SHAH RUKH KHAN, MUMBAI V. ACIT CEN CIR 29, MUMBAI

ITA 80/MUM/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0211 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R PRASAD
• Assessee Lawyers: DHARAN GANDHI LD ARS
• Keywords: Deemed Gift on Purchase of immovable Property below Jantri value; Gift; Valuation report
• Section: 143(3)

Judgement Text

ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.8555/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) ASSISTANT COMMISSIONER OF INCOME TAX (ACIT) CENTRAL CIRCLE 29 4 TH FLOOR, ROOM NO. 411 AAYKAR BHAVAN M.K. ROAD MUMBAI 400 020 / VS. SHAHRUKH KHAN 44, MANNAT B.J.ROAD, BAND STAND BANDRA (W) MUMBAI-400 050 !' ./PAN NO. AAHPK-3293-L ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) & ./I.T.A. NO.80/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) SHAHRUKH KHAN 44, MANNAT B.J.ROAD, BAND STAND BANDRA (W) MUMBAI-400 050 / VS. ASSISTANT COMMISSIONER OF INCOME TAX (ACIT) CENTRAL CIRCLE 29 4 TH FLOOR, ROOM NO. 411 AAYKAR BHAVAN M.K. ROAD MUMBAI 400 020 !' ./PAN NO. AAHPK-3293-L ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 2 ASSES SEE BY : HIRO RAI & DHARAN GANDHI, LD. ARS REVENUE BY : R.R. PRASAD, CIT (DR) / DATE OF HEARING : 25/05/2017 / DATE OF PRONOUNCEMENT : 18 /08/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR 2008 -09 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4 0 [CIT(A)], MUMBAI DATED 17/10/2011. SINCE, BOTH CONTEST SINGUL AR ISSUE FROM DIFFERENT ANGLES, WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. THE WHOLE ISSUE IN THE APPEAL REVOLVES AROUND TAXABILITY OF SIGNATURE VILLA SITUATED AT DUBAI RECEIVED AS GIFT BY THE ASSESSEE IN THE IMPUGNED AY. 2. FIRST WE TAKE UP ITA NO. 80/MUM/2012 WHICH IS AS SESSEES APPEAL WHERE THE ASSESSEE HAS RAISED FIVE GROUNDS OF APPEA L. GROUND NO. 5 IS GENERAL IN NATURE WHEREAS GROUND NO. 4 IS RELATED W ITH CONSEQUENTIAL INTEREST U/S 234B/C. GROUND NO. 3 HAS BEEN WITHDRAW N BY LD. COUNSEL FOR ASSESSEE [AR] DURING PROCEEDINGS BEFORE US AND HENCE, THE SAME IS DISMISSED IN LIMINE. THEREFORE, THE ONLY EFFECTIVE GROUNDS ARE GROUND NUMBERS 1 & 2 WHICH READS AS FOLLOWS:- 1. THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN C ONFIRMING THE ACTION OF THE LEARNED ASST. CIT IN TAXING THE VALUE OF THE SI GNATURE VILLA AT DUBAI RECEIVED BY THE APPELLANT AS A GIFT, AS THE INCOME OF THE APPELLANT. THE ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 3 REASONS GIVEN IN THIS REGARD BOTH BY THE LEARNED CI T (APPEALS) AND THE LEARNED ASST. CIT ARE INCORRECT, UNJUSTIFIED AND UN WARRANTED. 2. THE LEARNED CIT(APPEALS) AND THE LEARNED ASST. C IT HAVE ERRED IN HOLDING THAT THE GIFT WAS RECEIVED BY THE APPELLANT FOR UTILIZING HIS BRAND IMAGE AND FOR THE STAGE PERFORMANCE GIVEN BY THE AP PELLANT. THE SAID FINDING IS INCORRECT AND IS BASED ENTIRELY ON CONJE CTURES AND SURMISES. 3.1 BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT INDIVIDUAL AND A FILM ACTOR BY PROFESSION, WAS ASSESSED U/S 143(3) FOR IMPUGNE D AY VIDE ASSESSING OFFICERS ORDER DATED 27/12/2010 AT RS.14 4.17 CRORES AFTER CERTAIN ADJUSTMENTS / DISALLOWANCES AS AGAINST RETU RNED INCOME OF RS.126.31 CRORES FILED BY THE ASSESSEE ON 30/09/200 8 WHICH WAS SUBSEQUENTLY REVISED TO SAME FIGURES ON 22/04/2009. AS STATED EARLIER, THE ONLY ISSUE INVOLVED IN THE APPEAL IS TAXABILITY OF SIGNATURE VILLA RECEIVED BY ASSESSEE AS GIFT FROM NAKHEEL PJSC (PUBLIC JOINT STOCK COMPANY) , A DUBAI BASED COMPANY VIDE DEED OF GIFT DATED 16/ 09/2007, THE VALUE OF WHICH, IN THE OPINION OF LD. AO, WAS A SSESSABLE AS PROFESSIONAL RECEIPTS BEING COVERED UNDER SECTION 28(IV) OF THE INCOME TAX ACT, 1961. ON THE OTHER HAND, THE ASSESSEE, VID E HIS LETTER DATED 26/11/2010 DENIED HAVING RENDERED ANY PROFESSIONAL SERVICES TO NAKHEEL PJSC AND ATTRIBUTED THE RECEIPT OF FLAT TO SIMPLY A UNIL ATERAL GRATUITOUS ACT OF GIFT BY NAKHEEL PJSC ON ACCOUNT OF NATURAL LOVE AND AFFECTION OF PERSONAL FRIEND OF THE ASSESSEE NAMELY H.E.SULTAN AHMED BIN SULAYEM [SULTAN], BEING EXECUTIVE DIRECTOR / CHAIRMAN OF THE NAKHEEL PJSC AND THEREFORE COULD NOT BE SAID TO HAVE ARISEN OUT OF EXERCISE OF ANY PROFESSION BEING COVERED BY SECTION 28(IV). MOREOVER, ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 4 THERE WAS NO CONTRACTUAL OBLIGATION ON ANY PARTY AN D THE GIFT WAS NOT ON ACCOUNT OF EXERCISE OF PROFESSION AS PER SECTION 28(IV) SINCE THE SAID TERM SIGNIFIES CARRYING OUT OF ANY POSITIVE ACT. 3.2 HOWEVER, LD. AO NOTED THAT THE ASSESSEE DERIVED MAJOR