SANJAY BADANI, MUMBAI V. ACIT 10(3), MUMBAI

ITA 982/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3671 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Deemed owner of house property; Principle of natural justice; Additional evidence; Deemed dividend; Set aside
• Section: 2(22)(e); 143(2)

Judgement Text

P A G E | 1 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.982/MUM/2016 (ASSESSMENT YEAR: 2009 - 10 ) MR. SANJAY BADANI C/O JAYESH SANGHRAJKA & CO LLP, CHARTERED ACCOUNTANTS , UNIT NO. 405, H IND RAJASTHAN CENTRE,D.S. PHALKE ROAD, DADAR (E),MUMBAI 400 014 VS. ACIT - 10(3) [NOW KNOWN AS 15(2)(1)] AAYAKAR BHAVAN, MUMBAI PAN AABPB9926B (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI RAJEEV GUBGOTRA, D .R DATE OF HEARING: 19.08 .2019 DATE OF PRONOUNCEMENT: 2 8 .08.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 24, MUMBAI, DATED 30.12.2015, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3)(II)) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) , DATED 16.12.2011 . THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE U S : 1. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LEARNED COMMISSIONER OF INCOME TAX APPEALS, ERRED IN DIRECTING LD. AO TO VERIFY AND TREAT PROPERTY AT CLOVER REGENCY, GHATKOPAR UNDER CONSTRUCTION IF THE LETTER OF POSSESSION IS FOUND PROPER, AND P A G E | 2 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) SUCH DIRECTION IS BAD IN LAW AND ERRONEOUS IN FACTS AND SUITABLY BE MODIFIED. 2. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN NOT PASSING ANY DIRECTION AS REGARDS PROPERTY AT VORA APT., G HATKOPAR, EVEN THOUGH THE SAME WAS SELF OCCUPIED BY THE ASSESSEE. 3. WITHOUT PREJUDICE TO THE ABOVE, ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; WHEN THE ORDER GIVING EFFECT IS PASSED BY THE LD. AO THE PROPERTY AT VORA APARTMENTS SHOULD BE TREATED AS SELF OCCUPIES PROPERTY AND RELIEF TO THAT EXTENT SHOULD BE GIVEN. 4. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN NOT PASSING ANY DIRECTION AS REGARDS THE PROPERTY AT WANWORIE, PUNE. 5. WITHOUT PREJUDICE TO THE ABOVE, ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; THE PROPERTY AT WANWORIE , PUNE SHOUL D BE ASSESSED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS DEEMED LET OUT ON THE BASIS OF THE MUNICIPAL VALUATION. 6. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN DIRECTING THE L D. AO TO RECOMPUTED THE UNEARNED INCOME FROM LET OUT HOUSE PROPERTY AT MAHAPE, NAVI MUMBAI FOR FOUR MONTHS, SUCH DIRECTION BY COMMISSIONER IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE DELETED. 7. WITHOUT PREJUDICE TO THE ABOVE, ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN DIRECTING THE LD. AO TO RECOMPUTED THE UNEARNED INCOME FROM LET OUT HOUSE PROPERTY AT MAHAPE, NAVI MUMBAI FOR FOUR MONTHS, EVEN THOUGH THE SAID PROPERTY WAS LET OUT DURING THE YEAR AND HENCE SUCH ADDITION IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE DELETED AND PROVISIONS OF SECTION 23(1) (C) SHOULD BE APPLIED TO ASSESSEE. 8. ON THE GIVEN FACTS, CIRCUMS TAN CES AND JUDICIAL PRONOUNCEMENTS; LD. CIT (APPEALS) ERRED IN MAKING ADDITION OF INTER CORPORATE DEPOSITS BY TREATING THE SAME AS DEEMED DIVIDEND U/S 2(22)(E), SUCH ADDITION IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE DELETED. 