ITO, New Delhi V. Sh. Yashovardhan Tyagi, Gurgaon

ITA 2880/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1325 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Keywords: Unexplained cash credit; Unexplained investment; Deemed owner of house property; Cost of acquisition; Deemed dividend; TDS; Capital Gains
• Section: 2(22)(e); 40(a)(ia); 9(1); 9(1); 9(1); 194J; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2880/DEL/2016 : ASSTT. YEAR : 2011-12 ITO WARD-34(3), NEW DELHI VS SH. YASHOVARDHAN TYAGI, 56, MADHYA MARG, DLF, PHASE-II, GURGAON, DELHI-122002 (APPELLANT) (RESPONDENT) PAN NO. AAAPT0403G ITA NO. 2439/DEL/2016 : ASSTT. YEAR : 2011-12 SH. YASHOVARDHAN TYAGI, 56, MADHYA MARG, DLF, PHASE-II, GURGAON, DELHI-122002 VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-19(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAAPT0403G ASSESSEE BY : NONE REVENUE BY : SH. S. N. MEENA, SR. DR DATE OF HEARING: 24.02.2020 DATE OF PRONOUNCEMENT: 27.04.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT (A)-12, NEW DELHI DATED 29.02.2016. 2. IN ITA NO. 2880/DEL/2016, FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE: THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE ADDITION OF RS.2,00,00,000/- I N RESPECT OF CLAIM OF ROYALTY FOR NON DEDUCTION OF TD S OBSERVING THAT THE MINIMUM GUARANTEE ROYALTY ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 2 DEBITED BY THE ASSESSEE IN THIS P&L A/C WHICH DOES NOT FALL IN THE DEFINITION OF ROYALTY. 2. THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE ADDITION OF RS.1,00,000/- MADE ON DEEMED DIVIDEND U/S 2(22)(E) OF THE IT ACT. 3. THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE ADDITION MADE ON ACCOUNT O F UNEXPLAINED INVESTMENTS INCREASE IN CAPITAL AMOUNTING TO RS.28,76,819/- OBSERVING THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE COMPANY IN WHICH HE WAS A DIRECTOR IS IN THE NATURE OF ADVANCE FOR COMMERCIAL PURPOSES. 4. THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE ADDITION OF RS.9,17,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS AS THE CASH RECEIPTS ARE IN RESPECT OF FILM DISTRIBUTI ON INCOME OF THE ASSESSEE. NON-DEDUCTION OF TDS: 3. THE ASSESSEE IS IN THE BUSINESS OF FILM DISTRIBU TION IN THE NAME OF M/S SUKRIT PICTURES. 4. THE RELEVANT FACTS ARE THAT THE ASSESSEE HAS PAI D AN AMOUNT OF RS.2 CRORES AS MINIMUM GUARANTEE ROYALTY (MGR) AND HAS NOT DEDUCTED TDS. THE ASSESSING OFFICER HEL D THAT THE PAYMENT WOULD FALL WITHIN THE DEFINITION OF ROYALT Y AND FAILURE TO DEDUCT TDS AS PER SECTION 194J OF THE INCOME TAX ACT, 1961 WOULD ATTRACT PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT. THE LD. CIT (A) DELETED THE ADDITION ON THE GROUNDS THAT TH E PROVISIONS OF SECTION 194J OF THE ACT CANNOT BE APPLICABLE TO THE INSTANT CASE. 5. BEFORE US DURING THE ARGUMENTS, THE LD. DR QUOTE D THE PROVISIONS OF THE SECTION 194J OF THE ACT AND ARGUE D THAT ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 3 CONSIDERATION FOR TRANSFER OF RIGHTS IN RESPECT OF ANY COPYRIGHT FOR FILMS USED IN CONNECTION WITH WOULD FALL WITHIN THE DEFINITION OF ROYALTY. IT WAS CONTENTED THAT THE ASSESSEES PA YMENTS CANNOT BE REGARDED AS FOR SALE, DISTRIBUTION OR EXH IBITION OF FILMS. HE ARGUED THAT THE ASSESSEE DID NOT PURCHASE THE CINEMATOGRAPHIC FILM BUT PURCHASED ONLY THEATRICAL DISTRIBUTION RIGHTS. 