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2016 (10) TMI 894 - ITAT KOLKATA

2016 (10) TMI 894 - ITAT KOLKATA - TMI - Deemed dividend addition under section 2( 22)(e) - Held that:- A perusal of the relevant Balance- sheet of M/s. Mahanagar Properties Pvt. Limited placed by him on record shows that the amount in question paid to the assessee was shown by the said Company as advance under the head “Loans and Advances” and there is nothing to show that the amount in question was paid by the said Company to the assessee as advance against property. There is also nothing brou .....

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on 2( 22)(e) of the Act. - I.T.A. No. 1783/KOL/ 2014, I.T.A. Nos. 1784 & 1785/KOL/ 2014 - Dated:- 21-10-2016 - Shri P.M. Jagtap, Accountant Member Shri Manoj Kumar Tiwari, C.A., for the assessee Shri A. K. Singh, JCIT, D.R., for the Department ORDER These three appeals filed by the assessee are directed against three separate orders, all dated 27.06.2014 passed by the ld. Commissioner of Income Tax (Appeals)-XXXVI, Kolkata and since some of the issues involved therein are common, the same have b .....

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and confirmed by the ld. CIT( Appeals). 4. The assessee in the present case is an individual, who is engaged in carrying on legal profession. The return of income for the year under consideration, i.e. A.Y. 2004-05 was filed by him on 29. 10.2004 declaring total income of ₹ 20, 58,220/- and agricultural income of ₹ 2, 25,000/-. During the course of assessment proceedings, the claim of the assessee of agricultural income was examined by the Assessing Officer. In this regard, the expla .....

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ands of the assessee. On appeal, the ld. CIT( Appeals) upheld the action of the Assessing Officer on this issue. 5. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As agreed by the ld. representatives of both the sides, this issue is squarely covered in favour of the assessee by the decision of this Tribunal rendered in assessee s own case for A.Y. 2003-04 vide its order dated 23. 11.2007 passed in ITA No. 343/KOL/ 2006, wher .....

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e Assessing Officer to accept the claim of the assessee for agricultural income of ₹ 2, 25,000/-. Ground No. 2 is accordingly allowed. 6. In Ground No. 3, the assessee has challenged the following disallowances made by the Assessing Officer and confirmed by the ld. CIT( Appeals):- (i) ₹ 48,895/- out of car running and maintenance expenses; (ii) ₹ 27,035/- out of telephone expenses; (iii) ₹ 7, 895/- out of chamber maintenance expenses; (iv) ₹ 49, 117/- out of travel .....

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o disallowance out of these expenses was offered by the assessee in his return of income on account of personal use of vehicle. Since such personal use of the vehicle could not be ruled out, the Assessing Officer made a disallowance of ₹ 48, 895/- being 1/6t h of the motor car running and maintenance expenses and ₹ 13, 000/- being 1/7t h of the Driver s salary and bonus. Similarly a disallowance of ₹ 27, 035/- being 1/ 5t h of the telephone and Trunk- call expenses of ₹ 1 .....

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the assessee for the stay of his family. He, therefore, made a disallowance of ₹ 7, 895/- being 1/ 6t h of the Chamber maintenance expenses of ₹ 47, 370/- claimed by the assessee. A further disallowance of ₹ 49,117/- was also made by the Assessing Officer being 1/6t h of the travelling and conveyance expenses of ₹ 2, 94, 720/- claimed by the assessee on the ground that the said claim was not duly supported by the relevant documentary evidence to show that the travelling .....

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e Assessing Officer, which the assessee failed to rebut or controvert. 8. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. At the time of hearing, the ld. counsel for the assessee has not been able to rebut or controvert the findings recorded by the Assessing Officer that the claim of the assessee for the relevant expenses is not supported by documentary evidence in the form of Log Book, Call Register, bills/ vouchers, etc. Th .....

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is no justifiable reason to interfere with the same. I, therefore, uphold the impugned order of the ld. CIT( Appeals) confirming the various disallowances made by the Assessing Officer and dismiss Ground No. 3 of the assessee s appeal. 9. Now I take up the appeal of the assessee for A.Y. 2005-06 being ITA No. 1784/KOL/ 2014. Ground No. 1 raised by the assessee in this appeal is general, which does not require any specific adjudication. 10. The issue raised in Ground No. 2 relates to the disallow .....

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required him to explain as to why the said amount should not be disallowed under section 40(a)(ia). In reply, it was explained by the assessee that the amount in question was paid by him to Shri Ranjan Lal Mitra for making payments to his Juniors, Clerks and other Counsels for the services rendered in favour of the assessee. It was contended by the assessee that since the proper break-up of the amount so paid was not available, it was not practically possible to deduct tax at source. This conten .....

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cer. 12. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The ld. counsel for the assessee has submitted that the amount in question was mainly paid by the assessee to two Advocates, who have already included the said amounts in their income and paid tax thereon. He has contended that no disallowance under section 40( a)(ia) in respect of the amounts paid to these two Advocates can be made in view of the 2n d proviso to sectio .....

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or this purpose. I find merit in this contention of the ld. D.R. Accordingly, the impugned order of the ld. CIT(Appeals) on this issue is set aside and the matter is restored to the file of the Assessing Officer for deciding the same afresh after verifying the submissions made by the ld. counsel for the assessee for the first time before the Tribunal from the relevant record. Ground No. 2 is accordingly treated as allowed for statistical purposes. 13. The issue raised in Ground No. 3 of the asse .....

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a Tiwari from Mumbai to London. In this regard, the explanation offered by the assessee that his daughter Ms. Pragya Tiwari was graduated in Law from a very reputed U.K. University and had assisted him during the visits to London by working for Goodricke Group of Companies was not found acceptable by the Assessing Officer in the absence of any supporting evidence. He also noted that Ms. Pragya Tiwari was neither the employee or the Associate of the assessee and no amount of salary or professiona .....

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essee has contended that the main client of the assessee is having offices in London, he has not been able to rebut or controvert the findings recorded by the Assessing Officer that Ms. Pragya Tiwari was neither the employee nor the Associate of the assessee during the year under consideration. He has also not been able to bring any evidence on record to show that the visit of Ms. Pragya Tiwari to London had any nexus with the profession of the assessee. I, therefore, find no justifiable reason .....

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under section 143(3) was examined by the ld. CIT and on such examination, he was of the view that the amount of ₹ 6,55, 000/- received by the assessee as loan from M/ s. Mahanagar Properties Pvt. Limited clearly fell within the ambit of deemed dividend under section 2(22)(e). Since the said amount was not added by the Assessing Officer to the total income of the assessee as deemed dividend under section 2( 22)(e), he set aside the order passed by the Assessing Officer under section 143(3) .....

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y to M/s. Mahanagar Properties Pvt. Limited and the amount in question was received by him against the said transaction as advance. This explanation of the assessee was not found acceptable by the Assessing Officer. According to him, the provisions of section 2( 22)(e) were applicable to any payment and the amount in question received by the assessee as advance was covered by the said provision. He accordingly invoked the provision of section 2(22)(e) and treated the amount of ₹ 6, 55,000/ .....

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on was received by the assessee as advance from M/s. Mahanagar Properties Pvt. Limited under an agreement by which the property belonging to the assessee was agreed to be sold to the said Company. He has submitted that the sale of the said property, however, was not effected and the property belonging to the assessee was ultimately sold by the assessee to some other party in the year 2008. Relying on the decision of the Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra [ 338 ITR 5 .....

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