9. WITHOUT PREJUDICE TO ABOVE, ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LD. CIT (APPEALS) ERRED IN MAKING ADDITION OF INTER CORPORATE DEPOSITS BY TREATING THE SAME AS DEEMED DIVIDEND U/S 2(22)(E), SUCH ADDITION IS EXCESSIVE AND LIABLE TO BE REDUCED. 10. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCE MENTS; LD. CIT (APPEALS) ERRED IN MAKING ADDITION OF INTER CORPORATE DEPOSITS BY TREATING THE SAME AS DEEMED DIVIDEND U/S 2(22)( E) BY IGNORING THE FACT THAT THESE DEPOSITS ARE IN NATURE OF NON GRATUITOUS DEPOSITS, SUCH ADDITION IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE DELETED. 11. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; LD.CIT (APPEALS) ERRED IN FRAMING THE ORDER IN ABSENCE OF REASONABLE OPPORTUNITY OF MAKING THE SUBMISSIONS TO THE ASSESSEE IN PRINCIPLES OF NATURAL AND SUCH ORDER IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND LIABLE TO BE ANNULLED. P A G E | 3 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) 12. THE APPELLANT PRAYS TO ADD, AMEND AND ALTER OR DELETE ALL OR ANY OF THE ABOVE MENTIONED GROUNDS OF APPEAL . 2. BRIEFLY STATED, THE ASSESSEE HAD ON 20.07.2009 FILED HIS RETURN OF INCOME FOR A.Y. 2009 - 10 , DECLARING HIS TOTAL INCOME AT RS. 48,29,390/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT . THE A.O WHILE FRAMING THE ASSESS MENT INTER ALIA MADE THE FOLLOWING ADDITIONS IN THE HANDS OF THE ASSESSEE: SR. NO. INCOME FROM HOUSE PROPERTY AMOUNT 1. RENT RECEIVED, MAHAPE PROPERTY AS PER STATEMENT 4,00,000/ - ANNUAL VALUE OF TWO FLATS 7,43,760/ - 11,43,760/ - LESS: DEDUCTION U/S. 24(A) 3,43,128/ - 8,00,632 / - 2. DEEMED DIVIDEND UNDER SEC. 2(22)(E) OF THE ACT. RS.13,37,681/ - 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) NOT FINDING FAVOUR WITH THE CONTENTION S ADVANCED BY THE ASSESSEE AS REGARDS THE ADDITIONS MADE BY THE A.O TOWARDS DEEMED DIVIDEND UNDER SEC.2(22)(E) OF THE ACT , UPHELD THE SAME. AS REGARDS THE ADDITION MADE BY THE A.O TOWARDS ANNUAL LETTABLE VALUE (FOR SHORT ALV ) OF THE PROPERTIES OWNED BY THE ASSESSEE , I T WAS NOTICED BY THE CIT(A) THAT THE ASSESSEE OWNED THREE FLATS AND ONE OFFICE PREMISES. IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE HAD IN HIS COMPUTATION OF INCOME OFFERED FOR TAX RENTAL INCOME OF RS.4,00,000/ - ONLY IN RESPECT OF ONE OF HIS PROPERTY VIZ. MAHAPE, NAVI MUMBAI. AS REGARDS AN ANOTHER PROPERTY OF THE ASSESSEE AT CLOVER REGENCY, GHATKOPAR, IT WAS THE CLAIM OF THE ASSESSEE THAT THE SAME DURING THE YEAR WAS UNDER CONSTRUCTION. APART THERE FROM, IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE HAD NOT ACCOUNTED FOR THE ALV OF THE REMAINING TWO PROPERTIES VIZ. (I) VORA APARTMENT, GHATKOPAR (E AST ) , MUMBAI ; AND (II) PROPERTY AT WANWORIE , PUNE. IT P A G E | 4 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) WAS NOTICED BY THE CIT(A) THAT AS THE ASSESSEE HAD NOT SOUGHT EXCLUSION OF ALV IN RESPECT OF A NY SELF - OCCUPIED HOUSE PROPERTY, THEREFORE, THE A.O HAD IN ALL FAIRNESS TREATED THE HOUSE PROPERTY AT CLOVER REGE NCY, GHATKOPAR AS THE PROPERTY UNDER THE SELF - OCCUPATION