6. HEARD THE ARGUMENTS AND PERUSED THE MATERIAL AVA ILABLE ON RECORD. 7. THE PROVISIONS OF SECTION 194J OF THE ACT WITH R ELATION TO ROYALTY ARE AS PER THE EXPLANATION 2 TO CLAUSE (V I) OF SUB- SECTION (1) OF SECTION 9. 8. THE EXPLANATION 2 TO SECTION 9(1)(VI) READS AS U NDER: EXPLANATION 2.FOR THE PURPOSES OF THIS CLAUSE, 'R OYALTY' MEANS CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDE RATION BUT EXCLUDING ANY CONSIDERATION WHICH WOULD BE THE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS') FOR (I) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING TH E GRANTING OF A LICENCE) IN RESPECT OF A PATENT, INVENTION, MODEL , DESIGN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY; (II) THE IMPARTING OF ANY INFORMATION CONCERNING TH E WORKING OF, OR THE USE OF, A PATENT, INVENTION, MODEL, DESI GN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERT Y ; (III) THE USE OF ANY PATENT, INVENTION, MODEL, DESI GN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERT Y ; ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 4 (IV) THE IMPARTING OF ANY INFORMATION CONCERNING TE CHNICAL, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXP ERIENCE OR SKILL ; [(IVA) THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMM ERCIAL OR SCIENTIFIC EQUIPMENT BUT NOT INCLUDING THE AMOUNTS REFERRED TO IN SECTION 44BB;] (V) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING TH E GRANTING OF A LICENCE) IN RESPECT OF ANY COPYRIGHT, LITERARY , ARTISTIC OR SCIENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TELEVISION OR TAPES FOR USE IN CONN ECTION WITH RADIO BROADCASTING, BUT NOT INCLUDING CONSIDER ATION FOR THE SALE, DISTRIBUTION OR EXHIBITION OF CINEMATOGRA PHIC FILMS ; OR (VI) THE RENDERING OF ANY SERVICES IN CONNECTION WI TH THE ACTIVITIES REFERRED TO IN SUB-CLAUSES (I) TO [(IV), (IVA) AND] (V). 9. WE FIND THAT CLAUSE (V) OF EXPLANATION 2 TO SECT ION 9(1) CONSISTS OF TWO DIFFERENT TRANSACTIONS, ONE INCLUSI VE ANOTHER NON-INCLUSIVE. THE INCLUSIVE PART CONSISTS OF THE T RANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GRANTING OF A LICENCE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIFIC WOR K INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TELEVISIO N OR TAPES FOR USE IN CONNECTION WITH RADIO BROADCASTING. THE NON- INCLUSIVE PART CONSISTS OF CONSIDERATION FOR THE SALE DISTRIB UTION OR EXHIBITION OF CINEMATOGRAPHIC FILMS. THE ASSESSING OFFICER MISREAD THE PROVISION IN THE SECOND PART OF THE CLA USE WITH REGARD TO EXHIBITION OF CINEMATOGRAPHIC FILMS. HE W RONGLY HELD THAT WHAT THE ASSESSEE PURCHASED IS COPYRIGHTS AND HENCE LIABLE TO TDS. IN FACT, THE COPYRIGHTS ARE