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ACIT, Central Circle-03, New Delhi Versus Suresh Nanda and Vica-Versa

2016 (4) TMI 668 - ITAT DELHI

Addition on account of peak deposits in HSBC, Geneva account and interest thereon - CIT(A) deleted the addition - Held that:- Since the principle amount in the HSBC Geneva Bank account is itself not taxable due to the non-resident status of the assessee, and as there is no proof that the income has accrued or arisen in India consequently, there can’t be any addition on account of interest income on the amount of deposits in the same bank account. - Decided in favour of assessee

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acquiring the new asset and the revenue ought not to have made the addition on this count. This addition is, therefore, deleted.- Decided in favour of assessee. - ITA Nos.4802 to 4806/Del/2015, CO Nos.266 to 269/Del/2015 - Dated:- 22-2-2016 - SHRI J. SUDHAKAR REDDY, AM AND SHRI SUDHANSHU SRIVASTAVA, JM For The Assessee : Shri Ajay Wadhwa, Advocate For The Department : Ms Nirupama Kotru, CIT, DR ORDER PER BENCH: All these appeals filed by the Revenue are directed against the common order passed b .....

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ackground of the matter is that in April 1 May, 2011 India received information from a foreign government under the relevant Double Taxation Avoidance Agreement (DTAA) that certain Indian passport holders had opened and maintained bank accounts with Hongkong & Shanghai Banking Corporation (HSBC) in Switzerland, etc. The information received was covered under the confidentiality clause of the DTAA, and its contents could not be disclosed or shared by the Income Tax Department (ITD) other than .....

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on by the persons searched that they had opened accounts overseas and not disclosed it for tax purposes in India. Some persons, when summoned by the ITD, admitted having opened the accounts and transacted therein while some persons denied having any transaction in the said accounts. Some persons outrightly denied having opened any such bank accounts overseas. Based on the investigations, further information has been sought from the respective countries and in several cases reference has been mad .....

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rseas. 3.2 The appellant's name figured as one of the beneficiaries of an account with HSBC, Geneva. Name of Late Dr. M V Rao also figured in the list. Consequently, on 24.02.2012, search and seizure action was carried out on the appellant and his relatives, concerns and associates, including at the premises of Late Dr. M V Rao. While the appellant denied having any foreign account in HSBC, Geneva, he nonetheless paid tax on the maximum outstanding balance in the said account 'to buy pea .....

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sultants Ltd., a company incorporated in the British Virgin Islands, a tax haven. There was a remittance of US $30,000 at the instance of this company from Deutsche Bank, Singapore to the NRO / NRE account of Sh. M Venu, son of Late Dr. Rao, maintained with Deutsche Bank, New Delhi. Thus, maintenance of foreign bank account and seizure of large amounts of cash (i.e. ₹ 2 crore in 2007 and ₹ 7.6 crore in 2012, totaling ₹ 9.6 crore), led to an inescapable conclusion that Dr. Rao w .....

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made on certain other issues which we would be specifically referring to later. 5. We have heard Ms Nirupama Kotru, the ld. CIT, DR on behalf of the Revenue and Shri Ajay Wadhwa, the ld. counsel for the assessee. Detailed submissions were made by both the parties. Paper books were filed along with written submissions. 6. On a careful consideration of the facts and circumstances of the case and on a perusal of the facts on record and the orders of the authorities below, we adjudicate the issues .....

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nts, including in HSBC account, are proceeds of commission received in defence contracts awarded by the Government of India. If the revenue has suspicion that the amounts represent income accrued / arisen in India, evidence has to be collected for the same and confronted to the appellant. There was some indication to this effect in the earlier searches conducted in 2007, for which references had been made to various foreign tax authorities under the respective treaty provisions. Some information .....

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re is no evidence yet to link the money brought into India, or kept in foreign accounts, with any Indian defence contract payments. In the absence of any positive evidence indicating receipt of money in defence contracts awarded in India, any conclusion that amounts kept by the appellant in his foreign accounts or capital brought by him into India are proceeds of such commission would be premature and presumptious. Thus, even if it is concluded that the amounts kept in the HSBC account belongs t .....

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the issue involved for these years is even otherwise covered by the judgement of the Hon ble Delhi High Court dated 25.02.2013, in ITA Nos.85/2013, 100/2013 and 87/2013 in the assessee s own case for AYs 2001-02, 2002-03 & 2003-04, wherein the assessee was held to be an NRI and deleted the addition in respect of the assessee s bank in Singapore holding that in absence of any evidence of accrual or receipt of income in India, foreign bank accounts of NRI cannot be subjected to tax in India. .....

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is is exactly what the Tribunal has done. The Tribunal considered the case of the Revenue as well as that of the assessee and determined that the assessee was a non-resident and, therefore, the said addition was deleted. 13. In view of the fact that the Tribunal has correctly decided that the respondent/assessee was not a resident in India in the years in question, it is axiomatic that the addition of ₹ 10,51,20,000/- u/s 68 would have to be deleted because it was a transfer from the respo .....

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.165/Del/2013, ITA Nos.2606/Del/2013 & CO No.166/Del/2013 (iii) Judgement of the Hon ble Delhi High Court dated 27.5.2015 for AYs 2007-08 and 2008-09, in ITA No.715/2014, CM No.19243/2014, ITA Nos.722/2014 & 723/2014 (iv) Order of the ITAT for AYs 2007-08 and 2008-09 dated 11.4.2014 in ITA Nos.2237,3718, 3431 & 4641/Del/2013 (v) Judgement of the Hon ble Delhi High Court dated 23.9.2015 for AY 2009-10 in ITA No.741/2015. 12. The ld. DR though not leaving her ground fairly submitted th .....

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ements/orders cited by the ld. AR, we find that the common issue as mentioned above, involved in the appeals for the AYs 2006-07 and 2007- 08 are squarely covered by the judgements/orders cited by the ld. AR (supra) in favour of the assessee. The ld. DR could not controvert the factual finding of the ld.CIT(A) that the AO had not brought on record any evidence to link the money brought into India or kept in foreign accounts by the assessee have a link with any Indian defence contract payment. Th .....

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of the revenue on this issue for AY 2007-08, 2008- 09, 2009-10, 2010-11, 2011-12 and 2012-13 are dismissed. 16. Another common ground raised for the AYs 2006-07 & 2007-08 relate to the deletion of additions made by the AO on account of documents seized from Shri Suresh Gulati s residence. 17. The ld. CIT(A) vide the impugned order held as under:- 8.1 The fourth ground of appeal in AYs 2006-07 & 2007-08 are against additions of ₹ 4,82,543/- & ₹ 1 ,66,07,257/-, respectivel .....

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xpenditure/investments. Details are available in the submissions filed by Ld. AR reproduced in Para-4 above. Following the earlier appeal orders, these additions are deleted and these grounds of appeal are allowed. 18. It was submitted by the ld. AR that this issue relates to the payment made outside India from bank account in Deutsche Bank, Singapore. He relied on the judgements of the jurisdictional High Court on the very same issue in assessee s own case for the earlier assessment years 2006- .....

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is order. Hence remittances from the same accounts are also not taxable in India. Respectfully following those judgements/orders, we uphold the order of the CIT(A) on this issue also and dismiss this ground of revenue for A.Y. 2006-07 and 2007-08. 20. For AY 2007-08 the Revenue has raised a ground that the ld.CIT(A) has erred in deleting the addition of ₹ 3,44,18,350/- made by the AO on account of remittance in NRE account. 21. The ld.CIT(A) held as under:- 8.2 The sixth ground of appeal i .....

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appeals, wherein it was held that money kept in his account at Singapore is not taxable in India. Details are available in the submissions filed by Ld. AR reproduced in Para-4 above. Following the earlier appeal orders, this addition also does not survive and is deleted. This ground of appeal is allowed. 22. The ld. AR made the same submissions and relied on the same judgements/orders as for AYs 2006-07 & 2007-08 in support of this issue also. 23. We find that this issue is also squarely co .....

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ting the additions of ₹ 1,15,40,179 (AY 2008- 09) and ₹ 3,61,47,562 (AY: 2007-08) made by the AO on account of unexplained deposits in ICICI, London. 25. The ld. CIT(A) held as under:- 8.3 The seventh ground of appeal in AY 2007-08 and the fourth ground of appeal in AY 2008-09 is against addition ofRs.3,61,47,562/- & ₹ 1,15,40,179/-, respectively, being deposits in the bank account of the appellant held with ICICI Bank, London. It has been held by Hon'ble ITAT in appell .....

