1998 (11) TMI 666 - AT - Income Tax

Summary

Issues Involved:
1. Addition on account of benami investment in properties at Bangalore.
2. Disallowance of fees paid for acquiring membership of Otters Club.
3. Addition on account of low household withdrawals.
4. Restriction of deductions u/s 80RR.
5. Addition u/s 28(iv) of the Income-tax Act.

Summary:

1. Addition on account of benami investment in properties at Bangalore:
The premises of the assessee were searched u/s 132, leading to the discovery of an agreement indicating a Rs. 31 lakh investment in Bangalore properties. The Assessing Officer treated this as the assessee's undisclosed income. However, the Tribunal found that the agreement and statements from relevant parties indicated that the investment was made by Mrs. Kiran Mohan, not the assessee. The Tribunal noted that the possession of the agreement by the assessee was reasonably explained and directed the deletion of the Rs. 31 lakh addition.

2. Disallowance of fees paid for acquiring membership of Otters Club:
The Assessing Officer disallowed Rs. 2,50,000 paid for club membership, treating it as income from undisclosed sources. The Tribunal referenced several judicial decisions supporting the deduction of such fees and found no justification for treating it as undisclosed income. The addition was directed to be deleted.

3. Addition on account of low household withdrawals:
The Assessing Officer added Rs. 4 lakhs due to perceived low household withdrawals. The Tribunal found that the withdrawals were reasonable based on the assessee's income in earlier years and that no material evidence supported the addition. Therefore, the addition was deleted.

4. Restriction of deductions u/s 80RR:
The Assessing Officer restricted deductions u/s 80RR, but the Tribunal held that such disallowances could not be made in proceedings to assess undisclosed income u/s 158BC. The Tribunal directed that the disallowance be deleted.

5. Addition u/s 28(iv) of the Income-tax Act:
The Assessing Officer added Rs. 3,91,650 as income from profession u/s 28(iv) for expenses incurred on the assessee's family during foreign trips. The Tribunal found that the assessee's health necessitated family accompaniment and that such additions could not be considered in proceedings for undisclosed income. The addition was directed to be deleted.

Conclusion:
The Tribunal allowed the assessee's appeal, directing the deletion of all contested additions and disallowances.