INCOME FROM ADVERTISEMENT AND STAGE SHOWS AND WAS REGULARL Y ENDORSING VARIOUS BRANDS BECAUSE OF HIS ICONIC IMAGE AND GLOB ALLY RECOGNIZED FAME AND CHARGING BRAND ENDORSEMENT FEES RANGING FR OM 6.50 CRORES TO 8 CRORES PER ENDORSEMENT DURING THE IMPUGNED AY. 3.3 THE LD. AO GATHERED / COLLECTED CERTAIN MATERIA L FROM THE WEBSITE OF NAKHEEL PJSC AND NOTED THAT THE SAID COMPANY WAS USING THE ASSESSEES BRAND IMAGE FOR ENDORSING ITS PALM PROJECT SINCE 2004 ON ITS OFFICIAL WEBSITE AND OTHER ELECTRONIC & PRINT MEDIA WHICH COULD BE CORROBORATED BY THE FACT THAT THE ASSESSEE MADE MAN Y VISITS TO THE SALE/SITE OFFICE OF THE DONOR IN THE YEAR 2004 & 20 05 AND ALSO PARTICIPATED IN THE ANNUAL DAY CELEBRATION OF THE D ONOR IN THE YEAR 2007. THE LD. AO FURTHER OPINED THAT THE DONOR WAS KEEN T O USE ASSESSEES IMAGE & BRAND FOR PUBLICITY FOR ITS PALM PROJECT SINCE 2004 AND PLACED ASSESSEES NEWS ITEMS ON ITS OFFICIAL WEBSITE, WHER EAS, THE ASSESSEE NEVER OBJECTED TO THE SAME, WHICH LED THE LD. AO TO BELIEVE THAT THE SAID GIFT TRANSACTION WAS MERE CAMOUFLAGE TO EVADE THE T AXES. 3.4 THE LD. AO FURTHER NOTED THAT THE OWNERSHIP OF THE SAID VILLA VESTED WITH THE CORPORATE ENTITY WHICH HAD SEPARATE / DIST INCT LEGAL IDENTITY AS SEPARATE FROM ITS DIRECTORS AND THEREFORE, COULD NO T HAVE ANY EMOTIONS / SENTIMENTS LIKE NATURAL LOVE AND AFFECTION AND THER EFORE, INCAPABLE OF MAKING THE SAID GIFT WHICH WAS PURPORTEDLY SAID TO HAVE BEEN MADE BY THE SULTAN, BEING MERE EXECUTIVE DIRECTOR OF THE COMPANY. ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 5 3.5 THE LD. AO, AFTER PERUSING THE LETTER OF SULTAN DATED 16/12/2004 EXPRESSING INTENTION TO DONATE THE SAID VILLA CAME TO CONCLUSION THAT THE SAID COMPANY WAS KEEN TO USE ASSESSEES BRAND IMAGE / BRAND POTENTIAL FOR THE PUBLICITY OF THE PALM PROJECT IN LIEU OF THE GIFT. THE WHOLE ISSUE WAS ENCAPSULATED BY LD. AO IN PARA NO. 6 OF THE ASS ESSMENT ORDER IN THE FOLLOWING MANNER:- 6 . THUS, THE SUM-TOTAL OF THE ENTIRE ISSUE IS ENCAPSUL ATED HEREUNDER: THE ASSESSEE IS A RENOWNED FILM ARTIST WITH WORLDWI DE FAN FOLLOWING, WHO HAS BEEN EARNING INCOME FROM ACTING IN FIIMS, BRAND END ORSEMENTS AND STAGE PERFORMANCES. DURING THE FINANCIAL YEAR UNDER CONSI DERATION, THE ASSESSEE HAS SHOWN THAT HE HAS RECEIVED A GIFT OF SIGNATURE VILL A AT DUBAI, AND SHOWN THAT THIS IS NOT CHARGEABLE TO TAX. BUT, THE FACT THAT THE ASSES SE HAS BEEN USED AS BRAND AMBASSADOR BY THE DONOR COMPANY NAKHEEL PJSC FOR TH E PROJECT SINCE 2004 AND THE ASSESSEES FREQUENT VISITS TO ITS SALES CENTRE AND SUBSEQUENT PERFORMANCE AT THE ANNUAL DAY OF THE COMPANY FOR WHICH HE HAS NOT SHOW N ANY RECEIPT/INCOME, STRONGLY POINTS THAT THIS ALLEGED GIFT IS A PROFESS IONAL RECEIPT TRANSACTED IN THE GUISE OF GIFT. THIS IS SUPPORTED BY THE FACT THAT THE DO NOR IN THE CASE IS A DUBAI BASED COMPANY WHICH IS AN ARTIFICIAL JURISTIC PERSON DEVO ID OF ANY NATURAL SENSES SUCH AS LOVE AND AFFECTION, AND THE FACT THAT THE ASSESSEE S BRAND NAME HAS BEEN USED TO ADVERTISE THE PROJECT SINCE 2004 AND SUBSEQUENTLY H AS PERFORMED AT THE ANNUAL DAY OF THE COMPANY, FOR WHICH HE HAS NOT SHOWN ANY RECE IPT/INCOME, THUS RULING OUT THE CONCEPTS OF NATURAL LOVE AND AFFECTION AND WITHO UT ANY CONSIDERATION WHICH ARE VITAL ELEMENT TO CHARACTERIZE THE GIFT. THE ASSESS E GOT THE LETTER FROM NAKHEEL DATED 16 TH DECEMBER, 2004 AND HAS MADE SEVERAL VISITS TO COMP ANYS SALES CENTRE IN THE YEAR 2004 AND 2005 AS MENTIONED IN COMPANYS FUNCTI ON ALONG WITH THE MATERIALS IN THE COMPANYS WEBSITE CLEARLY ESTABLISH THAT THIS T RANSACTION HAS RESULTED OUT OF THE EXERCISE OF ASSESSEES PROFESSION. THE ASSESSE IS AN ARTIST AND IS REGULARLY ENDORSING VARIOUS BRANDS AND PERFORMING AT VARIOUS EVENTS AND SHOWS, AND IS CHARGING ENORMOUS AMOUNT FOR ENDORSEMENT AND PERFORMANCES. THE ALLEGED GIFT THUS REPRESENTS REM UNERATION OR PAYMENT FOR UTILIZING THE ASSESSEES IMAGE AND BRAND NAME AND I N LIEU OF HIS PERFORMANCE AT COMPANYS EVENT. THE RECEIPT HAS CLEARLY ARISEN IN THE COURSE OF THE EXERCISE OF HIS PROFESSION. ANYTHING IN WHICH A PERSON WAS ENGAGED SYSTEMATICAL LY COULD BE PROFESSION OR VOCATION. THERE IS A LINK BETWEEN THE ACTIVITY OF THE ASSESSE AND THE NONMONETARY CONSIDERATION MADE BY THE DONOR COMPANY. THE CONSI DERATION IN KIND WAS MADE FOR THE PURPOSE OF REMUNERATING THE ASSESSE FOR UTILIZI NG HIS BRAND IMAGE AND IN LIEU OF HIS STAGE PERFORMANCE AT COMPANYS ANNUAL DAY FUNCT ION. THE CONNECTION BETWEEN THE ACTIVITY OF THE ASSESSE AND THE ALLEGED GIFT IS THUS INEXTRICABLY INTERCONNECTED. IT AROSE OUT OF THE PROFESSION CARRIED ON BY THE ASSES SE. THEREFORE, THE RECEIPTS AROSE FROM THE EXERCISE OF PROFESSION BY THE ASSESSE. ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 6 IN THE INSTANT CASE, THERE IS NO DOUBT THAT THE ALL EGED GIFT HAS BEEN MADE FOR THE PURPOSE IN PURSUANCE OF PROFESSION, THUS, IT AROSE OUT OF HIS PROFESSION. THIS BEING SO, THE SAME IS COVERED BY THE TAXING PROVISION OF THE INCOME TAX ACT, 1961. SUCH INCOME COULD ONLY BE EXCLUDED IF IT WAS SPECIFICALL Y AND EXPRESSLY EXCLUDED BY ANY PROVISION OF THE ACT. THE POSITION IS THUS, THIS AL LEGED GIFT WAS RECEIVED BY THE ASSESSE IN THE COURSE OF HIS PROFESSION AND WAS GIV EN TO HIM FOR THE PURPOSE OF THE SAME. THUS, IN VIEW OF ALL THESE FACTS, THE MONETARY VALU E OF THE SIGNATURE VILLA SHOWN BY THE ASSESSE IN HIS WEALTH TAX RETURN FOR A.Y. 2009- 10 AT RS.17,84,95,000/- IS TAXED AS A PROFESSIONAL RECEIPT WITHIN THE MEANING OF THE PROVISION OF SECTION 28(IV) OF INCOME TAX ACT, 1961. THE VALUE OF THE SIGNATURE V ILLA DECLARED BY THE ASSESSE IN HIS WEALTH TAX RETURN FOR A.Y. 2009-10 IS APPARENTL Y AN ESTIMATED VALUE NOT BACKED BY ANY VALUATION REPORT. IF THIS IS CONSIDERED AS T HE BASIS FOR ADOPTING THE VALUE OF THE PROPERTY, WHICH IS THE SCALED DOWN VALUE ON ACC OUNT OF WORLDWIDE ECONOMIC RECESSION AND ECONOMIC MELTDOWN OF UAE MARKETS, THE APPARENT AND INHERENT VALUE OF THE SAID PROPERTY FOR THE YEAR UNDER CONSIDERATI ON, WHEN THE ECONOMY OF UAE WAS BUOYANT, THEN THE VALUE OF THE SAID PROPERTY WO ULD BE STILL HIGHER. HOWEVER THE CONSERVATIVE VALUE OF RS.17,84,95,000/- AS GIVEN B Y THE ASSESSE IS ADOPTED AS THE MONETARY VALUE OF THE PROFESSIONAL RECEIPT. 3.6 THE ASSESSEE, VIDE ANOTHER SUBMISSION DATED 22/ 12/2010 CONTESTED THE STAND BEING TAKEN BY THE LD. AO AND I N SUPPORT, PRODUCED A LETTER FROM NAKHEEL PJSC DATED 17/10/2010 WHERE THE DONOR CONFIRMED THAT IT DID NOT AVAIL ANY PROFESSIONAL SE RVICES FROM THE ASSESSEE AND FURTHER THE ASSESSEES PERFORMANCE AT THE ANNUAL DAY CELEBRATION WAS ONLY A GESTURE OF PERSONAL FRIENDSH IP OF THE ASSESSEE WITH THE SULTAN. THE ASSESSEE FURTHER CONTENDED THAT THERE WAS NO COMMERCIAL LINKAGE OF THE SAID ATTENDANCE AT ANNUAL DAY IN ANY MANNER AND THE VISIT WAS ONLY OUT OF PERSONAL COURTESY WIT HOUT ANY CONSIDERATION. THE ASSESSEE FURTHER DREW ATTENTION TO THE FACT THAT THE SAID GIFT WAS OFFERED IN THE YEAR 2004 AND THE ASSE SSEE SOUGHT PERMISSION OF GOVERNMENT AGENCY VIZ. RBI WHICH HAS BEEN GRANTED TO THE ASSESSEE VIDE RBI LETTER DATED 20/04/2007 WHICH CLEARLY SHOWS THAT THE GIFT WAS RECEIVED MUCH EARLIER, ALTHOUGH FRUCTI FIED LATER ON DUE TO ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 7 GOVERNMENT PERMISSION AND THEREFORE, NO LINKAGE WIT H ASSESSEES APPEARANCE AT THE ANNUAL DAY WHICH TOOK PLACE IN TH E YEAR 2007. 3.7 HOWEVER, NOT CONVINCED, THE LD. AO CONCLUDED TH AT THE MERE PRESENCE OF THE ASSESSEE AND SPEECH GIVEN BY HIM AT THE ANNUAL DAY TANTAMOUNT TO ADVERTISEMENT FOR THE DONOR AND CAME TO FURTHER CONCLUSION THAT THE SAID ARRANGEMENT WAS NOTHING BU T A FAADE OF GIFT / QUID PRO QUO ARRANGEMENT AND HENCE PROFESSIONAL RECEIPTS OF THE ASSESSEE. FINALLY, THE LD. AO, TAKING THE VALUE OF THE SAID VILLA AS RS.17,84,95,000/- BEING VALUE DECLARED BY THE ASSESSEE IN HIS WEALTH TAX RETURN FOR AY 2009-10, ADDED THE SAME TO THE IN COME OF THE ASSESSEE. 4.1 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 17/10/2 011 WHERE THE ASSESSEE REITERATED THE SAID CONTENTIONS AND FURTHE R CONTENDED THAT THE ASSESSEE DID NOT INDULGED IN ANY TYPE OF PHOTO SHOO T OR ENDORSEMENT FOR DONOR IN ANY MANNER AND THE SAID VILLA WAS RECEIVED UNDER GIFT AFTER DUE PERMISSION OF RBI. THE ASSESSEE ALSO DREW ATTENTION TO THE MATERIAL GATHERED BY LD. AO FROM THE OFFICIAL WEBSITE OF THE DONOR AND ASSAILED THE SAME FROM VARIOUS ANGLES TO DEMONSTRATE THAT TH E SAID MATERIAL WAS ONLY ONE OF THE MANY NEWS ITEMS PLACED ON THE WEBSI TE WHICH WAS NOT PROMINENTLY VISIBLE TO THE USERS AND HENCE COULD NO T LEAD TO A CONCLUSION THAT THE ASSESSEE UNDERTOOK ANY KIND OF ENDORSEMENT / ADVERTISEMENT FOR THE DONOR. 4.2 REGARDING PRESENCE AT ANNUAL DAY, THE ASSESSEE CONTENDED THAT THE SAME WAS AT THE REQUEST OF THE SULTAN OUT OF PERSONAL COURTESY / FRIENDSHIP AND THE ASSESSEE DID NOT MAKE ANY STAGE PERFORMANCE OR ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 8 UNDERTOOK ANY ADVERTISEMENT RATHER HE MERELY ADDRES SED THE EMPLOYEES OF THE COMPANY WHICH ON NO ACCOUNT COULD TANTAMOUNT TO ADVERTISEMENT FOR DONOR. THE ATTENTION WAS ALSO DRAWN TO THE FACT THAT THE ASSESSEE DURING THE RELEVANT TIME WAS CHARGING ONLY RS.1 CRO RES FOR SIMILAR STAGE PERFORMANCE AND THEREFORE, THE RECEIPT OF THE VILLA OF SUCH A HIGH VALUE COULD NOT BE SAID TO BE AGAINST ANY SORT OF ADVERTI SEMENT OR BRAND ENDORSEMENT. 4.3 THE ATTENTION WAS FURTHER DRAWN TO THE LETTER I SSUED BY NAKHEEL PJSC DATED 17/10/2010 TO SUPPORT THE CONTENTION THAT NO PERFORMANCE WAS UNDERTAKEN BY THE ASSESSEE AT THE ANNUAL DAY CE LEBRATION IN 2007. FURTHER, THE ASSESSEE RECEIVED GIFT WAY BACK IN 200 4 AND TO FINALIZE THE LOCATION ETC. VISITED SALES / OFFICE CENTER OF THE DONOR ONLY TWICE IN THE YEAR 2004 & 2005 BUT NEVERTHELESS, THE TRANSACTION BEING GIFT IN NATURE, COULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. 4.4 WITHOUT PREJUDICE, THE ASSESSEE ALSO CONTESTED THE VALUE OF THE VILLA ADOPTED BY THE LD. AO BY PLACING RELIANCE ON THE P ROPERTY VALUATION REPORT DATED 11/08/2011 ISSUED BY HAMPTONS INTERNATIONAL ACCORDING TO WHICH THE VALUE OF THE PROPERTY ON THE DATE OF GIFT I.E. 16/09/2007 WAS RS.14,69,92,845/-. 4.5 HOWEVER, THE VARIOUS SUBMISSIONS / CONTENTIONS COULD NOT FIND FAVOR WITH LD. CIT(A) WHO JUSTIFIED THE ACTION OF L D. AO BY CONCLUDING THE MATTER WITH FOLLOWING OBSERVATIONS:- 4.10 I HAVE CAREFULLY CONSIDERED THE ISSUE. THE AP PELLANT CLAIMED THAT THE GIFT WAS GIVEN TOTALLY ON A GRATUITOUS BASIS AND EVEN THE NO OBJECTION LET TER RECEIVED FROM THE RESERVE BANK OF INDIA FOR ACCEPTANCE OF GIFT WAS OBTAINED BEFORE THE ACCE PTANCE OF GIFT. THE GIFT WAS RECEIVED FROM NAKHEEL PJSC, WHICH IS ONE OF THE MOST REPUTED CONS TRUCTION COMPANIES IN U.A.E. THROUGH ITS EXECUTIVE CHAIRMAN AND AFTER OBTAINING THE PERMISSI ON OF THE RESERVE BANK OF INDIA WHICH HAS IN TURN TAKEN APPROVAL FROM MINISTRY OF HOME AFFAIR S AND MINISTRY OF EXTERNAL AFFAIRS. THEREFORE, IN THE OPINION OF THE LD. AR OF THE APPELLANT, THE STAND TAKEN BY THE ASSESSING OFFICER IS ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 9 INCORRECT AND UNFAIR. THE ASSESSING OFFICER HAS WRO NGLY QUESTIONED THE VALIDITY OF THE LEGAL PROCEDURES THAT THE APPELLANT HAS DILIGENTLY FOLLOW ED AND COMPLIED WITH. 4.11. THE ASSESSING OFFICER, ON THE OTHER HAND, EST ABLISHED THAT THERE IS NO ELEMENT OF LOVE AND AFFECTION BETWEEN THE DONOR COMPANY AND THE APP ELLANT. HE ESTABLISHED THE ELEMENT OF CONSIDERATION BETWEEN THE DONOR COMPANY AND THE APP ELLANT, THE ABSENCE OF WHICH IS AN ESSENTIAL ELEMENT TO CONSTITUTE A GIFT. THE COMPAN Y HAS USED APPELLANTS IMAGE AND BRAND POTENTIAL FOR THE PUBLICITY OF ITS PROJECT PALM JUM ERIAH. THE APPELLANT RENDERED PROFESSIONAL ACTIVITY AT COMPANYS ANNUAL DAY. HE MADE A SERIES OF VISITS TO COMPANYS SALES CENTRE SINCE 2004. THE LD. AO OBSERVED THAT THE APPELLANT BEING A FILM STAR BY PROFESSION HAS BEEN ENDORSING FOREIGN BRANDS. WITH REGARD TO ENDORSEME NT OF TAG HEUER, THE APPELLANT CHARGED RS. 6.0 CRORES AND FOR HYUNDAI HE CHARGED RS. 8 CRO RES AND FOR PEPSI HE CHARGED RS. 6.90 CRORES DURING THE YEAR. THE APPELLANT HAS BEEN REG ULARLY ENDORSING VARIOUS PRODUCTS AND BRANDS BECAUSE OF HIS ICONIC IMAGE AND GLOBALLY REC OGNIZED FAME. NAKHEEL PJSC, THE COMPANY, WHO GIFTED SIGNATURE VILLA TO THE APPELLAN T, IS ALLEGED TO HAVE GOT ITS PALM PROJECT ENDORSED BY THE APPELLANT AS APPARENT FROM THE OFFI CIAL WEBSITE OF THE SAID COMPANY. IT IS ALSO A FACT THAT THE APPELLANT HAS NOT SHOWN ANY RECEIPT S WITH REGARD TO THIS ENDORSEMENT IN HIS BOOKS OF ACCOUNTS. THE SAID COMPANY WAS KEENLY INTERESTED IN USING THE APPELLANT'S IMAGE AND BRAND FOR PUBLICITY OF ITS PALM PROJECT, AND TH E SAME HAS BEEN USED IN PERPETUITY SINCE 2004. THE APPELLANT NEVER OBJECTED TO THE NEWS OF A CTOR'S VISIT BEING PUT ON THE COMPANY'S OFFICIAL WEBSITE. THE APPELLANT'S INTEREST IN HAVIN G A HOUSE IN THIS PROJECT WAS DECIPHERED BY THE LD.AO FROM THE APPELLANT'S VISIT TO THE SALES CENTR E OF THE COMPANY. THERE IS MERIT IN THE LD. AOS OBSERVATION THAT THE DONOR BEING A COMPANY AND AN ARTIFICIAL ENTITY, CANNOT BE BELIEVED TO HAVE BEHAVIORAL SENTIMENTS SUCH AS COURTESY OR GRAT ITUDE. WITHOUT NATURAL LOVE AND AFFECTION, NO PERSON WOULD PART AWAY WITH HIS BELONGINGS PERMA NENTLY IN FAVOUR OF ANY UNKNOWN / LITTLE KNOWN PERSON. THE ID. AO HAS FAIRLY SUCCEEDED IN IN TERLINKING THE ACTIVITY OF ENDORSEMENT OF BRAND WITH RECEIPT OF GIFT IN THIS CASE, WHICH IS P ARTICULARLY ACCENTUATED BY THE LETTER DATED 16.12.2004 REPRODUCED IN THE ASSESSMENT ORDER AT PA GE15. THIS LETTER INCLUDES THE