TMI Blog2017 (6) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) on this issue and direct the AO to delete the addition. - Decided in favour of assessee Disallowance of mould repairs and maintenance - Held that:- The assessee has produced copies of invoices/bills of the various amounts debited to the head ‘mould repair and maintenance’ and it is evident that most of the bills pertain to welding charges. The amounts paid towards welding charges range between ₹ 3000/- and ₹ 12,000/-. The assessee has also produced a copy of the ‘Moulds’ ledger account under fixed assets which shows purchase of ₹ 1,08,000/- against Bill No. 1264 on 15th of June 2004 which has been duly capitalised by the assessee. The assessee has also filed copies of assessment orders for assessment years 2013 – 14 and 2012 – 13 passed under section 143 (3) and has submitted that no such disallowance was made in these respective assessment years. Thus this addition also needs to be deleted as the assessee has been able to demonstrate that these expenses were essentially of revenue in nature and pertained to day to day repairs of the mould and not in the nature of capital expenditure as contended by the Department. - Decided in favour of assessee - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n established. The Assessing Officer proceeded to add back this amount of ₹ 62,91,279 to the income of the assessee u/s 68 of the Income Tax Act, 1961 (hereinafter called the Act ). 2.1 Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the assessee s appeal and now, the assessee has approached the ITAT and has raised the following grounds of appeal:- 1 (i) That the learned CIT (Appeals) is riot justified both on facts and in law in confirming the addition as made by learned Assessing Officer of ₹ 62,91,279/- under s.68 of Income Tax Act 1961. (ii) That the learned CIT (Appeals) is not justified on facts and in law in treating the maturity proceeds of India Millennium Deposit amounting to ₹ 62,91,279/- as unexplained and confirming the addition of the same. (iii) That the addition of ₹ 62,91,279/- being the maturity proceeds of India Millennium Deposit (i.e. amount of deposit and interest thereupon) is not justified both on facts and in law. (iv) That the addition of ₹ 62,91,279/- is without any basis and reasoning and therefore not justified both on facts and in law. (v) That the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. It was submitted that the identity of the donor was proved by providing copy of the passport of the donor along with affidavit. It was submitted that the creditworthiness of the donor was proved from the fact that the donor had acquired the certificates long back and had gifted the certificates only at a later date. It was also submitted that the Assessing Officer had ignored the documentary evidence in form of certificates from Abu Dhabi Bank and the State Bank of India. Ld. AR also drew the attention of the Bench to the following documents available in the Paper Book-I:- i) Copy of passport of the donor (pages 8-38) ii) Affidavit of the donor (pages 29-33) iii) Direct reply by the donor to the Assessing Officer through fax (page 34) iv) Certificate from bank (page 45) 3.1 Ld. Authorised Representative submitted that in view of the evidences submitted before the lower authorities, the genuineness of the gift was amply proved. 3.2 On the second ground relating to disallowance of mould repairs and maintenance expenses, it was submitted that the bills pertained to repairs only. It was also submitted that mould repairs were allowed as an expense item in earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gift, his creditworthiness and genuineness. failed to provide reason for foreclosure and premature encashment of the Bonds failed to provide evidence regarding relationship or circumstances in which the gift was made was not the blood relative of the donor failed to furnish a gift deed failed to file confirmatory letter or correspondence confirming the gifts. 5.3 The Ld. CIT (Appeals) has noted that the assessee had filed an affidavit of Sh. Subash Chand and also a copy of his passport. The Ld. CIT (Appeals) in the impugned order accepted that the identity of the donor may be taken as established. However, he further noted that there was nothing on record to suggest the creditworthiness of the donor, the relationship of the donor with the donee, that the gift was out of natural love and affection, that the donor knew the assessee since a long time, that there was an occasion to give the gift, that there was any quid pro quo on part of the assessee, that the donor had given any other gifts to the assessee on any other occasion and that the donor was a longstanding friend of the assessee. The Ld. CIT (Appeals) has further noted that the assessee was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the assessee to prove the genuineness of the gift is discharged. Now the burden shifts on the Department to show material that the gift made was bogus and ingenuine. No material had been brought on record to prove this except raising suspicion that the donor had no permanent source of income. The suspicion howsoever strong it may be cannot be the basis of rejection of assessee s claim unless it is supported by material on record. It is worthy to note that the identity of the donor, the genuineness of the gift and the capacity of the donor is provided by the assessee. Simply because there is suspicion about the source of income, the evidence cannot be discarded. In our view, we are of the opinion that the evidence provided by the assessee prove the genuineness of the gift and the burden which lay upon the assessee has been discharged . 5.5 In CIT versus Ms. Mayawati reported in 243 CTR (Del) 9, the Hon ble High Court of Delhi held that since all the donors who had made gifts to the assessee had appeared before the Department and submitted affidavits on oath confirming the gifts made by them, citing their old relations with the assessee and proved their capacity to make gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 69 of the Act. 5.9 It is seen in the present case that the main thrust of the Department is on the fact that the assessee could not produce the donor, the alleged donor was not a family member of the assessee, the assessee had not given any similar gift to the donor, there was no special occasion to give the gift and that it was beyond comprehension and human probability that a person would gift an amount of ₹ 62 lakhs to even a friend. Thus, the entire case of the Department is apparently built on suspicion only. The ITAT Calcutta Bench in Smt. Bhagwati Devi versus ITO reported in 47 ITD 58, while examining the issue of genuineness of a gift held, ..the AAC did not decide the issue with an open mind and was perhaps biased that the assessee, a lady, residing in India, could receive a gift of ₹ 1 lakh from a foreign resident out of natural love and affection and also without there being any evidence of social interaction between donor and donee namely, the assessee. It could not be understood as to how and why it was necessary for the donor and the assessee to prove the social interaction between them or for that matter to prove natural love and affection by don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit has not even been considered by the Ld. CIT (A). Further, the donor has responded directly to the Assessing Officer by sending his confirmation of the transaction through Fax on 23/12/2007 which the Department has not disputed. Further, Abu Dhabi Commercial Bank as well as the SBI NRI Branch both have confirmed that the transaction was through its banking channels. It is also undisputed that the India Millenium Deposits Bonds were in the name of the donor. The Ld. CIT (A) has also mentioned that the donor was not produced either before the AO or before him but he has also accepted the fact that the assessee had offered recording of statement through Skype/video conferencing which was refused by the Ld. CIT (A). In our considered opinion, since, the donor is an NRI, it may be practically impossible for him to travel to India for the recording of a statement and the assessee cannot be made to suffer on that account. The donor has referred in his affidavit to the help extended to the donor s family in his childhood by the father of the donee as a reason for the gift but the Ld. CIT (A) has confirmed the addition on the footing that there was neither any occasion for the gift ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
