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TMI Blog2014 (11) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,29,22,613 from M/s. Speed Projects and Infrastructure Pvt. Ltd. According to the Assessing Officer, the said amount received by the assessee was covered by the provisions of S.2(22)(e) and consequently, invoking the said provision, he added the amount of Rs. 1,29,22,613 to the total income of the assessee on account of deemed dividend. On appeal, the learned CIT(A) confirmed the said addition made by the Assessing Officer. 4. We have heard the arguments of both the sides and also perused the relevant material on record. The only contention raised by the learned counsel for the assessee is that M/s. Speed Projects and Infrastructure Pvt. Ltd. had not commenced business at the relevant time and consequently, the said company did not have any accumulated profits out of which the loans in question could be said to have been advanced to the assessee. He has contended that the said loans therefore, cannot be treated as deemed dividend income of the assessee under S.2(22)(e). As rightly contended by the learned counsel for the assessee, the payment made by a company, which is covered by the provisions of S.2(22)(e), can be treated as deemed dividend only to the extent to which suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f deemed dividend under S.2(22)(e) can be made in the case of the assessee only to the extent of Rs. 10 lakhs, being the amount received during the year under consideration. The Learned Departmental Representative, on the other hand, has contended that this aspect of the matter requires verification by the Assessing Officer. We find merit in this contention of the Learned Departmental Representative. Accordingly, we restore this issue to the file of the Assessing Officer for the limited purpose of verifying the claim of the assessee that out of Rs. 27 lakhs, loan Rs. 10 lakhs only was received in the year under consideration, and the balance amount of Rs. 17 lakhs was received in earlier years and deciding the issue afresh in accordance with law. Needless to observe that the Assessing Officer shall afford sufficient opportunity of hearing to the assessee. Ground No.2 is accordingly treated as allowed for statistical purposes. 8. Grounds No.3 and 5 involve a common issue relating to addition of Rs. 39,50,000 made by the Assessing Officer and confirmed by the learned CIT(A) on account of gross receipts shown by the assessee relating to his business of interior design works. 9. In h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re claimed by the Appellant and taxed the entire receipts as the Business Income. The Assessing Officer ignored the fact that the Business Income comprising Business Receipts are received after incurring certain expenditure which is incidental to the Business and the legitimate Business expenses are all to be allowed as per Section 37 of the Income Tax Act, for the General Business Expenses and as per Section 32 for the Depreciation of the Asset which are put to use for the Business of the Assessee are to be allowed in total. As such the Business expenditure of Rs. 59,36,677/-, including Depreciation of Rs. 26,50143/- as claimed may be allowed. 11. The learned CIT(A) did not find merit in the submissions made by the assessee and upheld the action of the Assessing Officer in treating the gross receipts of Rs. 39,50,000 as income of the assessee, but chargeable to tax as income from other sources for the following reasons given in paragraphs 6.2 and 6.3 of the impugned order- "6.2. I have seen carefully all the facts and the evidence in this regard. It is very clear that no interior designing work was carried out by the appellant. The Appellant has neither demonstrated any knowle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh that any expense relating to the said business was actually incurred by the assessee. On appeal, the learned CIT(A) also found on verification of the relevant facts and evidence that no interior designing work was actually carried out by the assessee. He also noted that there was nothing brought on record by the assessee to demonstrate that any knowledge or skill required to carry out such work was possessed by him. He also found that not a single voucher or evidence was presented by the assessee in support of his claim of having incurred expenditure in relation to the said work. As noted by him, not even a copy of any agreement with any one was produced by the assessee to support its claim of having done the interior designing work and also no details were furnished to show any kind of design that was made by him. On the basis of these findings, the learned CIT(A) upheld the action of the Assessing Officer in treating the claim of the assessee of having carried on the business of interior designing work as false and added the gross receipts of Rs. 39,50,000 to the total income of the assessee, although under a different head 'income from other sources'. 15. At the time of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. As per the said provision, any special allowance or benefit not being in the nature of perquisite, specifically granted to meet expense wholly, necessarily and exclusively incurred for in the performance of the duty of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose, is exempt from tax. There is however, no evidence brought on record by the learned counsel for the assessee before us to show that any special allowance was specifically granted to the assessee by the employer to meet conveyance expense wholly, necessarily and exclusively in the performance of his duty. There is also no evidence placed on record before us to show that the amount in question claimed to be received by the assessee on account of conveyance allowance was actually incurred for such purpose. In the absence of such details and evidence, we are unable to accept the contention of the assessee that the amount in question is exempt from tax under S.10(14)(i) and rejecting the same, we uphold the disallowance made by the Assessing Officer and sustained by the learned CIT(A) on this issue. Ground No.4 of the assessee's appeal is accordingly dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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