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2018 (1) TMI 971 - AT - Income TaxAddition as perquisite in lieu of salary u/s 17(2)(iii) - difference in value between stamp duty valuation and actual sale value - assessee is a director of the company - Held that:- There is nothing on record, either in the assessment proceeding or in the order of the first appellate authority to suggest that the Assessing Officer has made any enquiry to ascertain the fair market value of the property. Even, he has not conducted any enquiry with the company which has sold shops to the assessee to ascertain the fair market value of the property sold to the assessee. In the absence of any enquiry conducted by the Assessing Officer to demonstrate that the value adopted for stamp duty purpose is the actual fair market value of the properties sold, it cannot be said that a benefit in the nature of perquisite as provided under section 17(2)(iii) of the Act has been given to the assessee by the company. Merely because the assessee happens to be a director of the company, provisions of section 17(2)(iii) of the Act cannot be applied to the assessee without establishing the fact that the assessee is an employee of the company and the benefit given is in the nature of salary. Without factually establishing the existence of employer–employee relationship between the company and the assessee it cannot be assumed that the assessee has been given a benefit in lieu of salary, even, in the absence of contract of employment between the company and the assessee. This is so because as per section 17(2)(iii)(a) of the Act, the director to whom any benefit or amenity is granted must be an employee of the company. Merely on the basis of the difference between stamp duty valuation and actual sale consideration the Assessing Officer has concluded that a benefit in the nature of perquisite has been given to the assessee by the company. However, there is nothing on record nor any positive finding by the Assessing Officer on the basis of any enquiry to suggest that the fair market value is the value determined for stamp duty purpose. There is no allegation by the Assessing Officer that any consideration over and above the sale value has changed hands. That being the case, the addition made by the Assessing Officer by treating the difference in value between stamp duty valuation and actual sale value cannot be treated as perquisite u/s 17(2)(iii) of the Act. Though, AO has consciously not referred to the provisions of section 50C of the Act, however, there is no room for doubt that applying the deeming fiction of section 50C, the Assessing Officer has adopted the stamp duty value as the deemed sale consideration while making the disputed addition. Therefore, in view of the aforesaid, we hold that the addition made is unsustainable - Decided in favour of assessee. Applicability of section 28(iv) - purchase of shop rooms - Held that:- We are unable to agree with the decision of FAA since, the transaction relating to purchase of shop rooms has been shown as an investment activity by the assessee in its books. Moreover, in the assessment year 2010–11, the Department has accepted it as an investment activity. So, if at all there is any benefit or perquisite, even assuming the argument of the Department, it cannot be said to be arising from a business or exercise of a profession by the assessee. In any case of the matter, we have already held that AO has failed to establish that by merely the reason of difference between stamp duty valuation and actual sale consideration actually any benefit did arise and accrue to the assessee. That being the case, it cannot be treated as a profit and gain of business or profession u/s 28(iv) of the Act. Applicability of section 56(2)(vii)(b) - Held that:- Undisputedly the transfer of shop rooms to the assessee and his wife was not without consideration. Therefore, as per the provisions of section 56(2)(vii) of the Act as it existed in the relevant assessment year, no addition under the said provision can be made. See case of Sandeep Srivastava [2015 (7) TMI 1262 - ITAT MUMBAI] - Decided in favour of assessee
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