ALWAYS WITH THE PRODUCER. THE DISTRIBUTOR IS ONLY GIVEN THE RIGHT EXHIBITION OF CINEMATOGRAPHIC FILMS. HENCE, SUCH TRANSACTIONS DO NOT ATTRACT ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 5 THE PROVISIONS OF TDS. FURTHER, THE MINIMUM GUARANT EE AMOUNT WHICH IS PAID BY THE DISTRIBUTOR FOR ACQUIRING THE EXHIBITION RIGHTS OF A MOVIE IS A FIXED EXPENDITURE FOR THE DI STRIBUTOR THAT IS PAID TO PRODUCERS IRRESPECTIVE OF THE FACT WHETH ER THE FILM GENERATES A PROFIT OR INCURS LOSSES. HENCE, THE PAY MENTS MADE BY THE ASSESSEE DO NOT FALL UNDER THE TERM ROYALTY AND DO NOT ATTRACT THE PROVISIONS OF TDS. THE APPEAL OF THE RE VENUE ON THIS GROUND IS DISMISSED. DEEMED DIVIDEND: 10. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E WAS A SHAREHOLDER AND DIRECTOR IN M/S ASSOCIATED CINE EXP LOITERS PVT. LTD. (ACEL) AND OBTAINED LOAN OF RS.1,00,000/-. THE ASSESSING OFFICER HELD THIS TO BE A DEEMED DIVIDEND IN ACCORD ANCE WITH THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. AFTER HE ARING THE ARGUMENTS AND PERUSAL OF THE MATERIAL ON THE RECORD , WE FIND THAT THE ASSESSEE HAS RECEIVED RS.1,50,000/- AS COM MERCIAL ADVANCE FOR GRANTING RIGHTS FOR DISTRIBUTION OF MOV IE AND THE AMOUNT WAS PAID TO M/S SUKRIT PICTURES ON 03.05.201 0 WAS COMMERCIAL ADVANCE FOR SCREENING OF THE MOVIE. IT I S A FACT ON RECORD THAT THE AMOUNT RECEIVED FROM ACEL WHICH IS RUNNING A CINEMA THEATRE IN ROHTAK HAS GIVEN LOAN TO SUKRIT P ICTURES WHICH IS THE DISTRIBUTOR. THUS, THIS IS THE AMOUNT RECEIVED FROM THE THEATRE OWNER TO THE DISTRIBUTOR OF THE FILMS. IT IS A PURE COMMERCIAL TRANSACTION BETWEEN THE MOVIE THEATRE AN D THE DISTRIBUTOR. IN VIEW OF THE JUDGMENT OF HONBLE JUR ISDICTION HIGH COURT IN THE CASE OF CIT VS CREATIVE DYEING & PRINT ING PVT. LTD. 318 ITR 476 WHEREIN IT HAS BEEN HELD THAT AMOUNTS A DVANCED TO THE ASSESSEE BY ANOTHER COMPANY FOR THE BUSINESS PU RPOSE ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 6 WHEREIN BOTH THE ENTITIES ARE HAVING COMMON DIRECTO RS AND IF IT IS IN THE NATURE OF A COMMERCIAL TRANSACTIONS, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT ATTRACTED. WE F IND THAT THE FACTS OF THE INSTANT CASE ARE SIMILAR WHEREIN THE R ATIO OF THE ABOVE JUDGMENT IS APPLICABLE. HENCE, THE ADDITION M ADE BY THE AO IS HEREBY DIRECTED TO BE DELETED. UNEXPLAINED INVESTMENTS: 11. THE ASSESSING OFFICER OBSERVED THAT AS PER CAPI TAL ACCOUNT APPEARING IN THE BALANCE SHEET AS ON 31.03.2010, TH E CAPITAL OF THE ASSESSEE WAS MENTIONED AT RS.(-)1,39,578/- WHER EAS AS PER CAPITAL ACCOUNT APPEARING IN THE BALANCE SHEET AS O N 31.03.2011, THE OPENING CAPITAL OF THE ASSESSEE AS ON 01.01.2010 WAS AT RS.27,37,241/-. HENCE, THE ASSESS ING OFFICER MADE ADDITION OF RS.28,76,819/- (RS.27,37,241/- + RS.1,39,578/-). 