OF THE ASSESSEE . ACCORDINGLY, THE A.O HAD BROUGHT TO TAX THE ALV OF THE REMAINING TWO PROPERTIES VIZ. (I).VORA APARTMENT, GHATKOPAR: RS. 4,05,600/ - ; AND (II). WANWORIE APARTMENT , PUNE: RS.3,38,160/ - TO TAX. AS THE ASSESSEE HAD IN ORDER TO FORTIFY HIS CLAIM THAT THE PROPERTY AT CLOVER REGENCY, GHATKOPAR (E AST ) HAD DURING THE YEAR I.E A.Y. 2011 - 12 REMAINED UNDER CONSTRUCTION FILED A COPY OF A FINAL POSSESSION LETTER DATED 14.01.2011 WITH THE CIT(A) , THE REFORE, THE LATTER HAD IN ALL FAIRNESS DIRECTED THE A.O TO VERIFY THE AUTHENTICITY OF THE SAID DOCUMENT AND GRANT APPROPRIATE RELIEF TO THE ASSESSEE. AS REGARDS THE PROPERTY OF THE ASSESSEE AT MAHAPE, NAVI MUMBAI, IT WAS OBSERVED BY THE CIT(A) THAT THOUGH THE A.O HAD OBSERVED IN THE ASSESS MENT ORDER THAT RENT IN RESPECT OF THE SAID PROPERTY WAS TO BE CHARGED TO TAX AT A TOTAL SUM OF RS.6,00,000/ - A S AGAINST RS.4,00,000/ - OFFERED BY THE ASSESSEE IN HIS RETURN OF INCOME , HOWEVER , WHILE FRAMING THE ASSESSMENT HE HAD FAILED TO MAKE ANY SUCH ADDITION . ACCORDINGLY, THE CIT(A) DIRECTED THE A.O TO TAKE REMEDIAL MEASURE AND AFTER CONSIDERING THE AFORESAID INFIRMITY RE - COMPUTE THE HOUSE PROPERTY INCOME OF THE ASSESSEE IN RESPECT OF THE SAID PROPERTY. ON THE BASIS OF HIS AFORESAID DELIBERATIONS, T HE CIT(A) PARTLY ALLOWED RELIEF TO THE ASSESSEE AS REGARDS THE ADDITION MADE BY THE A.O UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT DESPITE THE FACT THAT THE ASSESSEE WAS AWARE OF THE DATE OF HE ARING OF THE APPEAL, HOWEVER, HAD FAILED TO PUT UP AN APPEARANCE BEFORE US. ACCORDINGLY, BEING LEFT WITH NO OTHER ALTERNATIVE W E ARE CONSTRAINED TO DISPOSE OFF P A G E | 5 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) THE APPEAL AS PER RULE 24 OF THE APPELLATE TRIBUNAL RULES, 1963 AFTER HEARING THE RESPONDENT REVENUE AND PERUSING THE ORDER S OF THE LOWER AUTHORITIES. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) HAD RELIED ON THE ORDER S OF THE LOWER AUTHORITIES. 5. WE SHALL NOW ADVERT TO THE VARIOUS ISSUES AS REGARDS WHICH THE ORDER OF THE CIT(A) HAS BEEN ASSAILED BY THE ASSESSEE BEFORE US. WE SHALL FIRST ADVERT TO THE CLAIM OF THE ASSESSEE THAT NOW WHEN HE HAD FILED WITH THE CIT(A) A COPY OF THE FINAL POSSESSION L ETTER , DATED 14.01.2011 IN RESPECT OF HIS PROPERTY AT CLOVER REGENCY, GHATKOPAR, WHICH REVEALED THAT THE SAID PROPERTY DURING THE YEAR UNDER CONSIDERATION VIZ. A.Y. 2009 - 10 WAS UNDER CONSTRUCTION, THEREFORE, THE CIT(A) WAS IN ERROR IN DIRECTING THE A.O TO VERIFY THE SAID FACTUAL POSITION. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SAID C LAIM OF THE ASSESSEE AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE SAME. IN OUR CONSIDERED VIEW, AS THE ASSESSEE HAD FILED A COPY OF THE FINAL POSSESSION L ETTER OF THE AFORESAID PROPERTY FOR THE VERY FIRST TIME BEFORE THE CIT(A) , THEREFORE, HE HAD IN ALL FAIRNESS DIRECTED THE A.O TO VERIFY THE FACTUAL POSITION AS WAS CLAIMED BY THE ASSESSEE BEFORE HIM. IN FACT, WE ARE OF A STRONG CONVICTION THAT AS THE AFORESAID FINAL POSSESSION LETTER WAS NEVER FILED BY THE ASSESSEE BEFORE THE A.O, THEREFORE, THE SAID VERIFICATION WAS INDISPENSABLY REQUIRED TO BE DONE ON HIS PART IN ORDER TO VERIFY THE AUTHENTICITY OF THE AFORESAID CLAIM OF THE ASSESSEE. ACCORD INGLY, FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION, WE UPHOLD HIS VIEW. THE GROUND OF APPEAL NO.1 IS DISMISSED. 6 . WE SHALL NOW ADVERT TO THE CLAIM OF THE ASSESSEE AS REGARDS THE PROPERTY AT VORA APARTMENT, GHATKOPAR. AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER, THE A.O HAD TAKEN THE ALV OF THE VORA APARTMENT, GHATKOPAR AT RS.4,05,600/ - . IT IS THE CLAIM OF THE ASSESSEE THAT AS THE P A G E | 6 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) SAID PROPERTY WAS UNDER SELF - OCCUPATION, THEREFORE, THE CIT(A) IN TOTALITY OF T HE FACTS BEFORE HIM HAS ERRED IN NOT GIVING ANY DIRECTIONS AS THE REGARDS THE SAME WHILE DISPOSING OFF THE APPEAL. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION AND FIND SUBSTANTIAL FORCE IN THE CLAIM OF THE ASSESSEE AS HAD BEEN RAISED BEFORE US. AS OBSERVED BY US HEREINABOVE, THE A.O HAD WHILE FRAMING THE ASSESSMENT TREATED THE PROPERTY OF THE ASSESSEE VIZ. CLOVER REGENCY, GHATKOPAR AS A SELF - OCCUPIED PROPERTY OF THE ASSESSEE AND RESULTANTLY TAKEN THE ALV OF THE SAME AS PER SEC. 23(2) OF THE ACT A T RS.NIL. IT IS THE CLAIM OF THE ASSESSEE THAT AS THE AFORESAID PROPERTY VIZ. CLOVER REGENCY , GHATKOPAR HAD DURING THE YEAR REMAINED UNDER CON STRUCTION , THEREFORE, THE ALV OF THE AFORE SAID PROPERTY VIZ. VORA APARTMENT, GHATKOPAR, WHICH WAS SELF - OCCUPIED BY HIM DURING THE YEAR UNDER CONSIDERATION WAS TO BE TAKEN AT NIL AS PER SEC.23(2)(A) OF THE ACT. IN SUM AND SUBSTANCE, IT IS SUBMITTED BY THE ASSESSEE THAT IF HIS CLAIM THAT THE PROPERTY AT CLOVER REGENCY, GHATKOPAR DURING THE YEAR HAD REMAINED UNDER CONSTR UCTION WAS FOUND TO BE IN ORDER IN THE COURSE OF THE SET ASIDE PROCEEDINGS , THE N, THE RE OUGHT TO HAVE BEEN A CONSEQUENTIAL DIRECTION BY THE CIT(A) TO THE A.O TO TREAT HIS PROPERTY VIZ. VORA APARTMENT, GHATKOPAR AS A SELF - OCCUPIED PROPERTY AND CONSEQUEN TLY TAKE ITS ALV AT RS. NIL. WE HAVE DELIBERATED ON THE AFORESAID CLAIM OF THE ASSESSEE AND FINDING OURSELVES TO BE IN AGREEMENT WITH THE SAME, HENCE DIRECT THE A.O THAT IN CASE IF IN THE COURSE OF THE SET ASIDE PROCEEDINGS THE CLAIM OF THE ASSESSEE THAT HIS PROPERTY AT CLOVER REGENCY, GHATKOPAR DURING THE YEAR UNDER CONSIDERATION I.E A.Y. 2009 - 10 WAS UNDER CONSTRUCTION, IS FOUND TO BE IN ORDER , THEN THE PROPERTY OF THE ASSESSEE AT VORA APARTMENT, GHATKOPAR, WHICH AS CLAIMED BY THE ASSESSEE WAS UNDER HIS SELF - OCCUPATION DURING THE YEAR SHALL BE WORKED OUT AS PER SEC.23(2)(A) OF THE ACT. HOWEVER, THE A.O WHILE GIVING EFFECT TO OUR AFORESAID DIRECTIONS SHALL MAKE NECESSARY VERIFICATION AS TO WHETHER P A G E | 7 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) THE AFORESAID PROPERTY VIZ. VORA APARTMENT, GHATKOPAR, DURI NG THE YEAR UNDER CONSIDERATION I.E A.Y. 2009 - 10 WAS UNDER THE SELF - OCCUPATION OF THE ASSESSEE, OR NOT. NEEDLESS TO SAY, THE ASSESSEE IN THE COURSE OF THE SET ASIDE PROCEEDINGS SHALL BE AFFORDED A SUFFICIENT OPPORTUNITY BY THE A.O TO SUBSTANTIATE HIS AFO RESAID CLAIM. THE GROUNDS OF APPEAL NOS. 2 & 3 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. 