TMI Blog2012 (9) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, it is to be concluded that the addition made by the AO was merely on presumption, hence deserves to be reversed - in favour of assessee. Addition on account of deemed rent of motor garage - Held that:- AO has presumed that the motor-car garage might have been let out by the assessee. In the absence of any evidence in his possession of letting out of the motor-car garage, thus AO has faulted in taxing an income merely on hypothesis - in favour of assessee. Deemed dividend by invoking the provisions of section 2(22)(e) - assessee happened to be a beneficial holder of 50% share in company imparting loan - Held that:- As it was a trade transaction as evident from the copy of accounts placed on record and there are certain corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act dated 16/10/2010 were that the assessee was asked to clarify that why a notional income should not be taxed in respect of a house property situated at Rajyog Residency. The case of the Revenue was that the assessee has purchased the said property of Rajyog Residency on 19/09/2007. The AO has held that as per the balance-sheet drawn as on 31.03.2008, the assessee had shown his share of investment in the said property at Rs.21 lacs. The AO has therefore held that it was quite clear that the possession was taken on or before the close of the accounting period. On that basis, he has held that the property was deemed to have been let out. He has estimated Rs.50,000/- p.m.; an estimated rent, and after granting standard deduction as prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in making arbitrary addition of deemed rent of Rs.4,20,000/- as income from house property. The AO has also mentioned in the assessment orde3r at Para-No.5 that full payment of the property was done before 31.03.2008 but actually appellant has paid only Rs.10,00,000/- and Rs.11,00,000/- were due to be paid at the time of possession which is clear from the balance sheet of the appellant as on 31.03.2008. The appellant has paid balance of Rs.11,00,000/- in F.Y. 2009-10. Without prejudice to above, appellant owns only 1/3rd share in the said shop at Rajoyg Residency, also the said shop was booked only 19.09.2007, hence addition should be restricted to part of the year and for the share of the appellant. 5.3. DECISION :- I have consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round of the Revenue is hereby dismissed. 5. Apropos to Ground No.2, the AO has noted that in respect of an another property the assessee has not shown rent of motor-car garage. He has estimated rent of motor-car garage at Rs.25,000/- monthly rent and taxed the same accordingly. 6. When the matter was carried before the first appellate authority, the ld.CIT(A) has decided the issue in assessee s favour in the following manner:- 6.2. SUBMISSION OF THE A.R . :- During the course of appellate proceedings, the AR of the appellant submitted as under:- The AO has made ad-hoc addition of Rs.2,10,000/- without giving an opportunity of being heard. Also, the said motor garage was used by the assessee for his personal use and was not le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a commercial transaction and it was not in the nature of a loan transaction. However, the AO was not convinced and taxed an amount of Rs.5 lacs as deemed dividend by invoking the provisions of section 2(22)(e) of IT Act. 9. The ld.CIT(A) has decided the issue in assessee s favour by observing as under:- Further, advance is given by Kalpsutra Chemicals Pvt.Ltd. to MAC Industry is in nature of trade deposit and in the ordinary course of business. Kalpsutra Chemicals Pvt.Ltd. makes purchase of goods from MAC Industry regularly. The trade deposit of Rs.5,00,000/- was given long back by Kalpsutra Chemicals Pvt.Ltd. to MAC Industry as a deposit against the said purchases in the ordinary course of business only. Kalpsutra Chemicals Pvt.Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs. Lakshmikutty Narayanan 105 ITD 558(ITAT-Cochin) 11. Having heard the parties, we have noted that undisputedly it was a trade transaction as evident from the copy of accounts placed on record. There are certain correspondences way back dated 8.2.2006, placed in the compilation, stated therein that the said deposit of Rs.5,00,000/- was towards supply of material on regular basis and that deposit was required to be adjusted against the pending dues, if any. In that context, the vehement argument is that the nature of deposit was not a loan deposit but in the nature of a trade deposit . Because of this fact, we hereby hold that the nature of transaction was neither an advance or loan but a trade deposit, hence out of the purview ..... X X X X Extracts X X X X X X X X Extracts X X X X
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