12. AS PER THE SUBMISSIONS FILED BEFORE THE LD. CIT (A), THE ASSESSEE HAS TRANSFERRED THE CAPITAL FROM M/S SUKRI T PICTURES OF RS.1,22,60,619/-. FURTHER, THE PROFIT OF THE SUKRIT PICTURES OF RS.14,06,155/- HAS BEEN ADDED. THUS, THE TOTAL AMOU NTS STANDS AT RS.1,35,27,196/-. OUT OF THIS AMOUNT OF RS.1,35, 27,196/-, AN AMOUNT OF RS.1,13,21,118/- HAS BEEN WITHDRAWN. THE CLOSING BALANCE REFLECTED IS RS.22,06,078/-. THE LD. CIT (A ) HAS EXAMINED THE ENTIRE ACCOUNT AND DID NOT FIND ANY DI SCREPANCY. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER C AN BE SAID TO BE AN ADDITION MADE CURSORILY WITHOUT LOOKING IN TO THE CAPITAL INTRODUCED AND THE PROFITS OF THE YEAR. THEREFORE, THE ADDITION IS HEREBY DIRECTED TO BE DELETED. ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 7 UNEXPLAINED CASH CREDITS: 13. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E MADE CASH DEPOSITS OF RS.9,17,000/- IN THE BANK ACCOUNT OF KARUR VYSYA BANK LTD. AND TREATED THE SAME AS UNEXPLAINED . BEFORE US THE LD. DR ARGUED THAT THE ASSESSEE COULD NOT PROVE THE SOURCES OF THIS CASH DEPOSITS SATISFACTORILY. WE FIND AS PE R LD. CIT (A), THE CASH WAS DULY REFLECTED IN THE CASH BOOK AND TH E SAME HAS BEEN DEPOSITED IN THE BANK ACCOUNT. THE LD. CIT (A) HELD THAT THE ASSESSEE HAS EARNED AN AMOUNT OF RS.2,06,73,705 /- WHICH WAS GENERATED DURING THE COURSE OF FILM DISTRIBUTIO N BUSINESS. THE LD. CIT (A) HAS EXAMINED THE CASH BOOK AND TALL IED THE SAME WITH THE SALES REGISTER. THE LD. CIT (A) THERE AFTER DELETED THE ADDITION SINCE NO DISCREPANCY HAS BEEN FOUND. T HE FACTUAL OBSERVATION OF THE LD. CIT (A) COULD NOT BE CONTROV ERTED BY THE REVENUE BY ANY DOCUMENTARY EVIDENCE. HENCE, WE HERE BY DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). ITA NO. 2439/DEL/2016 UNREALIZED RENT: 14. FACTS RELEVANT TO THE ADJUDICATION OF THE ISSUE ARE THAT THE ASSESSEE HAS LEASED HIS COMMERCIAL PROPERTY AT A MO NTHLY RENT OF RS.3,00,000/-, FOR A PERIOD OF THREE YEARS COMME NCING FROM 04.03.2010 TO 03.03.2013. THE ASSESSEE RECEIVED REN T WHICH HAS BEEN PAID BY THE TENANT ONLY FOR A PERIOD OF TW O MONTHS AND NO FURTHER PAYMENTS HAVE BEEN RECEIVED DURING THE Y EAR. THE ASSESSEE HAS DECLARED AN AMOUNT OF RS.5,40,000/- AS THE ANNUAL RENTAL VALUE U/S 23 OF THE INCOME TAX ACT, 1 961 AND AFTER CLAIMING DEDUCTION U/S 24(A) OF RS.1,62,000/- OFFERED AN ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 8 AMOUNT OF RS.3,78,000/- TO TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER HELD TH AT SINCE THE RENT AGREEMENT REFLECTS MONTHLY RENT OF RS.3,00,000 /-, THE PROPERTY SHOULD BE TREATED AS DEEMED LET OUT AND TH E ANNUAL RENTAL VALUE IS DETERMINED AT RS.36,00,000/-. AFTER GIVING DEDUCTION U/S 24(A) OF THE ACT OF RS.10,80,000/- AN D AFTER GIVING ALLOWANCE FOR RS.3,78,000/- DECLARED BY THE ASSESSEE, THE ASSESSING OFFICER BROUGHT TO TAX AN AMOUNT OF RS.21,42,000/-. THE LD. CIT (A) HELD THAT THE DEDUC TION OF UNREALIZED RENT IS AVAILABLE SUBJECT TO CONDITIONS PRESCRIBED IN RULE 4 OF THE IT RULES. RENT IS CONSIDERED UNREALIZ ABLE IF AND ONLY IF IT IS PROVED TO BE LOST AND IRRECOVERABLE, WHERE- (A) TENANCY IS BONAFIDE. (B) DEFAULTING TENANT HAS VACATED, OR STEPS HAVE BEEN T AKEN TO COMPEL HIM TO VACATE PROPERTY. (C) DEFAULTING TENANT IS NOT IN OCCUPATION OF ANY OTHER PROPERTY OF THE ASSESSEE. (D) ASSESSEE HAS TAKEN ALL REASONABLE STEPS TO INSTITUT E LEGAL PROCEEDINGS FOR THE RECOVERY OF THE UNPAID RE NT OR SATISFIES THE ASSESSING OFFICER THAT LEGAL PROCEEDI NGS WOULD BE USELESS. 