7 . WE SHALL NOW ADVERT TO THE CLAIM OF THE ASSESSEE THAT THE LOWER AUTHORITIES HAD ERRED IN NOT WORKING OUT THE ALV O F HIS PROPERTY AT WANWORIE , PUNE, ON THE BASIS OF THE MUNICIPAL VALUATION . AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, WE FIND , THAT THE A.O WITHOUT PLACING ON RECORD ANY SUPPORTING MATERIAL HAD AFTER ESTIMAT ING THE RATE OF RENT IN RESPECT OF THE PROPERTY UNDER CONSIDERATION @ RS. 20 / - PER SQ. FT. WORKED OUT THE ALV OF THE SAME AT RS.3,38,160/ - . WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE AFORESAID METHODOLOGY OF ESTIMATION OF THE ALV BY THE A.O. IN F ACT, WE FIND SUBSTANTIAL FORCE IN THE CLAIM OF THE ASSESSEE THAT THE ALV OF THE AFORESAID PROPERTY OUGHT TO HAVE BEEN WORKED OUT AS PER ITS MUNICIPAL RATEABLE VALUE . OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN T HE CASE OF CIT - 12 VS. TIP TOP TYPOGRAPHY ( 2014 ) 368 ITR 330 (BOM) . ACCORDINGLY, WE RESTORE THE MATTER TO THE FILE OF THE A.O WHO IS DIRECTED TO WORK OUT THE ALV OF THE AFORESAID PROPERTY VIZ. WANWORIE , PUNE, AFTER TAKING COGNIZANCE OF THE AFORESAID JUDGMEN T OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF TIP TOP TYPOGRAPHY ( S UPRA). THE GROUND OF APPEAL NO. 5 IS ALLOWED FOR STATISTICAL PURPOSES . 8 . WE SHALL NOW TAKE UP THE CONTENTION OF THE ASSESSEE THAT THE CIT(A) HAD ERRED IN DIRECTING THE A.O TO RE - COMPUTE THE UNEARNED INCOME FROM LET OUT HOUSE PROPERTY AT MAHAPE, NAVI MUMBAI FOR A P A G E | 8 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) PERIOD OF 4 MONTHS. AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER, I T WAS OBSERVED BY THE A.O THAT A PERUSAL OF THE COMPUTATION OF INCOME OF THE ASSESSEE REVEALED THAT HE WAS IN RECEIPT OF RENT OF RS.50,000/ - P.M. IN RESPECT OF THE AFORE SAID PROPERTY . H OWEVER, IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAD IN HIS RETURN O F INCOME SHOWN THE RENTAL INCOME IN RESPECT OF THE SAID PROPERTY AT RS.4,00,000/ - ONLY. ALSO, IT WAS OBSERVED BY THE A.O THAT THE RENT AGREEMENT FILED BY THE ASSESSEE ALSO REVEALED THAT THE PER MONTH COMPENSATION PAYABLE BY THE LICENSEE WAS RS.50,000/ - . AC CORDINGLY, IT WAS OBSERVED BY HIM , THAT AS THE ANNUAL RENT @ RS.50,000/ - PER MONTH WORKED OUT OF RS.6,00,000/ - , THEREFORE, THE INCOME OF THE ASSESSEE FROM HOUSE OF THE SAID PROPERTY VIZ. MAHAPE , NAVI MUMBAI WAS TO BE COMPUTED ACCORDINGLY. HOWEVER, THE A.O HAD WHILE COMPUTING THE TOTAL ASSESSED INCOME OF THE ASSESSEE HAD TAKEN THE RENTAL INCOME IN RESPECT OF THE MAHAPE PROPERTY AT RS.4,00,000/ - ONLY. ON THE BASIS OF THE AFORESAID FACTS, IT WAS OBSERVED BY THE CIT(A) , THAT DESPITE THE AFORESAID OBSERVATION TH E A.O HAD TAKEN THE TOTAL RENTAL INCOME IN RESPECT OF THE AFORESAID PROPERTY AT RS.4,00,000/ - . ACCORDINGLY, THE CIT(A) HAD DIRECTED THE A.O TO TAKE REMEDIAL MEASURES AND RE - COMPUTE THE TOTAL INCOME IN RESPECT OF THE PROPERTY OF THE ASSESSEE AT MAHAPE , NAVI MUMBAI , AS PER THE FACTS ON RECORD. WE FIND THAT IT IS THE CLAIM OF THE ASSESSEE THAT THE PROPERTY UNDER CONSIDERATION HAD DURING THE YEAR REMAINED LET OUT ONLY FOR A PERIOD OF 8 MONTHS , AND THUS , FOR THE SAID REASON THE RENT FOR THE REMAINING 4 MONTHS WAS NOT ACCOUNTED FOR AS A PART OF HIS INCOME IN THE RETURN OF INCOME. IN OUR CONSIDERED VIEW, AS THE CIT(A) HAD IN ALL FAIRNESS DIRECTED THE A.O TO RE - COMPUTE THE TOTAL INCOME FROM THE PROPERTY AT MAHAPE , NAVI MUMBAI , AS PE R THE FACTS ON RECORD, THEREFORE, NO INFIRMITY DOES EMERGE FROM THE SAID DIRECTION. ACCORDINGLY, NOT FINDING FAVOUR WITH THE AFORESAID CLAIM OF THE P A G E | 9 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) ASSESSEE, WE UPHOLD THE VIEW TAKEN BY THE CIT(A). THE GROUNDS OF APPEAL NOS. 6 & 7 ARE DISMISSED. 9 . WE SHAL L NOW ADVERT TO THE ADDITION OF RS . 13,37,681/ - MADE BY THE A.O UNDER SEC. 2(22)(E) OF THE ACT. A S OBSERVED BY US HEREINABOVE, THE AFORESAID ADDITION UNDER SEC.2(22)(E) HAD BEEN UPHELD BY THE CIT(A). BRIEFLY STATED, THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION OWNED 22.11% OF THE TOTAL SHARES OF M/S NISHOTECH SYSTEMS PVT. LTD. (NOW KNOWN AS NISHITECH SYSTEM PVT. LTD.) AND 20% OF THE TOTAL SHARES OF M/S SANITECH ENGINEERS PVT. LTD. IT WAS OBSERVED BY THE A.O THAT M/S NISHOTECH SYSTEMS PVT. LTD. HAD TAKEN AN AMOUNT OF RS.60,50,119/ - FROM M/S SANITECH ENGINEERS PVT. LTD., WHICH WAS HIT BY THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT. IT WAS FURTHER OBSERVED BY THE A.O THAT AS PER THE BALANCE SHEET OF M/S SANITECH ENGINEERS PVT. LTD. AS ON 01.04.2008 THE COM PANY HAD ACCUMULATED PROFITS OF RS.1,27,00,033/ - . ACCORDINGLY, THE A.O CONSIDERING THE 22.11% SHAREHOLDING OF THE ASSESSEE IN M/S NISHITECH SYSTEMS PVT. LTD. , THEREIN WORKED OUT THE PROPORTIONATE DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE AT RS.13,37,681/ - AND ADDED THE SAME TO HIS RETURNED INCOME. IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE BY DRAWING SUPPORT OF A BOARDS RESOLUTION, DATED 03.04.2008 IN THE CASE OF M/S SANITECH ENGINEERS PVT. LTD., THEREIN TRIED TO IMPRESS UPON THE CIT(A) THAT AS THE AFORESAID PAYMENT MADE BY M/S SANITECH ENGINEERS PVT. LTD. TO M/S NISHITECH SYSTEMS PVT. LTD. WAS IN THE NATURE OF A BUSINESS ADVANCE, THEREFORE, THE PROVISION S OF SEC.2(22)(E) WERE NOT ATTRACTED. HOWEVER, AS THE A FORESAID DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE WAS IN THE NATURE OF AN ADDITIONAL EVIDENCE , THE SAME IN THE ABSENCE OF ANY APPLICATION FILED BY THE ASSESSEE SEEKING ADMISSION OF THE SAME UNDER RULE 46A OF THE INCOME TAX RULES, 1962 WAS DECLINED TO B E ADMI TTED BY THE CIT(A). APART THERE FROM, IT WAS OBSERVED BY THE CIT(A) P A G E | 10 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) THAT THE ASSESSEE HAD ALSO NOT STATED AS TO WHAT HAD PREVENTED HIM FROM FILING THE SAID DOCUMENT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. ON MERITS, THE CIT(A) OBSERVED THAT AS TH E ASSESSEE WAS A BENEFICIAL SHAREHOLDER IN BOTH OF THE AFORESAID COMPANIES, THEREFORE, THE A.O HAD RIGHTLY INVOKED THE PROVISIONS OFSEC.2(22)(E) AND MADE AN ADDITION OF RS.13,37,681/ - AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. IN ORDER TO FORTIFY HIS AFORESAID VIEW, THE CIT(A) RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. UNIVERSAL MEDI CARE PVT. LTD. (2010) 324 ITR 263 (BOM) AND THE ORDER OF THE SPECIAL BENCH OF THE ITAT, MUMBAI IN THE CASE OF ACIT VS. BHAUMI K COLOURS PVT. LTD. (2009) 118 ITD 1 (MUM) (SB) . ACCORDINGLY, THE CIT(A) UPHELD THE ORDER OF THE A.O IN CONTEXT OF THE AFORESAID ISSUE UNDER CONSIDERATION. 10 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID ISSUE AND ARE PERSUADED TO SUBSCRIBE T O THE VIEW TAKEN BY THE LOWER AUTHORITIES . ADMITTEDLY, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIX ED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) H OLDING NOT LESS THAN 10 % OF THE VOTING POWER, IN BOTH OF THE AFOREMENTIONED COMPANIES VIZ. (I) M/S NISHITECH SYSTEMS PVT. LTD.; AND (II) M/S SANITECH ENGINEERS PVT. LTD. AS PER CLAUSE (E) OF SEC. 2(22) OF THE ACT, ANY PAYMENT BY A COMPANY NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, O F ANY SUM, BY WAY OF AN ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIX RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT T O PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN 10% OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS SUBSTANTIA L INTEREST OR ANY PAYMENT B Y ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEF IT, O F ANY SUCH SHAREHOLDER, TO THE EXTENT TO P A G E | 11 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS SHALL BE INCLUDED WITHIN THE DEFINITION OF DIVIDEND. AS PER THE E XPLANATION 3 TO SEC. 2(22) OF THE ACT, THE TERM CONCERN MEANS A HINDU UNDIVI DED FAMILY, OR A FIRM OR AN ASSOCIATION OF A PERSON OR BODY OF INDIVIDUALS OR A COMPANY. AS PER THE AFORESAID MANDATE OF LAW, WE FIND THAT THE AMOUNT OF RS.60,50,119/ - RECEIVED BY M/S NISHITECH SYSTEM PVT. LTD. FROM M/S SANITECH ENGINEERS PVT. LTD. , AS RIG HTLY OBSERVED BY THE LOWER AUTHORITIES, WAS CLEARLY HIT BY THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES HAD RIGHTLY CONCLUDED THAT AN AMOUNT OF RS. 13,37,681/ - I.E THE PROPORTIONATE AMOUNT OF THE ACCUMULATED PROFITS (AS ON 01.04.2008) OF THE LENDER COMPANY VIZ. M/S SANITECH ENGINEERS PVT. LTD. WORKED OUT ON A PRO - RATA BASIS OF THE 22.11% SHAREHOLDING O F THE ASSESSEE WITH M/S NISHOTECH SYSTEMS PVT. LTD. WAS ASSESSABLE AS DEEMED DIVIDEND U/S 2(22)(E) IN THE HANDS OF THE ASSESSEE. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT S OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF VIZ. (I). CIT VS. ANKITECH (P) LTD. (2012) 340 ITR 14 (BOM); AND (II). CIT VS. UNIVERSAL MEDICARE (P) LTD. (201 0) 324 ITR 263 (BOM). WE THUS NOT FINDING ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHO IN OUR CONSIDERED VIEW HAD CORRECTLY UPHELD THE AFORESAID ADDITION MADE BY THE A.O UNDER SEC.2(22)(E) OF RS.13,37,681/ - , UPH O LD THE SAID ADDITION . THE GROUNDS OF APPEAL NOS. 8 TO 10 ARE DISMISSED. 11 . AS THERE IS NOTHING DISCERNIBLE FROM THE RECORDS AS REGARDS THE G ROUND OF APPEAL NO. 11 IS CONCERNED, THEREFORE , THE SAME IS DISMISSED. 12 . THE GROUND OF APPEAL NO. 12 BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. P A G E | 12 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3) 13 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 8 .08.2019 S D / - S D / - ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI ; 28 .08.2019 *** PS . ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 13 ITA NO.982/MUM/2016 A.Y. 2009 - 10 MR. SANJAY BADANI VS. ACIT - 10(3)