FOLLOWING SENTENCE..................WE WILL DISCUSS THE LOCA TION OF THE VILLA AND FURTHER DETAILS OF THE GIFT I N DUE CONSULTATION WITH YOU. THE LD. AO HAS RIGHTLY OBSERVED THAT THIS SORT OF SELECTION AND CONSULTATION CLEARLY INDICATES THE TRANSACTION NOT TO BE IN THE NATURE OF GIFT. A GILT IS GIVEN AS PER WISHES AND DESIRES OF THE DONOR AND THE DONE MERELY ACCEPTS OR REJECTS THE SAME. 4.12. THE LD. AO'S RELIANCE ON THE RATIO OF THE JUD GMENT IN THE CASE OF ACT VS. RAJEEV TANDON 294 ITR 219 (DEL) IS ALSO VERY WELL PLACED. IN THE CITED CASE, THE HON'BLE HIGH COURT HAD THE OCCASION TO EXAMINE WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE WAS A GENUINE GIFT. IN THAT CASE ALSO, THE DONORS WERE NOT RELATED TO THE ASSES SEE AND HAD NO OCCASION TO MAKE SUCH A GIFT. APPLYING THE TEST OF HUMAN PROBABILITIES, THE HON'BLE HIGH COURT UPHELD THE CONCLUSION OF THE LD.AO THAT APPELLANTS OWN UNEXPLAINED MONEY WAS ROUTED THROUGH THE DONORS SIMPLY TO INCREASE THE CAPITAL OF THE ASSESSEE THE RATIO OF T HE SAID JUDGMENT IS FAIRLY APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. 4.13. CONSIDERING THE ENTIRE GAMUT OF FACTS AND CIR CUMSTANCES DESCRIBED IN THE FOREGOING PARAGRAPHS, IT IS HELD THAT THE LD.AO HAS CORRECTLY TREATED THE ALLEGED GIFT AS NOT GENUINE AND BROUGHT ITS VALUE TO TAX UNDER INCOME-TAX ACT. ACCORDINGLY, GROUND NO.1, 2 AND 3 ARE DISMISSED. 4.6 HOWEVER, WHILE UPHOLDING THE SAID ADDITION, LD. CIT(A) AGREED WITH THE VALUATION ARRIVED AT BY THE VALUER HAMPTONS INTERNATIONAL VIDE ITS VALUATION REPORT DATED 11/08/2011 AND DIRECTED THE LD. AO TO ADOPT THE VALUE OF THE VILLA AS RS.14,69,92,845/-. AGGRIEVED, THE ASSESSEE AS WELL ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 10 AS REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE HAS CONTESTED THE QUANTUM ADDITIONS, WHEREAS, THE REVENUE IS AGGRIEVE D BY RELIEF PROVIDED TO ASSESSEE QUA VALUATION OF PROPERTY. 5.1 THE LD. COUNSEL FOR ASSESSE [AR], WHILE DRAWING OUR ATTENTION TO VARIOUS DOCUMENTS PLACED ON RECORD INCLUDING PAPER BOOK, VEHEMENTLY CONTESTED THE STAND OF REVENUE. THE LD. AR EXPLAINE D THAT THE SULTAN WAS EXECUTIVE CHAIRMAN OF A COMPANY CALLED NAKHEEL LLC -A PRIVATE LIMITED COMPANY WHICH WAS LEADING CONSTRUCTION COMP ANY OF DUBAI AND WAS DEVELOPING THE SAID PALM PROJECT IN THE YEAR 20 04. THE SULTAN WAS PERSONAL FRIEND OF THE ASSESSEE AND THEREFORE, EXPR ESSED HIS DESIRE TO GIFT A VILLA IN THE SAID PROJECT TO ASSESSEE VIDE L ETTER DATED 16/12/2004. THE SAID LETTER WAS THE WHOLE GENESIS OF THE GIFT A ND THE ASSESSEE, WHILE ACCEPTING THE SAME SOUGHT RBI PERMISSION SINCE THE VILLA WAS SITUATED IN DUBAI. THE PERMISSION OF THE RBI CAME IN THE YEA R 2007 AFTER DUE CONSULTATION / PERMISSION OF MINISTRY OF FINANCE & MINISTRY OF HOME AFFAIRS. PURSUANT TO THE OFFER OF SAID LETTER, THE ASSESSEE VISITED SALES OFFICE OF THE DONOR TWICE IN 2004 & 2005 TO FINALIZ E THE LOCATION ETC. OF THE VILLA SINCE THE PROJECT WAS BEING DEVELOPED OVER HU GE AREA AND THE PROPERTY WHICH WAS TO BE GIFTED WAS TO BE IDENTIFIE D IN SPECIE . THEREAFTER, WHEN THE PERMISSION WAS RECEIVED FROM T HE GOVERNMENT AGENCY, THE GIFT DEED WAS EXECUTED BY THE DONOR IN HIS FAVOR. SINCE, THE OWNERSHIP OF THE PROPERTY WAS VESTED IN THE NAKHEEL PJSC WHICH WAS NOTHING BUT UNDER EXCLUSIVE CONTROL OF SULTAN & WHI CH WAS COMMON IN DUBAI, THE GIFT DEED WAS EXECUTED BY NAKHEEL WHO, IN THE MEANWHILE WAS CONVERTED INTO PUBLIC JOINT STOCK COMPANY. THE ASSESSEE ATTENDED THE ANNUAL DAY CELEBRATIONS OF THE NAKHEEL IN THE YEAR 2007 AT THE ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 11 REQUEST OF THE SULTAN AND MERELY ADDRESSED THE EMPLOYEES OF THE COMPANY AND DID NOT UNDERTAKE ANY STAGE APPEARANCE OR PERFORMANCE WHICH TANTAMOUNT TO BRAND ENDORSEMENT OR ADVERTISEM ENT FOR THE DONOR. OUR ATTENTION IS DRAWN TO THE FACT THAT ELABORATE A GREEMENT ARE EXECUTED BY THE ASSESSEE IN THE NORMAL COURSE TO UNDERTAKE A NY KIND OF BRAND ENDORSEMENT AND THE SAME REQUIRE EXTENSIVE PREPARAT ION INCLUDING LOTS OF PERIPHERALS, BACK UP ARTISTS AND REHEARSALS ETC. 5.2 THE LD. AR FURTHER EXPLAINED THAT THE LD. AO VI SITED THE OFFICIAL WEBSITE OF THE NAKHEEL AND OBTAINED FEW PHOTOGRAPHS DEPICTING THE FACE OF THE ASSESSEE AND EXTRACTED ONE OF THE NEWS ITEMS FROM AMONGST MANY NEWS ITEMS WHICH CONTAINED INFORMATION ABOUT A SSESSEES VISIT AT THE SALES OFFICE OF THE COMPANY. NEVERTHELESS, THE SAID NEWS ITEMS WAS PLACED IN AN OBSCURE PORTION OF THE WEBSITE AND WAS NOT PROMINENTLY DISPLAYED TO PUBLIC AT LARGE AND THE SAID NEWS ITEM S HAD TO BE EXTRACTED FROM THE WEBSITE OF THE COMPANY. THEREFORE, THE MAT ERIAL GATHERED BY LD. AO IN NO WAY COULD LEAD TO A CONCLUSION THAT TH E ASSESSEE UNDERTOOK ANY SORT OF BRAND ENDORSEMENT OR ADVERTIS EMENT FOR DONOR TO ATTRACT CUSTOMERS. THE ASSESSEE AS WELL AS THE DONO R, AT ALL STAGES DENIED HAVING INDULGED IN ANY SORT OF BRAND ENDORSE MENT ETC. AND THEREFORE, THE BURDEN WAS ON REVENUE TO PROVE THE FACTUM OF BRAND ENDORSEMENT CONCLUSIVELY. IN NUTSHELL, LD. AR STRES SED THE POINT THAT THE SAID GIFT WAS NOTHING BUT UNILATERAL GRATUITOUS GIF T OUT OF NATURAL LOVE AND AFFECTION THE SULTAN WAS HAVING TOWARDS THE ASSESSEE AND THE ASSESSEE WAS UNDER NO CONTRACTUAL OBLIGATION WHATSOEVER TO B ENEFIT THE COMPANY IN ANY MANNER. THE PRESENCE OF THE ASSESSEE AT ANNU AL DAY IN THE YEAR 2007 WAS OUT OR PERSONAL COURTESY AT THE REQUEST OF THE SULTAN WHERE ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 12 THE ASSESSEE MERELY ADDRESSED THE EMPLOYEES OF THE COMPANY. IN SUPPORT, OUR ATTENTION HAS BEEN DRAWN TO THE PHOTOG RAPHS AND OTHER MATERIAL GATHERED BY THE LD. AO FROM THE WEBSITE OF THE COMPANY. 5.3 THE LD. AR FURTHER EXPLAINED THAT THE ASSESSEE CHARGED FEES RANGING FROM RS.6.50 CRORES TO RS.8 CRORES IN THE I MPUGNED AY FOR BRAND ENDORSEMENT FOR VARIOUS PRODUCTS AS PER AGREEMENT P LACED IN THE PAPER BOOK WHICH ARE ELABORATE ONE AND THE ENDORSEMENTS A RE SUBJECTED TO HEAVY REHEARSALS, SHOOTS ETC. WHENEVER, THE ASSESSE E UNDERTAKES SUCH KIND OF BRAND ENDORSEMENT, THE SAME IS SPLASHED ALL OVER VARIOUS ELECTRONIC / PRINT MEDIA TO GET MAXIMUM PUBLIC ATTE NTION AND TO LEVERAGE FROM THE BRAND ENDORSEMENT AND THEREFORE, RELIANCE OF REVENUE MERELY ON TWO PHOTOGRAPHS AND ONE OF THE NEWS ITEM PLACED IN THE OBSCURE PORTION OF THE WEBSITE WAS NOT JUSTIFIED TO TAX THE VALUE OF THE GIFTED VILLA IN THE HANDS OF THE ASSESSEE. 5.4 THE LD. AR FURTHER CONTENDED THAT THE GIFT WAS OFFERED PURSUANT TO WISHES OF THE SULTAN WHO WAS EXECUTIVE DIRECTOR OF THE DONOR COMPANY. HOWEVER, AS PER THE PREVAILING PRACTICE / CUSTOM IN DUBAI, THE COMPANY IS UNDER EXCLUSIVE DOMAIN OF SULTAN AND ONLY SULTAN HAS THE EXCLUSIVE CONTROL OVER THE AFFAIRS OF THE COMPANY AND NOBODY COULD QUESTION THE ACTION OF SULTAN . SINCE THE OWNERSHIP OF THE VILLA WAS VESTED IN TH E COMPANY, THE GIFT DEED WAS EXECUTED BY THE COMPANY ONLY AT THE BEHEST OF SULTAN AND TO FULFILL HIS DESIRE TO GIFT A VILLA TO THE AS SESSEE VIDE LETTER DATED 16/12/2004. HOWEVER, THE SAME WERE PART AND PARCEL OF THE SAME TRANSACTION SOLELY AIMED AT FULFILLING THE WISHES O F THE SULTAN. THE LD. AR ALSO CONTENDED THAT THE WHOLE BURDEN OF PROVING THE ADVERSE INFERENCE WAS ON REVENUE AND WHICH REVENUE HAS FAILED TO DISC HARGE AND ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 13 THEREFORE, NO ADDITIONS COULD BE MADE MERELY ON THE BASIS OF DOUBTS , CONJECTURES OR SURMISES. 6.1 PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUPPORTED THE STAND TAKEN BY THE LOWER AUTHORITIES AND CONTENDED THAT THE MERE PRESENCE OF THE ASSESSEE AT THE ANNUAL DAY RESULTED INTO ADVERTISEMENT & BRAND ENDORSEMENT FOR THE DONOR COMPANY. THE ASSE SSEE WANTED TO ACQUIRE THE VILLA IN THE SAID PROJECT AND THEREFORE, MADE SEVERAL VI SIT TO SALES OFFICES OF THE DONOR COMPANY IN THE YEAR 2004 & 2005 TO FULFILL THE SAID PURSUITS. THE PERMISSION OF RBI WAS STATUTORY REQUIREMENT AND DO NOT PROVE THE NATURE OF THE TRANSACTION. WHEN THE P ERMISSION WAS OBTAINED IN THE YEAR 2007, THE GIFT DEED WAS GOT EX ECUTED BY THE ASSESSEE IN EXCHANGE FOR PERFORMANCE AT THE ANNUAL DAY CELEBRATIONS OF THE COMPANY. THE MERE PRESENCE OF THE ASSESSEE R ESULTED INTO ATTRACTING PROSPECTIVE BUYERS TO THE SAID PROJECT A ND THE DONOR COMPANY USED ASSESSEES PHOTOGRAPH AT ITS OFFICIAL WEBSITE FOR THE SAID PURPOSE. NOT ONLY THIS, THE NEWS ITEMS CONCERNING ASSESSEES VISIT WAS ALSO PLACED ON THE WEBSITE AND THE ASSESSEE NEVER OBJECT ED TO THE SAME. THEREFORE, THE GIFT WAS NOT GRATUITOUS ACT BUT, IN FACT, A BARTER TRANSACTION AND THEREFORE, RIGHTLY BEEN ADDED IN ASSESSEES HAN D. 6.2 THE LD. DR FURTHER CONTENDED THAT THE GIFT WAS OFFERED BY SULTAN BUT GIFT DEED WAS EXECUTED BY THE CORPORATE ENTITY WHICH HAS SEPARATE LEGAL IDENTITY AND IS QUITE DISTINCT FROM ITS OWNER S. THE SAID CORPORATE ENTITY BEING ARTIFICIAL JURIDICAL PERSON COULD NOT HAVE HUMAN SENTIMENTS / EMOTIONS LIKE NATURAL LOVE AND AFFECTION AND THEREF ORE, WAS INCOMPETENT TO EXECUTE THE SAID GIFT. THEREFORE, THE TRANSACTIO N IN REALITY WAS NOT A GIFT ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 14 BUT REMUNERATION TOWARDS BRAND ENDORSEMENT / ADVERT ISEMENT FOR DONOR AND HENCE ADDITION THEREOF IN ASSESSEES HAND WAS J USTIFIED. 7.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE VITAL QUESTION TO BE DECIDE D BY US IS, WHETHER THE SAID GIFT WAS UNILATERAL GRATUITOUS ACT WITHOUT CON SIDERATION OUT OF NATURAL LOVE AND AFFECTION OR RECEIVED BY THE ASSESSEE IN E XCHANGE OF BRAND ENDORSEMENT / ADVERTISEMENT FOR THE DONOR. THE MAIN THRUST OF LD. ARS ARGUMENTS IS THAT THE SAME WAS UNILATERAL ACT OF GI FT FROM SULTAN TO THE ASSESSEE WITHOUT ANY BRAND ENDORSEMENT / ADVERTISEM ENT FOR THE DONOR, WHEREAS, THE REVENUES MAIN CONTENTION IS THAT THE ASSESSEE HAS INDULGED IN BRAND ENDORSEMENT FOR THE DONOR AND IN RETURN, RECEIVED THE SAID VILLA AND THEREFORE, TAXABLE IN THE HANDS OF THE ASSESSEE , BEING ARISING OUT OF EXERCISE OF PROFESSION. 7.2 WE FIND THAT THE WHOLE GENESIS OF THE GIFT IS S ULTANS LETTER DATED 16/12/2004 WHICH HAS BEEN REPRODUCED IN ASSESSMENT ORDER AT PAGE NO.14. THE SAME IS EXECUTED ON THE LETTERHEAD OF NAKHEEL BY HE SULTAN AHMED BIN SULAYEM AND THE GIFT IS ACCEPTED BY THE ASSESSEE. A PERUSAL OF THE SAME SHOWS THAT THE VILLA HAS BEEN GIVEN AS A TOKEN OF OUR APPRECIATION. IT FURTHER STATES THAT .. WE WILL DISCUSS THE LOCATION OF THE VILLA AND FURTHER DETAILS OF THE GIFT IN DUE CO NSIDERATION WITH YOU. PURSUANT TO THE SAME, THE ASSESSEE, THROUGH CHARTERED ACCOUNTANT R.M.AJGAONKAR, SOUGHT PERMISSION OF RBI VIDE LETTER DATED 20/12/20 04 AS PLACED ON PAGE NO. 12 OF THE PAPER BOOK. THEREAFTER, AFTER A SERIES OF CORRESPONDENCE BETWEEN ASSESSEE / ASSESSEES REPRES ENTATIVES AND RBI, THE PERMISSION HAS FINALLY BEEN GIVEN TO THE A SSESSEE VIDE RBI LETTER DATED 20/04/2007 WHICH IS PLACED ON PAGE NO. 23 OF THE PAPER ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 15 BOOK. THEREAFTER, DEED OF GIFT HAS BEEN EXECUTED IN ASSES SEES FAVOR ON 16/09/2007 WHICH IS REPRODUCED ON PAGE NOS. 2 TO 4 OF THE ASSESSMENT ORDER. CLAUSE (E) OF THE SAID GIFT DEED STATES THAT THE DONOR IS DESIROUS OF TRANSFERRING BY WAY OF GIFT TO DONEE WHO IS CELE BRITY FROM INDIA AND ALSO A CELEBRITY IN DUBAI U.A.E., IN ORDER TO HONOR THE DONEE AND WITHOUT ANY MONETARY CONSIDERATION THE SAID PROPERTY BEING . SIMILARLY, AS PER CLAUSE (F), THE DONOR IS DESIROUS OF TRANSFERRING THE SAID PROP ERTY TO THE DONEE BY WAY OF GIFT. THE ASSESSEE HAS ACCEPTED THE SAID GIFT AND THE DEED ALSO BEARS A REFERENCE TO RBI PERMISSI ON DATED 20/04/2007. WE FIND THAT ALL THESE EVENTS ARE INTER LINKED AND IN TANDEM WITH EACH OTHER. THESE EVENTS ARE, PRIMA FACIE, PART AND PARCEL OF THE SAME TRANSACTION SOLELY AIMED AT FULFILLING SULTANS WISH TO GIFT A VILLA IN ASSESSEES FAVOR. 7.3 THE WHOLE MATERIAL RELIED UPON BY THE REVENUE I S NEWS ITEMS CONCERNING ASSESSEE AND FEW PHOTOGRAPHS OF ASSESSEE AT NAKHEELS ANNUAL DAY IN THE YEAR 2007 WHICH WAS PLACED ON THE WEBSITE OF THE COMPANY. THIS MATERIAL HAS BEEN REFERRED BY LD. AO AT VARIOUS PLACES IN THE ASSESSMENT ORDER TO REACH A CONCLUSION THAT THE ASSESSEE UNDERTOOK BRAND ENDORSEMENT FOR THE DONOR IN EXCHANGE OF GIFT . HOWEVER, A PERUSAL OF THE PHOTOGRAPH AS PLACED ON PAGE NOS. 8 & 9 OF T HE ASSESSMENT ORDER REVEALS THAT THE ASSESSEE FIGURES IN EVENT GALLERY 7 & 9. HOWEVER, THE SAME IN NO WAY SUGGEST STAGE PERFORMANCE BY THE ASSESSEE, IN ANY MANNER RATHER THE ASSESSEE IS SHOWN WITH A MIKE IN EVENT GALLERY 7 WHICH, IN FACT, CORROBORATES THE ARGUMENTS OF THE LD. AR THAT THE ASSESSEE MERELY ADDRESSED THE EMPLOYEES OF THE COMP ANY AT THE SAID GATHERING. ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 16 7.4 THE LD. AO HAS PLACED RELIANCE ON ANOTHER PHOTO GRAPH DEPICTING THE EVENT OF ASSESSEES VISIT AT DONORS SALES OFFI CE IN THE YEAR 2004 WITH A NEWS-ITEM WHICH GAVE BRIEF ACCOUNT OF ASSESSEES VISIT TO TH E NAKHEEL SALES CENTRE . HOWEVER, IT IS IMPORTANT TO NOTE THE POSITIONING OF THE NEWS-ITEM ON THE WEBSITE OF THE COMPANY AS ENUM ERATED BY THE LD. AR AND WHICH IS REPRODUCED ON PAGE NO 4 OF LD. CIT( A)S APPELLATE ORDER. A PERUSAL OF THE SAME REVEALS THAT THE WEBSI TE OF THE DONOR COMPANY CONTAINED NUMBER OF TABS ONE OF WHICH WAS NEWS WHICH CONTAINED CALENDAR WISE NEWS ITEMS. THE INFORMATION OF ASSESSEES VISIT TO THE SALES CENTER WAS ONE AMONGST THE MANY NEWS ITEMS AND THE LIST ALSO CONTAINED INFORMATION ABOUT VISIT OF SEVE RAL FAMOUS PERSONALITIES WORLDWIDE OVER SEVERAL YEARS TO NAKHEEL AND ITS VARIOUS PROJECTS. THEREFORE, AFTER PERUSAL OF THE SAME, IT IS DIFFICU LT TO ACCEPT THE FACT THAT THE SAID NEWS ITEM TANTAMOUNT TO ANY KIND OF ADVERT ISEMENT OR BRAND ENDORSEMENT FOR THE DONOR IN EXCHANGE OF GIFT. 7.5 THE ABOVE CONCLUSIONS ARE FURTHER SUPPORTED BY THE FACT THAT THE GIFT WAS OFFERED TO THE ASSESSEE IN THE YEAR 2004, WHEREAS, THE ANNUAL DAY TOOK PLACE IN THE YEAR 2007 AND THEREFORE THE A SSESSEE WAS UNDER NO OBLIGATION TO ATTEND THE SAME AND UNDERTAKE ANY SORT OF BRAND ENDORSEMENTS FOR DONOR COMPANY. THIS IS FURTHER FOR TIFIED BY THE LETTER OF NAKHEEL DATED 17/12/2010 WHERE NAKHEEL HAS STATED THAT: THIS IS TO FURTHER STATE THAT WE HAVE INVITED MR. SHAH RUKH KHAN AS ONE OF THE GUEST OF HONORS AT THE OCCASION OF NAKHEEL DAY HELD ON [2 ND SEPTEMBER, 2007] IN DUBAI. NAKHEEL DAY IS A NON-COMMERCIAL INT ERNAL STAFF EVENT OF THE COMPANY. HE GRACED THE OCCASION AS A GESTURE OF GOO DWILL AND FRIENDSHIP ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 17 WITH HE SULTAN AHMED BIN SULAYEM WHERE HIS PRESENCE AT THIS FUNCTION WAS GRATIS. THE SAID LETTER GIVES STRENGTH TO CONTENTION THAT P RESENCE OF THE ASSESSEE AT THE ANNUAL DAY WAS MERE GOODWILL GESTUR E AND THE EVENT WAS INTERNAL STAFF EVENT OF THE COMPANY. 7.6 SO FAR AS THE CAPACITY OF THE CORPORATE ENTITY TO MAKE A GIFT AND EXECUTION OF GIFT DEED IS CONCERNED, WE FIND THAT T HE ARGUMENT THAT THE CORPORATE HAS SEPARATE LEGAL ENTITY AS DISTINCT FRO M ITS MEMBERS / DIRECTORS, MAY BE TRUE IN INDIAN CONTEXT BUT MAY N OT BE TRUE AS PER CUSTOMS PREVAILING IN DUBAI. THE LD. AR HAS CONTENDED THAT SULTAN HAD THE ULTIMATE CONTROL OVER THE AFFAIRS OF THE DONOR COMPANY AND THE COMPANY WAS UNDER EXCLUSIVE DOMAIN OF THE SULTAN WHICH HAS NOWHERE BEEN CONTROVERTED BY THE REVENUE. EVEN IN INDIAN CO NTEXT, MUMBAI TRIBUNAL IN THE CASE OF DCIT VS. KDA ENTERPRISES PRIVATE LIMITED [57 TAXMANN.COM 284] HAS HELD THAT THE COMPANIES ARE COMPETENT TO MAKE GIFT AND THERE IS NO REQUIREMENT OF ANY NATURAL LOV E OR AFFECTION FOR MAKING OR RECEIVING GIFTS BY COMPANIES. UPON PERUSA L OF CHAIN OF EVENTS LEADING TO EXECUTION OF GIFT AS ENUMERATED IN PARA 7.2, WE HAVE ALREADY REACHED AN INEVITABLE CONCLUSION THAT ALL EVENTS /A CTIONS WERE INTERLINKED AND PART AND PARCEL OF THE SAME GIFT TRANSACTION AN D THEREFORE, GIFT DEED WAS EXECUTED BY THE NAKHEEL AT THE BEHEST OF SULTAN ONLY IN VIEW OF THE FACT THAT OWNERSHIP WAS VESTED WITH THE COMPANY. 7.7 FINALLY, IT IS WELL SETTLED LAW THAT NO ADDITIO N COULD BE MADE MERELY ON THE BASIS OF MERE SUSPICION, CONJECTURES OR SURM ISES. THE ASSESSEE HAS THEREFORE, IN OUR OPINION, DISCHARGED THE ONUS OF PROVING THE GIFT ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 18 TRANSACTION BEING UNILATERAL GRATUITOUS ACT OF THE DONOR COMPANY AND THE ONUS WAS ON REVENUE TO ESTABLISH THE CONTRARY, WHIC H, IN OUR OPINION, HAS REMAINED UNDISCHARGED. 7.8 LASTLY, SO FAR AS TAXABILITY OF GIFT IN KIND IS CONCERNED, WE FIND THAT THE GIFT OF IMMOVABLE PROPERTY ON OR AFTER 01/10/20 09 HAS BEEN BROUGHT TO TAX BY FINANCE ACT, 2009 VIDE AMENDMENT TO SECTI ON 56(2)(VII)(B). BEFORE THIS AMENDMENT, ANY SUM OF MONEY EXCEEDING RS.50,000/- RECEIVED BY AN INDIVIDUAL / HUF WITHOUT CONSIDERATI ON COULD BE BROUGHT TO TAX VIDE SECTION 56(2)(VII)(A). SINCE WE ARE DEA LING WITH AY 2008-09 ABOUT TAXABILITY OF AN IMMOVABLE PROPERTY, THE SAID AMENDMENT DOES NOT APPLY TO THE CASE OF THE ASSESSEE AND THEREFORE COU LD NOT HELP THE REVENUE IN ANY MANNER. 7.9 IN VIEW OF THE ABOVE FACTS / CIRCUMSTANCES AND OUR OBSERVATIONS, WE FIND THAT THE CONTENTION / CONDUCT OF THE ASSESS EE OUTWEIGH THE REVENUES CONTENTION. THEREFORE, WE ARE INCLINED TO HOLD THAT THE SAID VILLA WAS RECEIVED IN GIFT BY THE ASSESSEE AND NOT OUT O F EXERCISE OF PROFESSION AND THEREFORE, NOT TAXABLE IN ASSESSEES HANDS. RESULTANTLY, GROUND NO. 1 & 2 OF ASSESSEES APPEAL ITA NO. 80/MU M/2012 STANDS ALLOWED. 8. THE REVENUE, VIDE THEIR APPEAL ITA NO. 8555/MUM/ 2011 HAS CONTESTED THE RELIEF PROVIDED BY LD. CIT(A) ON ACCO UNT OF VALUATION OF PROPERTY. SINCE, WE HAVE ALREADY ALLOWED ASSESSEES APPEAL QUA QUANTUM ADDITIONS, THE SAME BECOMES INFRUCTOUS AND REQUIRE NO FURTHER ADJUDICATION AND THEREFORE, THE REVENUES APPEAL ST ANDS DISMISSED. ITA NO.8555/MUM/2011 & 80/MUM/2012 SHAHRUKH KHAN ASSESSMENT YEAR-2008-09 19 9. IN NUTSHELL, THE ASSESSEES APPEAL STANDS ALLOWE D IN TERMS OF OUR ABOVE ORDER WHEREAS THE REVENUES APPEAL STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18.08.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI