TMI Blog2019 (11) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact that assessee is not an employee of the two companies namely, M/s. Rolls Print Co. Pvt. Ltd. and M/s. Rolls Print Graphics Pvt. Ltd. which finding of fact has not been challenged by the department before us and since the amounts taken has been admitted by the assessee as given by these companies as loan, the question of this amount falling in the ken of section 17(3)(ii) does not arise Assessee in subsequent year has repaid the said loan to both these companies. Therefore, the amount which the assessee had taken as loan from these two companies does not attract section 17(3)(ii) of the Act and the CIT(A) s action on this score is upheld. Loan taken from the M/s. XPRT Engineered Packaging Solutions Pvt. Ltd., we note that assessee was a whole time director of the said company and has drawn salary from it. Therefore, once the assessee had drawn interest free loan from the said company where he was employed, what is chargeable to tax is only the perquisite value computed in the manner prescribed in Rule 3(7)(i) of the Rules, which is assessable under the head salary . We note that in the aforesaid scenario, the CIT(A) has directed the AO to assess/compute the perquisite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and since the purchase of land could not materialize, the amount was deposited back in its bank account. The AO had reproduced the following explanation submitted by the assessee as under: During the captioned Financial Year, the assessee deposited certain amount of money in his Bank account from past savings. The detail of cash withdrawals and deposits for the current financial year and prior two financial years are furnished as Anx. 1. As can be seen from Anx 1, the cash deposits have been made by the assessee from the cash in hand resulting from past savings and cash withdrawals during the captioned financial year. The cash deposits and withdrawals are duly supported by bank statements for the assessee furnished as Anx 2. 4. However, the AO was not satisfied with the explanation given (supra) by the assessee and according to him, the cash deposits remain unsubstantiated by the assessee by filing neither any evidence nor the wealth tax return in respect of the source of cash deposit of ₹ 60,18,000/- and ₹ 10,98,000/-. So, he was pleased to add ₹ 71,16,000/- u/s. 68 of the Income-tax Act, 1961 (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries in the bank statements, I find that the entries are recorded in the disclosed bank accounts of the assessee which showed that sufficient cash withdrawals were made by the assessee from his bank account to cover the cash deposit. This finding of fact made by the AO after examination of the cash flow statement for the year under consideration as also for the earlier two years after cross verifying it with the entries in the bank statement could not be dislodged by the departmental representative before us. In such a scenario, we are inclined to uphold the action of the Ld. CIT(A) and dismiss the ground of appeal of the revenue. 6. Ground no.2 is against the action of the Ld. CIT(A) in deleting the disallowance made by the AO u/s. 17(3)(ii) of the Act at ₹ 1,65,51,054/-. 7. Brief facts of the case as noted by the AO are that the assessee had shown outstanding loan balance from three companies which according to AO are from companies in which assessee is an employee i.e. director namely in (i) M/s. Rolls Print Co. Pvt. Ltd. ₹ 62,00,449/- (ii) M/s. Rolls Print Graphics Pvt. Ltd. ₹ 2,77,820/- and (iii) M/s. X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to AO, in view of the discrepancy in the audited balance sheet disclosures and written confirmations provided it was noticed by him that these are payments made to the assessee which are not substantiated as loan . The AO asked the assessee to explain as to why the receipts should not come under the purview of provisions of section 17(3) of the Act. Pursuant to the query of AO, the assessee replied that he is a non-executive director of the three companies namely, M/s. Rolls Print Co. Pvt. Ltd., (ii) M/s. Rolls Print Graphics Pvt Ltd. and (iii) M/s. XPRT Engineered Packaging Solutions Pvt Ltd., which fact can be taken note from the ROC filings of the said companies. And it was submitted by the assessee that he is neither a whole time director nor does he draws any salary from the above companies and, therefore, is not an employee of the said companies. It was also argued that the interest free loan or concessional loan given to assessee is not covered u/s. 17(3) of the Act and, therefore it was contented by the assessee that since he has taken loan from these legal entities, it is a liability and cannot be termed as profits in lieu of salary. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assess perquisite value in the manner prescribed in Rule 3(7)(i) in relation to loan received from XPRT Engineered Packaging Solutions Pvt. Ltd. As regards the loans received from Rolls Print Co. Pvt. Ltd and Rolls Print Graphics Pvt. Ltd no income shall be assessed since the loans received from these two Companies are not chargeable to tax as assessee's income under any of the taxing provisions of the Act nor perquisite value in terms of Rule 3(7)(i) is assessable in the hands of the assessee. Ground Nos. 3 to 7 are therefore treated as partly allowed. 9. We note that the Ld. CIT(A) has made a finding of fact that assessee was not an employee of two companies viz., M/s. Rolls Print co. Pvt. Ltd. and M/s. Rolls Print Graphics Pvt. Ltd. and, therefore, section 17(3)(ii) of the Act could not be applicable which finding of fact gets crystallized since Revenue has not assailed this factual finding of the Ld. CIT(A). Section 17(3)(ii) of the Act reads as under: (3) profits in lieu of salary includes (ii) any payment (other than any payment referred to in clause (10) [clause (10A) [clause (10B), clause (11), [clause (12), [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the action of the Ld. CIT(A) in directing the AO to assess the loss of ₹ 81,50,871/- as business loss derived from non-speculation transactions. 13. At the time of hearing the Ld. DR pointed out to us that the aforesaid grounds have been withdrawn by the department, so, we are inclined to dismiss these grounds of appeal raised by the revenue. Nevertheless, on merits, also we do not find any merit in the appeal of the Revenue. We note that the AO on a mistaken belief held that assessee had filed the return of income belatedly, he disallowed the loss claimed by the assessee as well as he was of the view that the loss claimed is from speculative transaction. However, the Ld. CIT(A) has recorded a finding that since tax audit was conducted in the assessee s case, the date of filing of return of income was 30th September and since the assessee had filed the return of income on 28th September the return of income was not belatedly filed; and he also found that the loss could not be qualified as Speculative, because it was incurred by the assessee in the trading conducted in derivatives and since the derivative trading was carried out throug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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