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e account held by in ICICI Bank London, or for that matter any other foreign bank account, cannot be taxed in India unless it can be established that the moneys are proceeds of income accruing or arising in India or deemed to have accrued or arisen in India. As there is no evidence to establish that the money kept in ICICI Bank, London has accrued or arisen from a source in India, these amounts cannot be brought to tax. I hold accordingly and delete these additions. These grounds of appeal are a .....

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wn from para 7 to para 13, we uphold the order of the CIT(A) on this issue also and dismiss the ground of revenue. 28. The common grounds for AYs 2008-09 & 2009-10 states that the ld.CIT(A) has erred in deleting the addition of ₹ 7,20,000/- made by the AO on account of deemed dividend received. 29. The facts of the case in brief are that Crown Corporation Pvt. Ltd., entered into a commercial agreement with the assessee in respect of property at Som Vihar for which initially an amount o .....

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being the amount received by the assessee from companies in which he held substantial interest. 31. The ld.CIT(A) deleted the said addition holding as under:- The view taken by the revenue is incorrect inasmuch as this is not a case of loan or advance but that of money received for consideration, i.e., security deposit against property let out. Such cases of amounts received for consideration and having commercial expediency are not covered in the purview of Section 2(22)(e). It is noted that t .....

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on rent. He placed reliance on the following case laws:- (a) CIT v. Ambassador Travels (P) Ltd. (2008) 318 ITR 376 (Del); (b) CIT vs. Creative & Printing (P) Ltd. (2009) 318 ITR 416 (Del) (c) Sunil Sethi vs. DCIT (2008) 26 SOT 95 (Del). 33. Having heard the rival submissions and perused the relevant material on record, we are in agreement with the ld.CIT(A) that the consideration in question received by the assessee is not covered by section 2(22)(e) of the Act. This common ground raised by .....

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disputed fact is that the additions in all these appeals are not based on any incriminating material found during the course of search u/s 132 consequent to which the assessments were framed u/s 153A r.w.s. 143(3), since in the Revenue s appeals the issues involved have been decided on merits in favour of the assessee, taking into consideration the status of the assessee as a non-resident Indian and the fact that the revenue could not discover any incriminating material during the course of sear .....

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ns has become academic and, therefore, this ground is dismissed as such. 38. Ground No.3 of the Cross Objections for AYs 2006-07 & 2007-08 states that the ld.CIT(A) has erred in holding that the appellant has admitted to pay tax on the amounts kept in HSBC bank account and therefore all due taxes on the said amounts along with interest thereon are to be realized from the appellant despite the fact that the ld.CIT(A) has himself deleted the addition relating to balances in HSBC account. 39. A .....

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the appellate orders. Hence this view of the ld.CIT(A) is right. There is no estoppel against law. This ground of the assessee is, therefore, allowed. 40. The common grounds raised in the Cross Objections of the assessee for AYs 2007-08, 2008-09, 2009-10 & 2011-12 states that: (i) the ld.CIT(A) has erred in stating on presumptive basis that interest on amounts outstanding in ILORA (HSBC) account, if at all, can be charged at the prevalent actual rates or alternatively at the mean rate for t .....

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known balance in the HSBC Geneva Bank Account. When the principle amount in the HSBC Geneva Bank account is itself not taxable due to the non-resident status of the assessee, then, there can t be any addition on account of interest income on the amount of deposits in the same bank account. 42. We have heard the parties and perused the relevant material on record. Since we have held that since the principle amount in the HSBC Geneva Bank account is itself not taxable due to the non-resident statu .....

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he ld.CIT(A) held as under:- 8.5 The fifth ground of appeal in AY 2009-10 relates to addition of ₹ 58,00,000/- to the taxable income of the appellant, being amount deposited by the appellant in a capital gains deposit account but not utilized within the statutory period of 3 years as required under the law. The facts are undisputed. The appellant did not utilize the amount within the statutory period of 3 years which expired on 26.10.2008. Hence the amount becomes taxable as the Proviso to .....

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