15. THE LD. CIT (A) CONFIRMED THE ADDITION HOLDING THAT IN THIS CASE, THE ASSESSEE HAS SUBMITTED NO EVIDENCE THAT T HE DEFAULTING TENANT HAS VACATED THE PROPERTY IN QUEST ION AND NO EVIDENCE WHATSOEVER WAS SUBMITTED BY THE ASSESSEE S HOWING THAT THE STEPS HAVE BEEN TAKEN TO COMPEL THE DEFAUL TING TENANT TO VACATE THE PROPERTY. FURTHER, THE ASSESSEE DID N OT FURNISH ANY DOCUMENT AS REGARDS TO SATISFACTION THAT THE LE GAL ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 9 PROCEEDINGS FOR THE RECOVERY OF THE UNPAID RENT WOU LD BE USELESS. 16. THE PROVISIONS RELATING TO THE TAXABILITY OF TH E INCOME FROM HOUSE PROPERTY ARE AS UNDER: 23. (1) FOR THE PURPOSES OF SECTION 22, THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS L ET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAU SE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE; OR (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET60 AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVA BLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE: PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORI TY IN RESPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PRE VIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMP LOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THA T PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION. FOR THE PURPOSES OF CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION, THE AMOUNT OF ACTUAL RENT RECEIVE D OR RECEIVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES AS MAY BE MADE IN THIS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CANNOT REALISE. (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PART OF A HOUSE WHICH ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 10 (A) IS IN THE OCCUPATION OF THE OWNER FOR THE PURPO SES OF HIS OWN RESIDENCE; OR (B) CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY REA SON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSIO N CARRIED ON AT ANY OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLA CE IN A BUILDING NOT BELONGING TO HIM, THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APP LY IF (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE O WNER. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN [ONE HOUSE] (A) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ONLY IN RESPECT OF [ONE] OF SUCH HOUSES, WHICH THE ASSESSEE MAY, AT HI S OPTION, SPECIFY IN THIS BEHALF; (B) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, [OTHER THAN THE HOUSE] IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISED AN O PTION UNDER CLAUSE (A), SHALL BE DETERMINED UNDER SUB-SECTION ( 1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET.] [(5) WHERE THE PROPERTY CONSISTING OF ANY BUILDING OR LAND APPURTENANT THERETO IS HELD AS STOCK-IN-TRADE AND T HE PROPERTY OR ANY PART OF THE PROPERTY IS NOT LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR, THE ANNUAL VALUE OF SUCH PROPERTY OR PART OF THE PROPERTY, FOR THE PERIOD UP TO [ONE YEAR] FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CERTIFICATE OF COMPLETI ON OF CONSTRUCTION OF THE PROPERTY IS OBTAINED FROM THE COMPETENT AUTHORI TY, SHALL BE TAKEN TO BE NIL.] 17. THE FACTS WITH RELATION TO THE ACT ARE TO BE IN TERPRETED AS UNDER: [SECTION 23(1)] ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 11 (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR= NOT QUANTIFI ED (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS L ET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAU SE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE; OR = RS.3,78,000/ - THE EXPLANATION. FOR THE PURPOSES OF CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION, THE AMOUNT OF ACTUAL RENT RECEIVE D OR RECEIVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES AS MAY BE MADE IN THIS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CAN NOT REALISE. 18. THE EXPLANATION CAN BE INVOKED IF (B) ABOVE IS APPLICABLE. WHEN (B) IS INVOKED, THE BENEFIT OF EXPLANATION IS SUBJECTED TO THE RULES (RULE 4). 19. RULE 4 READS AS UNDER: 4. FOR THE PURPOSES OF THE EXPLANATION BELOW SUB-S ECTION (1) OF SECTION 23, THE AMOUNT OF RENT WHICH THE OWNER CANN OT REALISE SHALL BE EQUAL TO THE AMOUNT OF RENT PAYABLE BUT NOT PAID BY A TENANT OF THE ASSESSEE AND SO PROVED TO BE LOST AND IRRECOVER ABLE WHERE, (A) THE TENANCY IS BONA FIDE; (B) THE DEFAULTING TENANT HAS VACATED, OR STEPS HAV E BEEN TAKEN TO COMPEL HIM TO VACATE THE PROPERTY; (C) THE DEFAULTING TENANT IS NOT IN OCCUPATION OF A NY OTHER PROPERTY OF THE ASSESSEE; (D) THE ASSESSEE HAS TAKEN ALL REASONABLE STEPS TO INSTITUTE LEGAL PROCEEDINGS FOR THE RECOVERY OF THE UNPAID RENT OR SATISFIES THE ASSESSING OFFICER THAT LEGAL PROCEEDINGS WOULD BE U SELESS.] 20. WE FIND THAT THE LD. CIT (A) HAS CONFIRMED THE ADDITION OWING TO FAILURE OF THE ASSESSEE TO FULFILL THE CON DITIONS LAID ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 12 DOWN IN THE RULES. HENCE, WE DECLINE TO INTERFERE I N THE ORDER OF THE LD. CIT (A). SALE OF JEWELLERY: 21. DURING THE YEAR, THE ASSESSEE HAS SOLD JEWELLER Y ON 23.10.2010 FOR RS.12,75,220/-. THE ASSESSEE FILED P URCHASE BILLS OF SUCH JEWELLERY WHICH REFLECTS THE PURCHASE OF GOLD ORNAMENTS WHEREAS THE SALE BILLS OF THE JEWELLERY R EFLECTS SALE OF GOLD BARS. BEFORE THE ASSESSING OFFICER, THE ASSESS EE SUBMITTED THAT THEY SOLD 500 GMS GOLD BARS STANDARD @1950 PER GM AND THE PURCHASE WAS OF ORNAMENTS. IT WAS ARGUED BEFOR E THE LD. CIT (A) THAT THE BULLION WAS RECEIVED AT THE TIME O F MARRIAGE AND COST OF ACQUISITION SHOULD BE TAKEN AS NIL. THU S, WE FIND THAT THERE ARE TWO DIFFERENT EXPLANATION OFFERED BY THE ASSESSEE. NO EVIDENCE OF GOLD BARS RECEIVED BY THE ASSESSEE. 22. WE HAVE GONE THROUGH THE ORDER OF THE LD. CIT ( A) WHEREIN THE ISSUES RELATING TO PURCHASE OF GOLD ORNAMENTS I N THE YEAR 1999 AND 2000 HAVE BEEN ADEQUATELY DEMOLISHED BY GO ING THROUGH THE ITEMS PURCHASED AND ITEMS SOLD WHICH DO NOT TALLY AND COULD NOT BE RECONCILED. HENCE, WE HEREBY UPHOL D THE DECISION OF THE LD. CIT (A) ON THIS ISSUE. CASH DEPOSITS: 23. THE ASSESSING OFFICER MADE ADDITION OF RS.64,17 ,645/- ON ACCOUNT OF CASH DEPOSITS IN KARUR VYSYA BANK. ASSES SING OFFICER OBSERVED THAT AS PER AIR INFORMATION THERE WAS CASH DEPOSIT OF RS.64,17,645/- IN HIS SAVING BANK ACCOUNT. ASSESSEE STATED THAT AMOUNT DID NOT PERTAIN TO HIM OR HIS FAMILY MEMBERS . ASSESSING ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 13 OFFICER ADDED THE AMOUNT OF RS.64,17,645/- AS THE O NUS TO PROVE THE NATURE AND SOURCE WAS ON THE ASSESSEE WHI CH WAS NOT DISCHARGED. THE ASSESSEE HAS STATED THAT CASH DEPOS ITS WERE NOT REFLECTED IN PERSONAL NAME OR IN THE NAME OF HI S PROPRIETARY CONCERN AND, THEREFORE, THE DEPOSITS WERE NEITHER I N RESPECT OF THE INCOME OF ASSESSEE NOR THEY WERE MADE IN THE BA NK ACCOUNT OF THE ASSESSEE. 24. IT IS SEEN THAT THE DEPOSITS OF RS.39,47,470/- AND RS.24,70,175/- WAS IN THE NAME OF M.S. EDUCATION SO CIETY AND TYAGI PUBLIC SCHOOL IN WHICH ASSESSEE WAS THE AUTHO RIZED SIGNATORY. IT IS A FACT THAT THE AMOUNTS OF CASH DE POSITS WERE REFLECTED AGAINST THE ASSESSEE IN THE AIR INFORMATI ON AS THE AMOUNTS WERE CLUBBED UNDER THE SAME PAN. IT IS A FA CT THAT M.S. EDUCATION SOCIETY AND TYAGI PUBLIC SCHOOL ARE DIFFERENT ENTITIES OTHER THAN THE ASSESSEE. THEREFORE, RIGHT COURSE OF ACTION WOULD HAVE BEEN EXAMINE THESE DEPOSITS IN TH E CASES OF M.S. EDUCATION SOCIETY AND TYAGI PUBLIC SCHOOL. FRO M THE PERUSAL OF PAGES 27 TO 31 OF PAPER BOOK WHICH IS A CONFIRMATION FROM CHIEF MANAGER OF KARUR VYSYA BANK DATED 07.03. 2014, IT IS SEEN THAT TRANSACTIONS OF RS.39,47,470/- DATED 30.0 3.2011 AND OF RS.24,70,175/- DATED 31.03.2011 WERE IN THE NAME OF M.S. EDUCATION SOCIETY AND TYAGI PUBLIC SCHOOL. IT WAS A LSO STATED THAT SH. YASHOVARDHAN TYAGI WAS THE AUTHORIZED SIGN ATORY FOR THESE ACCOUNTS. THEREFORE, IT IS A FACT THAT DEPOSI TS OF RS.39,47,470/- AND RS.24,70,175/- WERE MADE IN THE ACCOUNTS OF M.S. EDUCATION SOCIETY AND TYAGI PUBLIC SCHOOL W HICH ARE SEPARATE ENTITIES. THE FACT THAT ASSESSEE IS AN AUT HORIZED SIGNATORY OF THOSE ACCOUNTS DOES NOT ESTABLISH THAT ACCOUNTS BELONGED TO THE ASSESSED WHEN BOTH THESE ENTITIES A RE ITA NOS. 2880 & 2439/DEL/2016 YASHOVARDHAN TYAGI 14 SEPARATELY ASSESSED. THEREFORE, THE NATURE AND SOUR CE OF DEPOSITS AMOUNTING TO RS.39,47,470/- AND RS.24,70,1 75/- NEEDS TO BE EXAMINED IN THE HANDS OF M.S. EDUCATION SOCIE TY AND TYAGI PUBLIC SCHOOL RESPECTIVELY BUT NOT IN THE HAN DS OF THE ASSESSEE. HENCE, WE HEREBY DIRECT THAT THE ADDITION IS LIABLE TO BE DELETED IN THE HANDS OF THE ASSESSEE. 25. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B. R. R. KUMAR) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 27/04/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR