TMI Blog2013 (11) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration – Thus, Sunil P.Mantri clearly falls u/s 2(22)(e) of the Act – But, additions are to be restricted only to the extent of the accumulated profits of the lender concern up to March 31st of the previous years relevant to the assessment years under consideration during which the loans/advances have been made to various concerns - Decided against the assessee. Computation of income from House property on estimated basis @ 7% of cost of the property - Disallowance/addition on account of notional interest in respect of the property located at Ambey Valley, Lonawala and the allowability of interest expenses respectively - AO estimated the gross annual value @ 7% of the cost of acquisition and after allowing 30% standard deduction u/s 24(a), the AO determined the income from house property – Held that:- When the assessee claims for a lower ALV, the assessee is duty bound to file municipal valuation to substantiate his claim of lower value, which he has not discharged during the assessment/appellate proceedings – No any merit in the contention of the Ld.AR that the estimation of gross annual value ought to have been made as per the rent fixed by the municipal authority - Gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the respective amounts are as below:- In the assessment framed u/s 143(3) read with section 153A, the AO after observing the aforementioned shareholding pattern, invoked section 2(22)(e) of the Act and thereby treated the said amounts as deemed dividend in the hands of common share holder, Sunil P. Mantri as he was holding substantial control over the lender concern, M/S Sunil Mantri Reality Ltd. The said additions of the total amounts advanced to various concerns have been made in the hands of Sunil P. Mantri on substantive basis. The amounts received by the respective concerns were added on protective basis in the hands of the said concerns respectively. 3. On appeal, the Ld.CIT(A) confirmed the additions made in the hands of Sunil P.Mantri on account of the loans/advances made to various concerns. However, for the a.y 2008-09, the Ld.CIT(A) deleted the addition made on the amount received by M/s.Sunil Mantri Trinity Projects Pvt. Ltd since Sunil P.Mantri was not a common shareholder having substantial interest at the time of advancing the amount by Sunil Mantri Reality P. Ltd to Sunil Mantri Trinity Projects P. Ltd. For A.Y. 2009-10, the Ld.CIT(A) directed the AO to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee that Sunil Mantri Reality Ltd., has made payments directly to the four group concerns and since no payment either directly or indirectly made to the assessee, there is no individual benefit received by the assessee. Further, Sunil Mantri Reality Ltd. has made payments to the said concerns in the normal course of business wherein provisions of section 2(22)(e) shall not apply. It is also the contention of the assessee that the MOU dated 15th May, 2007 evidences payments of advances towards awarding of preferential contract to lender concern of any new project that may arise in future by the recipient concerns. Alternatively, the Ld.AR has argued that in case if the Bench arrives at a decision that Sunil P.Mantri's case falls within the provisions of section 2(22)(e), in such an event, the addition is to be restricted only to the extent of the accumulated profits of the lender concern up to March 31st of the previous years relevant to the assessment years under consideration during which the loans/advances have been made to various concerns. Per contra, it is the case of the revenue that Sunil P. Mantri is the registered and beneficial owner of shares in Sunil Mantri R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early falls u/s 2(22)(e) of the Act. However, we are inclined to accept the alternate arguments of the Ld.AR that the additions are to be restricted only to the extent of the accumulated profits of the lender concern up to March 31st of the previous years relevant to the assessment years under consideration during which the loans/advances have been made to various concerns. Therefore, as regards the additions made in the hands of Sunil P.Mantri for assessment years 2008-09 and 2009-10, we direct the AO to restrict the additions based on the accumulated profits of M/s Sunil Mantri Realty Ltd as on 31.03.2007 and 31.03.2008 respectively, corresponding to the loans/advances made for the relevant assessment years i.e., 2008-09 and 2009-10. 5.1.1 Secondly, as regards the issue raised in the appeal of the Revenue in the case of Sunil Mantri, for the assessment year 2008-09, agitating the decision of the Ld. CIT(A) deleting the addition made on account of the loans/advance received by Sunil Mantri Trinity Projects P. Ltd, we are of the considered opinion that the Ld. CIT(A) has correctly done so since for the period during which the loans/advances have been made by Sunil Mantri Reality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timated by AO @ 7% of cost of the property is reasonable. The fact that the assessee has paid interest on borrowed capital is also not disputed. Therefore, we do not find any infirmity in the decision of the Ld.CIT(A) that the assessee is eligible for claim of deduction in respect of interest paid. 5.1.5 Resultantly, (i) the additions confirmed by the Ld.CIT(A) u/s 2(22)(e) in the hands of Sunil P. Mantri on the substantive basis for the assessment years 2008-09 2009-10, subject to our direction that the additions made for the said assessment years is to be restricted to the extent of the accumulated profits of M/s Sunil Mantri Realty Ltd as on 31.03.2007 and 31.03.2008 respectively, corresponding to the loans/advances made for the relevant assessment years i.e., 2008-09 and 2009-10 (ii) the decision of the Ld.CIT(A) deleting the addition made by the AO in the hands of Sunil P. Mantri on account of the loans and advances received by Sunil Mantri Trinity Projects P. Ltd. for the assessment year 2008-09 (iii) decision of the Ld.CIT(A) in deleting the additions made by the AO in respect the sums repaid by the recipient concerns to the lender company for the A.Y 2009-10, (iv) the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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