Harsh Vardhan Sheth, New Delhi V. ACIT, New Delhi

ITA 3515/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52705 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Deemed dividend; Commercial expediency
• Section: 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.3515/DEL/2011 ASSESSMENT YEAR : 2007-08 HARSH VARDHAN SHETH, F-1/16, ANSARI ROAD, DARYA GANJ, NEW DELHI. PAN : AAUPS2452G VS. ACIT, CIRCLE 30(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE REVENUE BY : SHRI SALIL MISHRA, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 14 TH JUNE, 2011 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE FOLLOWING ACTIONS OF THE ASSESSING OFFICER. 1. IN MAKING AN ADDITION OF RS.18,09,412/- TO THE RETUR NED INCOME BY MISCONSTRUING AND WRONGLY APPLY THE PROVISI ON OF SECTION 2 (22)(E) OF THE INCOME TAX ACT, 1961; 2. IN ENHANCING THE LONG TERM CAPITAL GAINS BY A SUM O F RS.44,244/- BOTH THE ABOVE ACTIONS BEING ERRONEOUS AND UNLAWFUL BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF. ITA NO.3515/DEL/2011 2 2. APROPOS GROUND NO.1, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE WAS HOLDING 32% SHARES IN M/S SHETH PRINTOGRAPH PVT. LTD. AND IT WAS ALSO NOTICED THAT THE ASSESSEE WAS RUNNING AN ACCOUNT WITH TH E SAID COMPANY AND ON 19 TH JUNE, 2006 THE DEBIT BALANCE OF THE ASSESSEE WAS CONVERTED INTO CREDIT BALANCE AND THE ASSESSEE HAD REC EIVED CERTAIN PAYMENTS FROM M/S SHETH PRINTOGRAPH PVT. LTD., WHICH, ACCORDING TO THE ASSESSING OFFICER WERE IN THE NATURE OF ADVANCE/LOAN. THE DETAILS OF SUCH PAYMENT HAS BEEN LISTED OUT IN THE ASSESSMENT ORDER I N PARA 6 WHICH ARE AS UNDER:- S.NO. DATE AMOUNT 1. 19.06.2006 RS.10,00,000/- 2. 26.06.2006. RS. 5,000/- 3. 11.08.2006 RS. 4,00,000/- 4. 22.08.2006 RS. 40,000/- 5. 30.08.2006 RS. 1,00,000/- 6. 30.08.2006 RS. 3,00,000/- 7. 23.09.2006 RS. 1,15,000/- 8. 06.10.2006 RS. 20,000/- 9. 25.10.2006 RS. 5,000/- 10. 30.10.2006 RS. 2,15,595/- 11. 3.11.2006 RS. 50,000/- 12. 24.11.2006 RS. 20,000/- 13. 26.12.2006 RS. 15,000/- 14. 05.01.2008 RS. 13,412/- TOTAL RS.22,99,007/- 3. THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE TO SHOW AS TO W HY THE PROVISIONS OF SECTION 2 (22)(E) SHOULD NOT BE APPL IED. THE ASSESSEE HAD FILED REPLY VIDE LETTER DATED 24 TH DECEMBER, 2009 WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER . ACCORDING TO THE SUBMISSIONS MADE, IT WAS SUBMITTED THAT THE ASSESSEE IS HAVING A RUNNING ACCOUNT WITH THE SAID FIRM A ND BEFORE 1 ST ENTRY OF ` 10 LAC CREDITED TO THE ACCOUNT OF THE ASSE SSEE ON 19 TH JUNE, 2006 THE CREDIT BALANCE OF THE ASSESSEE WAS OF ` 6 LAC A ND ODD. IT WAS FURTHER SUBMITTED THAT THE SAID AMOUNT OF ` 10 LAC WA S PAID DIRECTLY BY ITA NO.3515/DEL/2011 3 THE COMPANY TO THE NOIDA