Shri Sunil Bansal, Hisar V. Addll. CIT, Hisar

ITA 76/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86553 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 06-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Depreciation; Deemed to accrue or arise in india; Deemed dividend; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G , NEW DELHI) BEFORE SHRI DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.76 /DEL/2010 ASSESSMENT YEAR : 2006-07 SHRI SUNIL BANSAL, VS. ADDL. CIT, RANGE, 2030, MHOALLA RAMPURA, HISAR HISAR GIR / PAN:ABQPB6536N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN, ADV. RESPONDENT BY : SHRI SATPAL SINGH, SR. DR ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LD. CIT(A) DATED 23.10.2009. THE ASSESSEE IS AGGRIEVED WITH T HE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED AN ADDITION OF RS.27,46,1 76/- MADE BY A.O. ON ACCOUNT OF DEEMED INCOME U/S 2(22) (E) OF THE I. T. ACT, 1961. THE ASSESSEE HAS TAKEN THIS GRIEVANCE IN GROUNDS NOS.2-2.3 OF HI S APPEAL. THE ASSESSEE IS FURTHER AGGRIEVED WITH THE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED THE ADDITION IN DISALLOWANCE 2,25,595/- REPRESENTIN G FINANCIAL CHARGES OF RS.2,11,510/- AND REPRESENTING DEPRECIATION BY HOLD ING THE SAME TO BE CAPITAL EXPENDITURE. 2. AT THE OUTSET, LD. A.R. SUBMITTED THAT CASE OF T HE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HONBLE TRIBUNAL IN THE CASES OF BROTHERS OF THE ASSESSEE WHEREBY SIMILAR ADDITIONS WERE DELETED BY THE TRIBUNAL. IN THIS ITA NO.76/DEL/2010 2 RESPECT, HE INVITED OUR ATTENTION TO COPY OF ORDER OF THE TRIBUNAL IN I.T.A. NO. NOS. 2574 AND 2573/DEL/2010 PLACED IN PAPER BOO K PAGE 63-75. INVITING OUR ATTENTION TO THE FACTS OF THE CASE LD. A.R. TOO K US TO PAGE 4 OF THE ASSESSMENT ORDER AND INVITED OUR ATTENTION TO THE O BSERVATIONS OF THE A.O. CONTAINED IN LAST PARA WHEREIN HE HAS MENTIONED THA T MR. ANIL BANSAL, PAWAN BANSAL AND SUNIL BANSAL HAD RECEIVED ADVANCES FROM THE COMPANY WHEREIN THEY HAD SUBSTANTIATED INTEREST AND THE COM PANY HAD SURPLUS AVAILABLE AND THEREFORE, IN THE CASES OF THREE BROT HERS, THE ADDITION WAS MADE ON ACCOUNT OF DEEMED DIVIDEND. LD. A.R. FURTHER SU BMITTED THAT THE TRIBUNAL IN THE CASES OF BROTHERS HAD DELETED THE A DDITION HOLDING THAT THE TRANSACTIONS WERE NOT IN THE NATURE OF LOAN BUT RAT HER THEY WERE IN THE NATURE OF CURRENT ACCOUNT WHERE ASSESSEE HAD DEBIT BALANCE AS WELL AS CREDIT BALANCE. HE FURTHER SUBMITTED THAT THE A.O. INSTEA D OF LOOKING INTO THE ENTIRE STATEMENT OF ACCOUNT FOR THE WHOLE YEAR ONLY PICKED UP ONLY DEBIT ENTRIES IN THE MONTH OF FEB 2006 AND TREATED THE DEBIT BALANCE AS DEEMED DIVIDEND. LD. A.R. FURTHER TOOK US TO COPY OF LEDGER ACCOUNT OF THE ASSESSEE AS APPEARING IN THE BOOKS OF THE COMPANY PLACED IN PAP ER BOOK PAGES 41-46 AND SUBMITTED THAT THE ACCOUNT REPRESENTED THE CURR ENT ACCOUNT AND BALANCE AT MOST OF THE TIME WAS CREDIT BALANCE INSTEAD OF D EBIT BALANCE AND, SUBMITTED IN THE CASES OF BROTHERS ALSO SIMILAR POS ITION WAS THERE AND THEREFORE, THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR. LD. A.R. HAS NOT PRESSED GROUND NO.3 OF APPEAL. 3. LD. D.R. ON THE OTHER HAND HEAVILY RELIED UPON T HE ORDERS OF AUTHORITIES BELOW. ITA NO.76/DEL/2010 3 4. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT IN THE CASE OF S/SHRI ANIL BANSAL AND PAWAN BANSAL WHO HAPPENS TO BE BROTHERS OF THE ASSESSEE FOR THE SAME ASSESSMENT YEAR 2006-07, SIMILAR ADDITIONS WERE MADE AND THE TRIBUN AL HAD HELD THAT THE TRANSACTIONS WERE NOT IN THE NATURE OF LOAN AND ADV ANCES BUT WERE IN THE NATURE OF CURRENT ACCOUNT. FOR THE SAKE OF CONVENI ENCE, THE FINDINGS OF THE TRIBUNAL IN THE CASE OF S/SHRI ANIL BANSAL IN I.T.A .NO. 2574/DEL/2007 ARE REPRODUCED BELOW: 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE COPY OF THE ASSESSEE'S ACCOUNT IN THE BOOKS OF MIS DAISY MOTORS PVT. LTD. IS PLACED AT PAGES 19 & 20 OF THE ASSESSEE'S PAPER BOOK.' FOR READY RE FERENCE, THE SAME IS ANNEXED HEREWITH AS ANNEXURE-I . FROM A PERUSAL OF THE ABOVE ACCOUNT, IT IS SEEN THAT THERE WAS OPENING CREDIT B ALANCE, THEN DEBIT BALANCE OCCURRED DUE TO' CERTAIN PAYMENTS MADE BY M IS DAISY MOTORS PVT. LTD. TO THE ASSESSEE IN THE MONTH OF APRIL AND JULY. THEREAFTER, FROM JULY 2007 TO 22ND MARCH, 2006, THERE WAS A CRE DIT BALANCE AND AGAIN ON 30TH MARCH, 2006, THERE WAS A DEBIT BALANC E. IF WE FURTHER ANALYZE THE ACCOUNTS, WE FIND THAT THE MAXIMUM DEBI T BALANCE OF THE ACCOUNT OF THE ASSESSEE WAS ONLY RS.2,08,212/- WHIL E THE MAXIMUM CREDIT BALANCE WAS MORE THAN RS.2 CRORES. THAT THE DEBIT BALANCE OF RS.2 LAKHS WAS ONLY FOR A PERIOD OF TEN DAYS I.E. F ROM 23RD JULY TO 8TH AUGUST, 2006 WHILE THE CREDIT BALANCE OF MORE THAN A CRORE REMAINS FOR MORE THAN TWO MONTHS ARID CREDIT BALANCE OF MOR E THAN RS.20 LAKHS REMAINS FOR MORE THAN SIX MONTHS. FROM THE CO PY OF ACCOUNT, IT IS EVIDENT THAT THE ASSESSEE ALSO MADE PURCHASE OF TEN VEHICLES. THUS, THE ACCOUNT IS CLEARLY IN THE NATURE OF A RUNNING C URRENT ACCOUNT AND MERELY BECAUSE FOR A FEW DAYS THERE WAS A DEBIT BAL ANCE OF RS.2 08,212/- IT CANNOT BE SAID THAT SUCH DEBIT BALANCE WAS EITHER LOAN OR ADVANCE BY M/S DAISY MOTORS PVT. LTD. TO THE ASSESS EE. ON THESE FACTS, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF AMBASSADOR TRAVELS PVT. LTD. (SUPRA), WHEREIN THEIR LORDSHIPS HELD AS UNDER, WOULD BE SQUARELY APPLICABLE: ITA NO.76/DEL/2010 4 '5. WE ARE OF THE VIEW' THAT THE ORDER PASSED BY T HE TRIBUNAL DOES NOT SUFFER FROM ANY ERROR OF LAW. IT IS QUITE CLEAR THAT THE ASSESSEE WAS A TRAVEL AGENCY AND THE ABOVE TWO CONC ERNS THAT IT HAD DEALINGS WITH, THAT IS M/S. HOLIDAY RESORT (P) LTD. AND M/S AMBASSADOR TOURS (I) (P) LTD. WERE ALSO IN THE TOUR ISM BUSINESS. THE ASSESSEE WAS INVOLVED IN THE BOOKING OF RESORTS FOR THE CUSTOMERS OF THESE COMPANIES AND ENTERED IN TO NORMAL BUSINESS TRANSACTIONS AS A PART OF ITS DAY-TO-DAY B USINESS ACTIVITIES. THE FINANCIAL TRANSACTIONS CANNOT IN AN Y CIRCUMSTANCES BE TREATED AS LOANS OR ADVANCES RECEI VED BY THE ASSESSEE FROM THESE TWO CONCERNS. ' 7. SIMILAR VIEW WAS ALSO TAKEN BY THEIR LORDSHIPS I N THE CASE OF CREATIVE DYEING AND PRINTING P. LTD. (SUPRA). RESPE CTFULLY FOLLOWING THE ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT AND APPLYING THE RATIO OF THE ABOVE DECISIONS TO THE FA CTS OF THE ASSESSEE'S CASE, WE HOLD THAT THE DEBIT' BALANCE OF ~2,08,212 /- CANNOT BE TREATED TO BE DEEMED DIVIDEND UNDER SECTION 2(22)(E ) OF THE ACT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFF ICER IS DELETED AND GROUND NO.2 OF THE ASSESSEE'S APPEAL IS ALLOWED . 5. FROM THE COPY OF ACCOUNT OF THE ASSESSEE AS APPE ARING IN THE BOOKS OF ACCOUNT OF DAISY MOTORS (P) LTD. AS PLACED IN PAPE R BOOK PAGE 41 TO 46 WE FIND THAT AS ON 01.04.2005, THE COMPANY HAD DEBITED BALANCE FROM ASSESSEE AMOUNTING TO RS.17.60 LACS AND AFTER THAT NUMBER OF TRUNCATIONS TOOK PLACE DURING THE YEAR AND BALANCE OF THE ASSESSEE TOWARDS COMPANY REMAINED IN CREDIT UP TO NOVEMBER 2005 AND AGAIN IT TURNED INTO DEBIT BALANCE AS ON THE CLOSE OF THE YEAR AND MOREOVER THERE ARE TWENTY ENT RIES OF SALES MADE TO ASSESSEE BY THIS COMPANY AND THE AMOUNT OF EACH SAL E EXCEEDS RS. SEVEN LACS. THEREFORE, THE NATURE OF TRANSACTIONS IN THE ACCOUNT DOES NOT REPRESENT A LOAN OR ADVANCE BUT A SERIES OF TRANSACTIONS WHIC H REPRESENT SALE TRANSACTIONS ALSO. THE A.O. WHILE FRAMING ASSESSME NT ORDER, HAS PICKED UP ITA NO.76/DEL/2010 5 ONLY ENTRIES OF FEB 2006 AND HAS NOT LOOKED INTO TH E ENTIRE TRANSACTIONS IN THE ACCOUNT. WE FIND THAT THE FACTS AND CIRCUMSTAN CES OF THE PRESENT CASE ARE SIMILAR AS THE FACTS IN THE CASE IN I.T.A. NO. 2574 AND 2573/DEL/2010. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ABOVE APPEALS, WE ALLOW THE GROUNDS NO.2 TO 2.3 OF THE AP PEAL. 6. GROUND NO.3 HAS NOT BEEN PRESSED, THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 7. GROUND NO.1 IS GENERAL AND DOES NOT REQUIRE ANY ADJUDICATION. 8. IN VIEW OF ABOVE, APPEAL OF THE ASSESSEE IS PART LY ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JAN., 2015. SD./- SD./- (DIVA SINGH ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16 TH JAN., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.76/DEL/2010 6 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 7/1 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 8,12, SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 16/1 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 16/1 SR. PS/PS 7 FILE SENT TO BENCH CLERK 16/1/15 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER