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TMI Blog2022 (8) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.03.2015 CIT(A)-XX, Gurgaon, order dated 13.06.2016 Assessee 2406/Del/2018 2014-15 M/s. Jayson Industries 30.12.2016 CIT(A)-XX, Gurgaon, order dated 31.01.2018 Assessee 6440/Del/2019 2012-13 M/s. Jayson Industries 30.03.2015 CIT(A)-XX, Gurgaon, order dated 29.05.2019 Assessee 9595/Del/2019 2014-15 M/s. Jayson Industries 29.03.2019 CIT(A)-XX, Gurgaon, order dated 30.09.2019 Assessee 2. All the four appeals are interconnected pertaining to same assessee and have been heard together. We shall proceed with the captioned appeals hereunder: ITA No.4446/Del/2016 (Assessment Year 2012-13) 3. The grounds of appeal raised by the assessee reads as under: "1. That on the facts and circumstances of the case and in law, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the same were personal in nature." 3.1 Ground No.1 of the appeal of the assessee concerns disallowance of Rs.3,12,600/- by invoking Section 40A(2)(b) of the Act. 3.2 It is the case of the assessee that the actions of the Revenue authorities are misconceived on facts and law. The assessee contends that both Assessing Officer and CIT(A) misdirected themselves in making disallowances on factually incorrect premise. With reference to the P&L account and the submissions made before the CIT(A) on factual position, it was contended that the Assessing Officer has compared the expenses incurred and paid to the sister concern, Jaypee Tehnoplast Pvt. Ltd., with outside party, namely, Kalsi Mould and Dyes whereas the nature of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is essentially service based, the comparison is rightly claimed to be unjustifiable. We thus find merit in the plea of the assessee for lack of sound basis for determination of 'fair market value' and consequent inapplicability of Section 40A(2)(b) in the facts of the case. We thus set aside the action of the Revenue Authorities and restore the stance of the assessee. Ground no.1 of the appeal of the assessee is allowed. 3.4 In the result, Ground No.1 of the appeal of the assessee is allowed. 4. Ground No.2 concerns addition of Rs.25,43,262 under Section 2(22)(e) of the Act. 4.1 Briefly stated, the assessee (partner firm) obtained loan from the sister concern, namely, M/s. Jaypee Technoplast Pvt. Ltd. One of the partners of the firm, Ms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT vs. Bharat Hotels Ltd., (2019) 410 ITR 417 (Del). (iii) the assessee firm in itself has neither invested its own funds in the lender company directly or through its partners nor the assessee firm is a shareholder of the lending company and thus the ratio of judgment of Hon'ble Delhi High Court in the case of CIT vs. Ankitech (P) Ltd. (2012) 340 ITR 14 (Del) and the ratio of judgment of Hon'ble ApexCourt in the case of Madhur Housing and Development Company, (2018) 401 ITR 152 (SC) shall squarely apply and thus no addition is permissible in the absence of the assessee firm being neither registered shareholder nor a beneficial shareholder in the lender company. 4.4 On careful consideration of the facts and arguments narrated above, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act on this score alone. Hence, we are not inclined to examine other limbs of arguments raised on behalf of the assessee. 4.5 In the result, Ground No.2 of the appeal of the assessee is allowed. ITA No.2406/Del/2018 (Assessment Year 2014-15) 5. As per its grounds of appeal, the assessee has challenged the addition of Rs.8,60,006/- under Section 2(22)(e) of the Act. 5.1 The facts of the issue being similar to the Ground No.2 of the appeal in ITA No.4446/Del/2015, the observations made in ITA No.4446/Del/2015 shall apply mutatis mutandis to the facts of this case. Hence, we see no justification in additions made under Section 2(22)(e) of the Act. 5.2 In the result, the appeal of the assessee is allowed. ITA Nos. 6640/Del/2019 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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