AUTHORITIES FOR OBTAINING A N INDUSTRIAL PLOT FOR SETTING UP AN INDUSTRY, IF POSSIBLE. THE NEED TO M AKE A DEPOSIT IN THE NAME OF DIRECTOR AROSE BECAUSE IT WAS CONSIDERED FI T AND PROPER THAT THE CUMBERSOME FORMALITIES WHICH ARE ASSOCIATED WI TH THE ACQUISITION AND REGISTRATION OF THE PLOT BY THE UNIT COULD BE CONVENIENTLY GONE INTO IF AN INDIVIDUAL WAS NAMED FO R THAT PURPOSE. BUT ALL THAT WAS DONE FOR AND ON BEHALF OF AND STRICT LY FOR THE PURPOSE OF THE EXISTING BUSINESS. THERE WAS NO INTENTION AT ANY POINT OF TIME TO OBTAIN A PLOT IN THE NAME OF THE INDIVIDUAL. THE C OMPANY, LOOKING AT THE CUMBERSOME PROCESS DECIDED THAT IT WILL SIMPLIFY TH E PROCEDURE AND THE FORMALITIES BY APPLYING FOR THE PLOT IN THE NAME OF THE DIRECTOR AND, THEN, WHEN ALLOTMENT NOTICE FORTHCOMING, IT WO ULD EXECUTE THE NECESSARY DOCUMENTS IN THE NAME OF THE COMPANY. REFERE NCE WAS MADE TO THE COPY OF APPLICATION AND IT WAS SUBMITTED THAT THE PERUSAL THEREOF WILL MAKE CLEAR THAT IT STIPULATES CATEGORICA LLY THAT THE REGISTRATION WILL BE DONE IN THE NAME OF THE PROPOSED COMPANY. THE PROMOTER OF THE PROPOSED COMPANY WOULD HAVE BEEN SHE TH PRINTOGRAPH PVT. LTD. WHICH HAS EXTENDED THE AMOUNT TO THE NOIDA AUTHORITIES. REFERENCE WAS ALSO MADE TO THE LETTER FI LED BY THE ASSESSEE DATED 12 TH SEPTEMBER, 2006 COPY OF WHICH WAS SUBMITTED TO THE ASSESSING OFFICER WHICH WAS WRITTEN TO GENERAL MANAG ER, INDUSTRIES OF THE NOIDA AUTHORITY TO MAKE CATEGORICAL EXPRESSION OF THE INTENTION OF THE COMPANY TO HAVE THE PLOT IN THE NAME OF THE COMPANY. REFERENCE WAS ALSO MADE TO THE MODE AND METHOD OF FIN ANCING THE PROJECT AND, FOR THAT PURPOSE, A LETTER FROM DENA BA NK WAS ALSO PLACED ON THE RECORD OF THE NOIDA AUTHORITIES WHERE THE REL ATIONSHIP BETWEEN THE DEPOSIT AND SHETH PRINTOGRAPH PVT. LTD. WAS CLEAR LY BROUGHT OUT. IT WAS SUBMITTED THAT THE AMOUNT PAID BY THE COMPANY HAD NEVER REACHED THE HANDS OF THE SHAREHOLDER, THE AMOUNT WAS N EVER INTENDED TO BE AN ADVANCE TO THE SHAREHOLDERS, THE AMOUNT W AS ALSO NEVER INTENDED TO BE A LOAN TO THE SHAREHOLDERS. IN FACT, VIS-A-VIS THE ITA NO.3515/DEL/2011 4 SHAREHOLDER THE LOAN WAS NEITHER AN ADVANCE NOR A LOA N. IN FACT, THE SHAREHOLDERS NEVER EVEN SAW THE AMOUNT INITIALLY IN HI S HANDS. IT WAS SUBMITTED THAT THE TERM ADVANCE OR LOAN HAVE A DEF INITE CONNOTATION AND MEANING IN THE USAGE OF IT ACT AND NONE OF THOSE USAGES SANCTIONED A DEPOSIT WITH A THIRD PARTY AS A PRECONDIT ION FOR OBTAINING AN ASSET AS AN ADVANCE OR LOAN TO A SHAREHOLDER. IT WA S ALSO SUBMITTED THAT AN AMOUNT OF ` 10 LAC WAS RETURNED BY THE NOID A AUTHORITIES AND THE SAME WAS ALSO RETURNED BY THE ASSESSEE TO THE COMPANY IN TWO INSTALLMENTS OF ` 8 LAC AND ` 2LAC EACH; ONE AFTER TH E OTHER IN QUICK SUCCESSION AND COPY OF ACCOUNT WAS ALSO FILED TO SUBSTANTI ATE SUCH CONTENTION. SO AS IT RELATES TO OTHER ENTRIES, THE RE PLY OF THE ASSESSEE WAS AS UNDER:- I) THE AMOUNT OF ` 4 LAC RECEIVED ON 11 TH AUGUST, 2006 WAS WITH REGARD TO BILL NO.1211 AND BILL NO.1212 WHICH ARE TRADE RECEIPTS AND ARE OUTSIDE THE PURVIEW OF THE SAID PROVI SION; II) THE AMOUNT OF ` 1 LAC RECEIVED ON 30 TH AUGUST, 2006 REPRESENT RUNNING ACCOUNT FIGURE AND WAS NEVER INTEND ED EITHER AS LOAN OR ADVANCE; III) THE AMOUNT OF ` 3 LAC RECEIVED ON 30 TH AUGUST, 2006 WAS REPATRIATION OF THE AMOUNT PAID BY THE ASSESSEE TO THE COMPANY ON 3 RD JUNE, 2006; IV) THE AMOUNT OF ` 1,15,000/- ON 23 RD SEPTEMBER, 2006. THE AMOUNT COMPRISING TWO AMOUNTS OF ` 1 LAC AND ` 15,000 /- WHICH WERE RELATING TO REMUNERATION AND, HENCE, OUTSIDE TH E SCOPE OF SECTION 2 (22)(E). ITA NO.3515/DEL/2011 5 V) THE AMOUNT OF ` 2,15,595/- ON 30 TH OCTOBER, 2006 REPRESENTS PAYMENT OF DIVIDEND AND PAYMENT OF DIVIDEN D DOES NOT ATTRACT THE PROVISIONS OF SECTION 2 (22)(E). 4. IN THIS MANNER, THE ASSESSEE CONTESTED THE SHOW CAUSE NO TICE ISSUED BY THE ASSESSING OFFICER. AFTER CONSIDERING THESE SU BMISSIONS, THE ASSESSING OFFICER HAS MADE THE ADDITION OF ` 18,09,4 12/- BY EXCLUDING CERTAIN AMOUNTS RELATING TO DIVIDEND, ETC. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE REGARDI NG THE AMOUNT HAVING BEEN RECEIVED ON ACCOUNT OF APPLICATION FOR OBTAINING INDUSTRIAL PLOT IN THE NAME OF THE COMPANY AS, ACCORDING TO THE ASSESSING OFFICER, THE SAME WAS NOT A JUSTIFIABLE STORY. ACCORDING TO THE ASSESSING OFFICER, THE SAID AMOUNT WAS PAID IN THE NAME AND ON BEHALF OF THE DIRECTOR OF THE COMPANY AND THE CONTENTION OF THE A SSESSEE WAS NOT ACCEPTABLE AS THE APPLICATION FOR PLOT WAS INTENDED FOR THE COMPANY AND WAS MADE IN THE NAME OF THE DIRECTOR. THE COMPA NY COULD HAVE APPLIED FOR THE SAID PLOT IN ITS OWN NAME AS THE FORMA LITIES AND PROCEDURES ARE MORE OR LESS IDENTICAL FOR THE SAME. HE , THEREFORE, REJECTED THE CONTENTION OF THE ASSESSEE REGARDING PAYME NT OF ` 10 LAC HAVING BEEN RECEIVED ON ACCOUNT OF APPLICATION MADE FOR OBTAINING INDUSTRIAL PLOT ON BEHALF OF THE COMPANY. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A), WHO HAS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. LEARNED CIT (A) HAS OBSERVED THAT ALL THE I NGREDIENTS OF SECTION 2 (22)(E) WERE FULFILLED AND THE SUBMISSIONS O F THE ASSESSEE REGARDING AMOUNT HAVING BEEN RECEIVED AND UTILIZED FOR THE PLOT TO BE OBTAINED FOR THE COMPANY WAS NOT ACCEPTABLE. THE ASSE SSEE IS AGGRIEVED, HENCE, IN APPEAL. 5. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY THE LEARNED AR THAT IN THE WRITTEN SUBMISSIONS MADE BEFORE THE ASSESSING OFFICE R AND CIT (A) IT WAS MADE CLEAR THAT THE INDUSTRIAL PLOT APPLIE D BY THE ASSESSEE IN ITA NO.3515/DEL/2011 6 HIS NAME WAS FOR AND ON BEHALF OF THE COMPANY AND TO SUBSTANTIATE SUCH CONTENTION, REFERENCE WAS MADE TO THE APPLICATIO N SUBMITTED BY THE ASSESSEE TO THE NOIDA AUTHORITIES IN WHICH IT WAS CLE ARLY WRITTEN THAT THE SAID PLOT WAS TO BE REGISTERED IN THE NAME OF THE COMPANY IF THE SAME IS ALLOTTED. HE SUBMITTED THAT REFERENCE WAS ALSO MADE TO THE FINANCIAL PROPOSAL SUBMITTED BY THE DENA BANK FOR THE PROJECT AND THAT FINANCIAL PROJECT WAS IN THE NAME OF THE COMPAN Y. REFERRING TO THE SUBMISSIONS MADE BEFORE CIT (A), IN WHICH SIMILAR SUB MISSIONS WERE MADE AND COPY OF SUCH SUBMISSIONS ARE FILED AT PAGE S A-F OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT WITH REGARD T O OTHER ENTRIES THE ASSESSEE HAD SUBMITTED THE POSITION TO THE ASSESSING OFFICER AND COPIES OF BANK ACCOUNTS ARE ALSO FILED AT PAGES 11-15 O F THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS THREE A CCOUNTS WITH THE SAID COMPANY AND A CONSOLIDATED ACCOUNT IN RESPECT OF ALL THE ENTRIES IS ALSO FIELD AT PAGES 16-18 OF THE PAPER BOOK. HE SUBMITTED THAT THE CONSOLIDATED ACCOUNT WILL SHOW THAT THE ASSESSEE HAS NEVER RECEIVED LOAN OR ADVANCE AS ENVISAGED IN SECTION 2 ( 22)(E) OF THE ACT. 6. DURING THE COURSE OF HEARING, IT WAS NOTICED THAT AS PER WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE CIT (A), COPY OF W HICH IS FILED AT PAGES A-F OF THE PAPER BOOK, THERE WAS A MENTION O F RESOLUTION PASSED AS PER COMPANY LAW REQUIREMENT FOR APPLYING THE PLOT. THE LEARNED AR WAS ASKED TO FURNISH THE COPY THEREOF AND T HE SAME WAS FURNISHED DURING THE COURSE OF HEARING. THE LEARNED AR ALSO RELIED UPON THE FOLLOWING DECISIONS:- I) ACIT VS. HARSHAD V. DOSHI 130 ITD 137 (2001). IN T HAT CASE THE ASSESSEE BEING MANAGING DIRECTOR OF THE COMPANY DHL WAS HAVING SUBSTANTIAL HOLDING OF THE SHARES IN THAT COM PANY. THE COMPANY WAS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. CERTAIN AMOUNTS WERE ADVANCED BY THE ITA NO.3515/DEL/2011 7 COMPANY TO THE ASSESSEE AND THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 2 (22)(E) ARE NOT APPLICABLE. ACCORDING TO THE REPLY FILED BY THE ASSE SSEE ALL THE ADVANCES RECEIVED WERE FOR ACQUIRING LAND WHICH WAS T O BE DEVELOPED BY THE COMPANY AND DECISION TO HOLD OWNERSH IP DIFFERENT FROM THAT OF THE SAID COMPANY, WAS A PURE B USINESS DECISION, FOR REDUCING THE COST OF REGISTRATION AS PER TAMIL NADU STAMP ACT. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAD GAINED FROM ADVANCES RECEIVED FROM DHL WHICH WAS ALL CREDITED INTO HIS PERSONAL BANK ACCOUNT, THEREFORE, S ECTION 2 (22)(E) WAS ATTRACTED. LEARNED CIT (A) DELETED THE ADDITION AND ON FACTS IT WAS HELD BY THE TRIBUNAL THAT AS A PRU DENT BUSINESS PERSON, COMPANY WITH AN INTENTION TO KEEP ITS C OST DOWN AND TO REMAIN COMPETITIVE HAD DECIDED TO HOLD LAND IN THE NAME OF THE ASSESSEE. THOUGH THE ASSESSEE HAD DERIVED CERTAIN BENEFIT IN THE PROCESS ON ACCOUNT OF CAPITAL GAIN, BUT THE SAME WOULD NOT IN ANY WAY CHANGE THE COLOUR OF T HE TRANSACTION WHICH WAS CLEARLY MOTIVATED BY BUSINESS CONSIDERATION AND COMMERCIAL EXPEDIENCY AND, THUS, IT WAS HELD THAT THE PROVISIONS OF SECTION 2 (22) (E) WERE N OT APPLICABLE. II) CIT VS. RAJ KUMAR 318 ITR 462 (DEL) WHEREIN HON BLE DELHI HIGH COURT WHILE INTERPRETING THE PROVISIONS OF SECTI ON 2 (22)(E) HELD THAT THE WORD ADVANCE, WHICH APPEARS IN THE COMPANY OF LOAN CAN ONLY MEAN SUCH ADVANCE WHICH C ARRIES WITH IT AN OBLIGATION OF REPAYMENT AND IT WAS HELD T HAT THE TRADE ADVANCES WHICH ARE IN THE NATURE OF MONEY TRAN SACTION TO GIVE EFFECT TO A COMMERCIAL TRANSACTION CANNOT BE TREATED AS DEEMED DIVIDEND FALLING WITHIN THE AMBIT OF PROVI SIONS OF SECTION 2(22)(E). ITA NO.3515/DEL/2011 8 III) CIT VS. AMBASSADOR TRAVELS PVT. LTD. 318 ITR 376 ( DEL) WHEREIN IT WAS HELD THAT THE FINANCIAL TRANSACTIONS EN TERED AS NORMAL BUSINESS TRANSACTIONS BEING PART OF DAY-TO-DAY BUSINESS ACTIVITIES CANNOT BE TREATED AS LOAN OR ADVANCE WITHIN THE MEANING OF SECTION 2 (22)(E) OF THE ACT . IV) CIT VS. F. PRAVEEN 220 CTR 639 (MADRAS). IT WAS HE LD THAT THERE WAS NO LOAN TO THE ASSESSEE FROM THE COMPANY AND I T WAS ONLY A BUSINESS TRANSACTION AND SUBSEQUENTLY, THE SAID AMOUNT WAS RETURNED TO THE COMPANY, AS AN ADVANCE TOW ARDS AN AGREEMENT FOR SALE OF PROPERTY WHICH WAS IN THE CO URSE OF THE BUSINESS OF THE COMPANY, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE LOAN IN QUESTION WAS NOT DEEMED DIV IDEND U/S 2(22)(E). V) ARUN KUMAR VS. UNION OF INDIA (SC) TO CONTEND THA T IF THE JURISDICTIONAL FACT EXISTS, THE AUTHORITIES CAN PROCEED WITH THE CASE AND TAKE AN APPROPRIATE DECISION IN ACCORDANCE W ITH THE LAW. ONCE THE AUTHORITY HAS THE JURISDICTION IN THE MATTER ON EXISTENCE OF JURISDICTIONAL FACT, IT CAN DECIDE THE FACT IN ISSUE OR ADJUDICATOR FACT. A WRONG DECISION, FACT IN I SSUE OR ADJUDICATOR FACT WOULD NOT MAKE THE DECISION OF TH E AUTHORITY WITHOUT JURISDICTION OR VULNERABLE PROVIDED ESSENTIAL OR FUNDAMENTAL FACT AMOUNT TO THE EXISTENCE OF JURISDICT ION. 7. THUS, HE PLEADED THAT IN THE PRESENT CASE THE ASSESSING OFFICER DOES NOT HAVE JURISDICTION AS IT HAS NOT BEEN SHOWN THAT WHETHER ANY BENEFIT WAS OBTAINED BY THE ASSESSEE FROM THE SAID TRANSAC TION. HE SUBMITTED THAT IN THE ABSENCE OF BENEFIT HAVING BEEN OBTAINED, THE PROVISIONS OF SECTION 2 (22)(E) COULD NOT BE APPLIED. ITA NO.3515/DEL/2011 9 8. IN THIS MANNER THE LEARNED AR CONCLUDED THAT THE ADDITION HAS WRONGLY BEEN MADE AND IT HAS WRONGLY BEEN SUSTAINED BY THE LEARNED CIT (A) AND THE ADDITION SHOULD BE DELETED. 9. ON THE OTHER HAND, RELYING UPON THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT (A), LEARNED DR PLEADED THAT T HE ADDITION HAS RIGHTLY BEEN UPHELD BY THE CIT (A). HE SUBMITTED TH AT ALL THE INGREDIENTS MENTIONED IN SECTION 2 (22)(E) ARE FULFI LLED. THEREFORE, THE APPEAL FILED BY THE ASSESSEE ON THIS ISSUE SHOULD BE DISMISSED . 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS I N THE LIGHT OF MATERIAL PLACED BEFORE US. SO FAR AS IT RELATES TO T HE TRANSACTION OF ` 10 LAC, THE ASSESSEE HAS BEEN ABLE TO PLACE MATERIAL ON RECORD TO SHOW THAT THE SAID TRANSACTION WAS NEITHER A LOAN ADVANCE D TO THE ASSESSEE NOR IT WAS AN ADVANCE MADE TO THE ASSESSEE. THE SAID P LOT WHICH WAS APPLIED FOR WAS TO BE OBTAINED FOR THE BUSINESS INTEREST OF THE COMPANY AND THE SAID MONEY ALSO DID NOT COME TO THE COFFER OF THE ASSESSEE AS IT WAS DIRECTLY PAID TO THE NOIDA AUTHORITIES FOR OBT AINING THE PLOT. HOWEVER, THE ALLOTMENT WAS NOT DONE AND THE MONEY WA S REFUNDED TO THE ASSESSEE WHICH IN TURN WAS REFUNDED BACK TO THE COMP ANY. THEREFORE, TO THAT EXTENT, IN OUR CONSIDERED OPINION , THE PROVISIONS OF SECTION 2 (22)(E) WERE NOT APPLICABLE. 11. NOW, COMING TO THE OTHER TRANSACTIONS, WE HAVE CA REFULLY GONE THROUGH THE CONSOLIDATED ACCOUNT FILED BY THE ASSESSEE W ITH REGARD TO THE PAYMENT RECEIVED BY HIM WHICH IS PLACED AT PAGE 16 TO 18 OF THE PAPER BOOK. AT THE OPENING OF THE YEAR THE ASSESSEE WA S HAVING A CREDIT BALANCE OF ` 9,50,600/-. TILL AN AMOUNT OF ` 10 LAC WAS DEBITED TO HIS ACCOUNT ON 19 TH JUNE, 2006, THE ASSESSEE WAS HAVING A CREDIT BALANCE OF ` 6,05,595/- AND AFTER CREDITING TO HIS A CCOUNT THE AFOREMENTIONED AMOUNT OF ` 10 LAC, DEBIT CAME TO TH E ACCOUNT OF THE ITA NO.3515/DEL/2011 10 ASSESSEE WHICH WAS A SUM OF ` 3,94,405/-. THE SAID AMOUNT OF ` 10 LAC WAS REPAID BY THE ASSESSEE; ` 8 LAC ON 28 TH OCTOBER, 2006 WHICH MADE THE DEBIT BALANCE OF THE ASSESSEE AT ` 1,78,405/- AND T ILL THEN THE DEBIT BALANCE OF THE ASSESSEE IN THE CONSOLIDATED ACCOUNT DID NOT EXCEED ` 10 LAC, THEREFORE, TILL THE DATE THE ASSESSEE PAID BACK THE AMOUNT OF ` 8 LAC ON 28 TH OCTOBER, 2006, NO LOAN OR ADVANCE WERE OBTAINED BY THE ASSESSEE FROM THE COMPANY AND, IN FACT, WHATEVER AMOUNT IS PAID BY THE ASSESSEE COMPANY TO HIM WAS OUT OF HIS OWN AMOUNT OF ` 9,50,600/-. THEREAFTER, THE PAYMENT RECEIVED BY TH E ASSESSEE IS ` 2,15,595/- ON 30 TH OCTOBER, 2006 WHICH WERE EXPLAINED BY THE ASSESSEE AS DIVIDEND RECEIVED BY HIM WHICH MADE THE DEBIT BAL ANCE AT ` 3,95,000/-. THEREAFTER, SALARY FOR THE MONTH OF OCTO BER IS CREDITED ON 31 ST OCTOBER, 2006 WHICH REDUCED THE DEBIT BALANCE TO ` 3,79,000/-. THEREAFTER, THE ASSESSEE RECEIVED AN AMOUNT OF ` 50,000 /- ON 3 RD NOVEMBER, 2006 WHICH INCREASED THE DEBIT BALANCE OF THE ASSESSEE WITH THE COMPANY AS ` 4,29,000/-. THEN, THE ASSESSEE HA D PAID BACK THE BALANCE AMOUNT OF ` 2 LAC OUT OF THE REFUND OF PLOT ON 6 TH NOVEMBER, 2006 WHICH MADE THE DEBIT BALANCE OF THE ASSESSEE AT ` 2,29,000/- AND, THEREAFTER, THE DEBIT BALANCE OF TH E ASSESSEE HAS BEEN CONVERTED ONLY ON 1 ST FEBRUARY, 2007 WHEN AN AMOUNT OF ` 7,50,000/- WAS CREDITED TO THE ACCOUNT OF THE ASSESSEE ON ACCOUNT O F GOODWILL AND COPYRIGHT. WE HAVE ALSO GONE THROUGH THE EXPLANATIO N FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WITH REGARD TO ALL TH ESE ENTRIES (THE RELEVANT PORTION HAS BEEN REPRODUCED IN PARA 3 OF THIS ORDER). THE REPLY OF THE ASSESSEE TO THE ASSESSING OFFICER HAS BEEN PLAC ED AT PAGE 6-8 OF THE PAPER-BOOK AND WE FIND THAT IN THE REPLY THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION WITH REGARD TO THE AMOUNT S PAID TO THE ASSESSEE OF ` 50,000/- ON 3 RD NOVEMBER, 2006 AND ` 20,000/- ON 24 TH NOVEMBER, 2006 AND ` 15,000/- ON 26 TH DECEMBER, 2006. ON ALL THESE DATES THE ASSESSEE WAS HAVING DEBIT BALANCE OF ` 4,29,000 /-, `2,49,000/- AND ` 2,19,000/- RESPECTIVELY. IN VIEW OF NO EXPLANATION ITA NO.3515/DEL/2011 11 FOUND ON RECORD, WE HOLD THAT THESE AMOUNTS CAN BE CO NSIDERED TO BE ADVANCE IN THE HANDS OF THE ASSESSEE AS PER THE PROVISIO NS OF SECTION 2(22)(E) OF THE ACT AND, THEREFORE, ADDITION ONLY T O THE EXTENT OF ` 85,000/- (` 50,000/- ON 3 RD NOVEMBER, 2006, ` 20,000/- ON 24 TH NOVEMBER, 2006 AND `15,000/- ON 26 TH DECEMBER, 2006) IS REQUIRED TO BE MADE U/S 2 (22)(E) OF THE ACT. THEREFORE, ADDITI ON TO THAT EXTENT IS SUSTAINABLE AND THE ADDITION OF OTHER AMOUNTS, FOR THE REASONS STATED AS ABOVE IS NOT SUSTAINABLE AND THE SAME IS DELETED. SO AS IT RELATES TO THE ENTRY OF ` 13,412/- DEBITED TO THE ASSESSEE ON 5 TH JANUARY, 2008, WE FIND THAT THE SAME IS THE PAYMENT MADE TO ICICI LOMBA RD AND IT IS NOT DIRECTLY PAID TO THE ASSESSEE AND, THEREFORE, THE SAME A LSO DOES NOT FALL WITHIN THE AMBIT OF SECTION 2 (22)(E) OF THE A CT. IN VIEW OF THE ABOVE DISCUSSION, EXCEPT FOR THE ADDITION OF ` 85,000/ -, THE BALANCE ADDITION IS DELETED AND GROUND NO.1 FILED BY THE ASSESSE E IS PARTLY ALLOWED. 12. SO FAR AS IT RELATES TO SECOND GROUND, RELATING TO THE QUANTIFICATION OF LONG-TERM CAPITAL GAIN, THE LEARN ED AR SUBMITTED THAT DUE TO THE SMALLNESS OF THE AMOUNT, THE ASSESSEE DOES NOT WANT TO PRESS IT. HENCE, THE FINDINGS ON THIS ISSUE RECORDED BY THE CIT (A) ARE CONFIRMED. GROUND NO.2 IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.09.20 11. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 16.09.2011. DK ITA NO.3515/DEL/2011 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES