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2016 (2) TMI 168

Deemed dividend addition u/s 2(22)(e) - CIT(A) deleted the addition - whether the advance made by M/s Adampur Distributors Pvt. Ltd. is for business transaction or it is a loan or advance? - Held that:- The ledger extract of M/s Adampur Distributors Pvt. Ltd. clearly establishes that M/s Adampur Distributors Pvt. Ltd. purchased gold from M/s Mustafa Gold Mart, a proprietary concern of the assessee. It is also not in dispute that upto 2007-08, M/s Adampur Distributors Pvt. Ltd. engaged in the bus .....

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ri Ishtiaq Ahmed - CIT(A) deleted the disallowance - Held that:- It is for the assessee to decide whether commission is to be paid to any particular individual or not. In the interest of the assessee and for promoting the business, if the assessee comes to a conclusion that payment of commission is required, then the Assessing Officer cannot step into the shoes of the assessee and say that the payment of commission is not required. In this case, it is not the case of the Revenue that the payment .....

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ion Act, however, the right of the creditor to recover the amount still exists by other modes. In other words, what is barred is filing civil suit to recover the money but the other means are not barred at all. Moreover, the liability is shown in the year under consideration also. Therefore, the assessee accepted liability during the year under consideration. When the assessee accepted the liability, the period of limitation gets extended. In those circumstances, there is no question of any cess .....

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ve received gold jewellery as Sthreedhan property during her marriage and also would have received gifts on the occasions like marriage, birthday, etc. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer - Decided in favour of assessee

Disallowance of expenses - Held that:- In the absence of proper vouchers, the CIT(A) has correctly restricted the disallowance to 20% claimed by the assessee.

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ly, the order of the CIT(Appeals) is set aside in respect of travelling allowance to the extent of ₹ 1,16,700/- and the Assessing Officer is directed to make addition of ₹ 1,16,700/- towards travelling expenses.

Charging of interest under Section 234B - Held that:- The return filed consequent to the notice issued under Section 153A has to be taken for computing interest under Section 234B of the Act. - ITA Nos.1676, 1677, 1678 & 1679/Mds/2013, ITA No.1680/Mds/2013 - Dated: .....

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Ltd., Chennai, having 99.98% shares. From the balance sheets, it is seen that M/s Mustafa Gold Mart, a proprietary concern of the assessee, was shown as creditor in the year ending 31.03.2009 to the extent of ₹ 1,28,32,146/-. During the financial year 2008-09, the assessee received approximately 2.92 Crores from Adampur Distributors Pvt. Ltd. After perusing the Profit & Loss account of the Adampur Distributors Pvt. Ltd., the Assessing Officer found that the total export sales was of &# .....

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d dividend. According to the Ld. counsel, in the absence of any business transaction between the proprietary concern of the assessee and M/s Adampur Distributors Pvt. Ltd., the sum advanced by M/s Adampur Distributors Pvt. Ltd. has to be construed as deemed dividend, therefore, the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer. 4. On the contrary, Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that M/s Adampur Distributors Pvt. Ltd. was engag .....

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nced only for the purpose of business. According to the Ld. counsel, the assessee had transaction with M/s Adampur Distributors Pvt. Ltd. in gold and sea food products right from the financial year 2000-01. When the transaction is a business transaction, the advance made by M/s Adampur Distributors Pvt. Ltd. cannot be construed as loan or advance. Therefore, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. 5. We have considered the rival submissions on either side .....

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e that upto 2007-08, M/s Adampur Distributors Pvt. Ltd. engaged in the business of jewellery and later on, the business was diversified. To revive the gold jewellery business, M/s Adampur Distributors Pvt. Ltd. advanced money to M/s Mustafa Gold Mart for purchasing gold jewellery. In fact, M/s Mustafa Gold Mart delivered gold jewellery to M/s Adampur Distributors Pvt. Ltd. In those circumstances, it is obvious that the transaction between M/s Adampur Distributors Pvt. Ltd. and M/s Mustafa Gold M .....

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tted that no commission was paid in the previous years. There was no agreement between the assessee and the above said Shri Ishtiaq Ahmed. Shri Ishtiaq Ahmed was examined by the Assessing Officer on 06.02.2013 and he could not explain the basis for determination of the quantum of commission. According to the Ld. D.R., in the earlier years, the above said Shri Ishtiaq Ahmed was paid only salary. The assessee explained before the Assessing Officer that payment of commission to Shri Ishtiaq Ahmed w .....

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rendered by him. The recipient Shri Ishtiaq Ahmed disclosed the receipt of commission and paid taxes. In fact, the Assessing Officer accepted the income declared by Shri Ishtiaq Ahmed. Therefore, the Assessing Officer cannot take a contrary decision by disallowing the payment in the assessee s hand. According to the Ld. counsel, the payment of commission is not disputed. The question is whether it is excessive or unreasonable. According to the Ld. counsel, after payment of commission, the profit .....

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f is not doubted. The question is whether it is excessive or unreasonable. Merely because the assessee paid salary in the earlier assessment years, it does not mean that the assessee shall not pay commission during the assessment years under consideration. It is for the assessee to decide whether commission is to be paid to any particular individual or not. In the interest of the assessee and for promoting the business, if the assessee comes to a conclusion that payment of commission is required .....

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) of the Act. 12. Shri A.B. Koli, the Ld. Departmental Representative, submitted that as on 31.03.2011, the assessee has shown a sum of ₹ 5,61,53,855/- as sundry credit. The Assessing Officer found that the above credit was outstanding from the assessment year 2005- 06. There was no movement in the sundry credit for the last seven years. According to the Ld. D.R., the assessee has not filed any confirmation letter. The assessee explained before the Assessing Officer that all the credits ar .....

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her submitted that the assessee has produced confirmation letters from some of the creditors. However, the assessee could not furnish confirmation letters from all the creditors since they are in abroad. According to the Ld. counsel, the assessee has established identity of the creditors and admittedly, the liability to repay the amount remains. The Assessing Officer disallowed the claim of the assessee only on the ground that the seven years period has expired. The assessee accepted the liabili .....

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from the assessment year 2005-06. It is not the case of the Revenue that the credit was entered in the books of account first time in the year under consideration. Therefore, the genuineness of the credit has to be examined during the assessment year 2005-06 and definitely not in the year under consideration. Even assuming for the argument sake that the assessee has to establish the genuineness of the credits, then the addition has to be made only for the assessment year 2005-06 and not for the .....

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ditors waived the amount due to them. In those circumstances, the CIT(Appeals) has rightly deleted the addition. This Tribunal do not find any reason to interfere with the order of the lower authority. According, the order of the CIT(Appeals) is confirmed. 17. Now coming to the appeal in the case of Shri Ishtiaq Ahmed in I.T.A. No.1680/Mds/2013, the first ground of appeal is with regard to addition made on account of unexplained jewellery to the extent of ₹ 21.49 lakhs. 18. Shri A.B. Koli, .....

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edhan gift, the Assessing Officer has rightly made the addition, therefore, the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer. 19. On the contrary, Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that no doubt, the Revenue authorities found jewellery in the locker and at the residence of the assessee. According to the Ld. counsel, at the time of marriage, assessee s wife was given gold jewellery by her parents. It is customary that at the time .....

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parents during her marriage. The quantity of gold jewellery depends upon the status of the assessee in the society. The assessee, being a businessman, commands respect in the locality where he resides. Therefore, naturally the parents of the girl would give gold jewellery as Sthreedhan property. This is a customary practice which prevails in the country. The Assessing Officer disbelieves the contention of the assessee only on the ground that no documentary evidence was found. It is not known wh .....

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received gifts on the occasions like marriage, birthday, etc. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. Accordingly, the order of the CIT(Appeals) is confirmed. 21. The next ground of appeal is with regard to disallowance of expenses to the extent of ₹ 22,04,085/-. 22. Shri A.B. Koli, the Ld. Departmental Representative, submitted that the assessee has declared business income to the extent o .....

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the assessee could not furnish any details regarding expenditure. Therefore, the Assessing Officer disallowed the claim of the assessee. 23. On the contrary, Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that the assessee has paid salary, conveyance and miscellaneous expenses in the course of doing the commission business. According to the Ld. counsel, the assessee employed about ten persons to make advertisement in various part of the city through loud speakers. The assessee emp .....

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of the considered opinion that the CIT(Appeals) has rightly restricted the claim to 20% by taking into consideration the material facts available on record. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is confirmed. 25. The next ground of appeal arises for consideration is with regard to disallowance made in respect of exemption claimed under Section 10 of the Act. 26. Sh. A.B. Koli, the Ld. Depart .....

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the relevant material available on record. The uniform allowance and conveyance allowance to the extent of ₹ 42,000/- and ₹ 9,600/- respectively have to be allowed since it is for the purpose of business or the employment carried out by the assessee. In respect of travelling expenses, the claim of the assessee was that he had to travel for advertisement at many places in the city of Chennai. This Tribunal is of the considered opinion that while claiming expenditure for the commission .....

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CIT(Appeals) treating the return filed in response to the notice issued under Section 153A of the Act, directed the Assessing Officer to compute the interest from the date of return filed consequent to the notice issued under Section 153A of the Act. According to the Ld. D.R., regular assessment means the assessment made under Section 143(3) of the Act, therefore, the original return filed under Section 139(1) of the Act has to be considered for the purpose of levy of interest under Section 234B .....

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date of filing of original return under Section 143(1) or consequent to the notice issued under Section 153A of the Act. This Tribunal in the case of Kalyanai Jayakumar (supra) while considering this issue found that for all practical purpose, the return filed consequent to the notice issued under Section 153A has to be taken for computing interest under Section 234B of the Act. In fact, the CIT(Appeals) directed the Assessing Officer to compute the interest only on the basis of the order of the .....

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