIDUALS INCOME. THERE WAS NO BENEFIT MONETARILY OR NON- MONETARILY THAT CAN BE MEASURED/VALUED IN MONETARY TERMS THAT HAVE ARISEN TO THE APPELLANT FROM INCURRING SU CH EXPENSES. 4.7. THE APPELLANT FURTHER SUBMITTED THAT THE ADVER TISEMENT EXPENSES OF RS.46,29,768/- WAS INCURRED BY THE COMP ANY GANESH HOUSING CORPORATION LTD. FOR ADVERTISEMENT I N VARIOUS PERIODICALS FOR FELICITATION FUNCTION OF TH E THEN CHAIRMAN OF THE COMPANY SHRI GOVINDBHAI C. PATEL. L IKEWISE THE PRINTING AND STATIONARY EXPENSES OF RS.18 LAKHS WAS INCURRED TOWARDS PUBLICATION OF A BOOK NAMELY 'SHES HTHI' IN THE FORM OF A BIOGRAPHY ON THE LIFE AND ACHIEVEMENT OF THEN CHAIRMAN OF THE COMPANY SHI GOVINDBHAI C. PATEL. BOT H THE ABOVE EXPENDITURES WERE IN NO WAY RELATED TO THE PE RSONAL ITA NO.2314/AHD/2016 WITH CO 10 BENEFITS OF THE APPELLANT. IT WAS ALSO SUBMITTED TH AT THE BOOKS AND MAGAZINE EXPENSES OF RS.2,50,000/- WAS IN CURRED FOR PRINTING AND PUBLISHING OF THE BOOK 'GUJARAT GO ORIES- POWER PEOPLE 50' WHICH CONTAINED A WRITE UP OF THE DIRECTOR OF THE COMPANY I.E. APPELLANT WHICH IS AGAIN NO WAY RELATED TO THE PERSONAL BENEFITS OF THE APPELLANT. 4.8. THE COMPANY NAMELY M/S. GANESH HOUSING CORPORA TION LTD. BEING A PUBLIC LIMITED COMPANY IT HAS GOT CRED IT RECOGNITION, INCREASE IN GOOD WILL, GOOD FAITH AND TRUST OF THE GENERAL PUBLIC AT LARGE DUE TO PUBLISHING OF THE BO OK. FURTHER IN RESPECT OF ADDITION MADE ON ACCOUNT OF VARIOUS EXPENDITURES FROM MOTOR CAR, MOBILE PHONE, ELECTRIC ITY EXPENSES, SECURITY SERVICE CHARGE AND DIRECTORS FOR EIGN TRAVEL THAT IT WAS NOT POSSIBLE TO DETERMINE THE EXPENSES USED FOR PERSONAL PURPOSES THEREFORE IN ANNEXURE-6 TO TAX AU DIT REPORT OF GANESH HOUSING CORPORATION THE AUDITORS H AVE MADE THE OBSERVATIONS IN THIS REGARD. SO IT WAS A V IEW OF THE TAX AUDITOR THAT SOME PORTION OF THE EXPENDITURE WA S FOR PERSONAL PURPOSE OF THE DIRECTORS BUT THERE WAS NO EVIDENCE TO JUSTIFY THE AUDITORS VIEW TO BE TRUE. IT WAS SUB MITTED THAT ALL THESE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS OF THE COMPANY IN WHICH THE APPELLANT WAS A DIRECTO R. ALSO SUBMITTED THAT THESE EXPENSES WERE NOT INCURRED TOR PERSONAL BENEFIT OF THE DIRECTORS. THE ABOVE EXPEND ITURES WERE DULY AUTHORIZED THROUGH RESOLUTION PASSED IN T HE MEETING OF THE BOARD OF DIRECTORS OF GANESH HOUSING CORPORATION LTD. 4.9. EVEN UNDER THE HEAD OF INCOME FROM PROFITS AND GAINS OF BUSINESS A PROPORTION OF VARIOUS EXPENDITURES LIKE MOTOR CAR FOR PARTNERS/EMPLOYEES WERE DISALLOWED ASSUMING THE SAME FOR PERSONAL USE BUT THEY ARE NOT ADDED TO THE INCO ME UNDER THE HEAD OF SALARIES AND MADE TAXABLE IN THE HANDS OF THE EMPLOYEES OR PARTNERS OF THE COMPANY. BY MAKING ONCE IN THE HANDS OF THE COMPANY NAMELY GANESH HOUSING CORPORATION LTD. AND THEREAFTER ONCE AGAIN IN THE H ANDS OF THE DIRECTORS IS NOTHING BUT THE DOUBLE TAXATION OF THE SAME AMOUNT WHICH IS UNWARRANTED AS PER THE PROVISIONS O F LAW. THIS WAS A REVENUE NEUTRAL EXERCISE AND ALL ARE ASS ESSED TO TAX IN THE MAXIMUM MARGINAL RATE. ITA NO.2314/AHD/2016 WITH CO 11 4.10. HAVING CONSIDERED THE FACTS AND THE SUBMISSIO NS, IT IS NOTICED FROM THE COPY OF THE BILL OF ADVERTISEMENT EXPENSES THAT GANESH HOUSING CORPORATION HAS INCURRED THE EXPENDITURE OF RS.46,29,768/- TOWARDS ADVERTISEMENT IN THE GUJARAT SAMACHAR, SANDESH, DIVYA BHASKAR, TIMES OF I NDIA IN RESPECT OF THE CHAIRMAN OF THE SAID COMPANY NAME LY SHRI GOVIND C. PATEL. THIS ADVERTISEMENT HAS BEEN MADE I N RESPECT OF SHRI GOVIND C. PATEL DUE TO THE GUJARAT GAURAV AND ADVERTORIAL ADVERTISEMENT, AND HENCE, THE APPEL LANT DID NOT HAVE ANY CONNECTION WITH THE AFORESAID EXPENDIT URE AND HE DID NOT AVAIL ANY PERSONAL BENEFIT OUT OF SUCH ADVERTISEMENT. MOREOVER M/S. GANESH HOUSING CORPORA TION WOULD BE BENEFITED FROM SUCH ADVERTISEMENTS THEREFO RE IN NO CASE THE SAME CAN BE TAKEN AS INCOME BEING PERQUISI TE AS PER THE PROVISIONS OF SECTION 2(24) (IV) AND THUS N O ADDITION IN THE HANDS OF THE APPELLANT IS CALLED FOR. 4.11. SIMILARLY THE EXPENDITURE OF RS.18 LAKHS HAVE BEEN MADE IN RESPECT OF THE PRINTING AND STATIONERY FOR THE BOOKLET IN THE NAME OF 'SHRESHTHI' FROM WHICH ALSO THE APPE LLANT DID NOT GET ANY PERSONAL BENEFITS AS IT WAS ALSO IN RES PECT OF SHRI GOVIND C. PATEL. THE ULTIMATE BENEFICIARY OF THIS E XPENDITURE WAS M/S.GANESH HOUSING CORPORATION LTD, 4.12. FURTHER WITH REGARD TO THE EXPENDITURE OF RS.2,50,000/- INCURRED BY GANESH HOUSING CORPORATIO N IN RESPECT OF THE BOOK AND MULTIMEDIA DISK IN THE NAME OF GUJARAT GLORIUS POWER PEOPLE 50 AND ALSO THE BENEFI CIARY WAS M/S. GANESH HOUSING CORPORATION LTD. AND NOT THE AP PELLANT SINCE NO PERSONAL BENEFIT HAS BEEN OBTAINED NOR IT WAS THE OBLIGATION OF THE APPELLANT TO MAKE THE PAYMENT THE REOF WHICH WAS PAID BY GANESH HOUSING CORPORATION. 4.13. IN VIEW OF THE AFORESAID DISCUSSION, TH E EXPENDITURES MADE IN RESPECT OF ABOVE HEADS ARE IN NO WAY PERSONALLY BENEFITED TO THE APPELLANT AND THERE FORE THE SAME CANNOT BE TREATED AS PERQUISITES AS INCOME AND HENCE THE ADDITION MADE BY THE AO IS LIABLE FOR DELETION. 11. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.CIT(A)HAS MAD E A DETAILED ITA NO.2314/AHD/2016 WITH CO 12 ANALYSIS OF ALL THE EXPENDITURE, AND THEREAFTER REC ORDED A FINDING THAT THERE IS NO PERSONAL ELEMENT INVOLVED IN ALL T HESE EXPENDITURE. THEY CANNOT BE CONSIDERED AS PERQUISI TE IN THE HANDS OF THE DIRECTOR. AFTER GOING THROUGH WELL RE ASONED ORDER OF THE LD.CIT(A), WE DO NOT FIND ANY ERROR ON THIS ISS UE. IT IS UPHELD. 12. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADD ITION OF RS.47,77,455/-. 13. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S ALLEGED TO HAVE TAKEN LOAN OF RS.3,18,49,700/- FROM UMNESH COMP LEX PLTD., AND MIHIKA BUILDCON P.LTD. ACCORDING TO THE AO, HA D AN INTEREST AT THE RATE OF 15% BEEN CHARGED, THEN THE ASSESSEE WOU LD BE REQUIRED TO PAY A SUM OF RS.47,77,455/-. BY NOT CH ARGING INTEREST FROM THE ASSESSEE, COMPANIES HAVE EXTENDED UNDUE BE NEFITS WHICH IS TO BE CONSTRUED AS PERQUISITE IN THE HANDS OF THE ASSESSEE UNDER SECTION 2(24)(IV) OF THE ACT. ACCORDINGLY, T HE LD.AO MADE ADDITION OF THE ABOVE AMOUNT. DISSATISFIED WITH TH E ADDITION, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD .CIT(A). THE LD.CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER: 5.3. DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE REASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF TH E APPELLANT. WITHOUT PREJUDICE TO THE ABOVE THAT THE REOPENING AND REASSESSMENT IS NOT TENABLE IN THE EYES OF LAW SINCE THE APPELLANT HAS RAISED THE GROUNDS ON THE MERITS OF T HE ISSUE HOWEVER THE SAME BECAME ACADEMIC IN NATURE, HOWEVER , ON MERITS THE SAME ARE DECIDED AS UNDER. ITA NO.2314/AHD/2016 WITH CO 13 5.4. THE AO HAS MADE THE ADDITION OF RS.47,77,455/- AS INTEREST ON THE LOAN TAKEN FROM THE COMPANIES IN VI EW OF THE PROVISIONS OF SECTION 2(24)(IV) OF THE I.T. ACT. IT HAS BEEN NOTICED THAT THE APPELLANT HAS TAKEN THE INTEREST F REE LOANS FROM UNMESH COMPLEX PVT. LTD. AND MIHIKA BUILDCON PVT . LTD. ON WHICH NO INTEREST HAS BEEN PAID BY THE APPE LLANT. THE APPELLANT WAS ONE OF THE DIRECTORS OF THE AFORESAID COMPANY. THE AO OBSERVED THAT IT WAS CERTAINLY A BENEFIT AND CONVERTIBLE INTO MONEY. IF THE LOAN HAS BEEN TAKEN FROM ANY OTHER ENTITY, INTEREST WOULD HAVE BEEN PAYABLE BY T HE APPELLANT. THEREFORE, THE BENEFIT ENJOYED BY THE AP PELLANT AS INTEREST ON THE LOANS TAKEN FROM THE COMPANY IS CON SIDERED AS INCOME IN THE HANDS OF THE APPELLANT. 5.5. ON THE OTHER SIDE THE APPELLANT HAS SUBMITTED THAT HE WAS NOT AN EMPLOYEE AND NOT DRAWING ANY REMUNERATIO N OR SALARY FROM THE AFORESAID TWO COMPANIES FROM WHOM L OANS HAVE BEEN TAKEN, THEREFORE, HE WAS NOT AN EMPLOYEE OF THE ABOVE COMPANIES AND HENCE PERQUISITE VALUE CANNOT B E TAXED IN THE HANDS OF THE APPELLANT. IT WAS ALSO SU BMITTED THAT THE APPELLANT WAS NOT HAVING ANY SUBSTANTIAL I NTEREST IN THE AFORESAID COMPANIES. THE APPELLANT HAD 9% AND 4 .37% SHARE HOLDING IN THE AFORESAID COMPANIES NAMELY UNME SH COMPLEX PVT. LTD. AND MIHIKA BUILDCON PVT. LTD. RESP ECTIVELY. SINCE THE APPELLANT HAD NOT OBTAINED ANY BENEFIT OR PERQUISITE IN THE CAPACITY OF THE EMPLOYEES ON THE AFORESAID COMPANIES THEREFORE NO INCOME CAN BE TAXED IN THE H ANDS OF THE APPELLANT MORE SO WHEN A COMPANY HAS NOT PAID A NY SUM OF MONEY WHICH IS BY WAY OBLIGATION PAYABLE BY THE APPELLANT. IT HAS ALSO BEEN SUBMITTED THAT NO LOAN HAS BEEN TAKEN IN THE YEAR UNDER CONSIDERATION FROM MIHIKA B UILDCON PVT. LTD. BUT THE SAME WAS THE OPENING BALANCE WHIC H REMAINED AS CLOSING BALANCE AT THE END OF THE YEAR. IN SUPPORT OF THIS, IT HAS RELIED UPON CATENA OF JUDGE MENTS WHICH HAVE BEEN REPRODUCED IN THE PRECEDING PARAS O F THIS ORDER. 5.6. HAVING CONSIDERED THE FACTS AND THE SUBMISSION S, IT IS NOTICED THAT THE AO HAS NOT BROUGHT ON RECORD THAT THE APPELLANT WAS AN EMPLOYEE IN THE AFORESAID COMPANIE S FROM WHOM THE LOANS HAVE BEEN TAKEN. EVEN NO REMUNERATIO N OR SALARY IN THE CAPACITY OF THE DIRECTOR HAS BEEN DRA WN BY THE ITA NO.2314/AHD/2016 WITH CO 14 APPELLANT FROM THE AFORESAID TWO COMPANIES. BEING TH E DIRECTOR HE CANNOT BE HELD TO BE AN EMPLOYEE OF THE COMPANIES FROM WHOM HE HAS AVAILED THE LOANS. MOREO VER HE WAS NOT HAVING SUBSTANTIAL INTEREST IN THE AFORESAI D COMPANIES. THE AO HAS ALSO NOT BROUGHT ANYTHING ON RECORD TO SAY THAT THE AFORESAID COMPANIES HAVE PAID ANY S UM OF MONEY WHICH IS BY WAY OF OBLIGATION PAYABLE BY THE APPELLANT. IN THE CASE OF MIHIKA BUILDCON PVT. LTD. THERE WAS NO FRESH LOANS TAKEN DURING THE YEAR UNDER CONSIDER ATION BUT THOSE WERE THE LOANS TAKEN IN THE PRECEDING YEARS. IT HAS ALSO BEEN NOTICED THAT BOTH THE COMPANIES DID NOT H AVE ANY INTEREST EXPENDITURE IN THEIR PROFIT AND LOSS ACCOU NT THEREFORE THERE WAS NO OBLIGATION OF THE APPELLANT IN RESPECT OF ANY INTEREST PAID BY THESE COMPANIES ON BEHALF OF THE A PPELLANT. 5.7. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING T HE JUDGEMENTS OF VARIOUS HON'BLE COURTS RELIED UPON BY THE APPELLANT, THERE IS NO CASE TO TREAT THE INCOME AS PERQUISITE IN THE HANDS OF THE APPELLANT AND THEREFORE ADDITIO N MADE BY THE A.O. IS DELETED. THUS, THE RELATED GROUNDS OF A PPEAL RAISED BY THE APPELLANT ARE ALLOWED. 14. AS OBSERVED BY THE LD.CIT(A) THAT THERE IS NO F RESH LOAN TAKEN BY THE ASSESSEE FROM UMNESH COMPLEX PLTD., AND MIHIKA BUILDCON P.LTD. IT IS AN OPENING BALANCE. NO INTERE ST WAS CHARGED IN EARLIER YEARS NOR ANY PERQUISITE VALUE WAS ASSES SED. SIMILARLY, THE LD.CIT(A) HAS OBSERVED THAT IF THE DIRECTORS HA VE RUNNING ACCOUNT WITH THE COMPANY, THEN NON-CHARGING OF INTE REST ON THE DEBIT BALANCE WOULD NOT CONSTITUTE A PERQUISITE. T HE LD.CIT(A)HAS MADE REFERENCE TO LARGE NUMBER OF DECISIONS WHILE T AKING NOTE OF ASSESSEES SUBMISSIONS AT PAGE NOS.39 TO 41 OF THE IMPUGNED ORDER. AFTER GOING THROUGH THE FINDING OF THE LD.C IT(A) WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A) ON THI S ISSUE. THIS GROUND OF APPEAL IS REJECTED. ITA NO.2314/AHD/2016 WITH CO 15 15. AS FAR AS CO OF THE ASSESSEE ARE CONCERNED, IT IS MERELY INS SUPPORT OF THE ORDER OF THE LD.CIT(A), AND NO SPECI FIC GRIEVANCE HAS BEEN PLEADED IN THE CO, HENCE, CO IS NOT MAINTA INABLE. 16. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21 ST FEBRUARY, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER