DCIT CENT. CIR. -2, MUMBAI v. Smt. PROFESSOR POONAM KUMAR, MUMBAI

ITA 5968/MUM/2006 | 2003-2004
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 596819914 RSA 2006
Assessee PAN AGPPK3252R
Bench Mumbai
Appeal Number ITA 5968/MUM/2006
Duration Of Justice 4 year(s) 2 month(s) 7 day(s)
Appellant DCIT CENT. CIR. -2, MUMBAI
Respondent Smt. PROFESSOR POONAM KUMAR, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 21-01-2011
Date Of Final Hearing 13-01-2011
Next Hearing Date 13-01-2011
Assessment Year 2003-2004
Appeal Filed On 13-11-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI B. RAMAKO TAIAH (AM) ITA NO.5968/MUM/2006 ASSESSMENT YEAR : 2003-04 DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 OLD CGO BLDG. 9 TH FLOOR M.K. ROAD MUMBAI 400 020. ..( APPELLANT ) VS. PROFESSOR POONAM KUMAR 302 PRABHU KUNJ PEDDAR ROAD MUMBAI-400 026. ..( RESPONDENT ) P.A. NO: (AGPPK 3252 R) ITA NO.6236/MUM/2006 ASSESSMENT YEAR : 2003-04 PROFESSOR POONAM KUMAR MUMBAI-400 026. ..( APPELLANT ) VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 MUMBAI 400 020. ..(RESPONDENT) DEPARTMENT BY : SH RI P.N. DEVDASAN ASSESSEE BY : DR. K. SHIVARAM AND SHR I AJAY R. SINGH O R D E R PER D.K. AGARWAL (JM). THESE CROSS APPEALS PREFERRED BY THE ASSESSEE AND THE REVENU E ARE DIRECTED AGAINST THE ORDER DATED 19.9.2006 PASSED B Y THE LD. ITA NO.5968 & 6236/M/06 A.Y:03-04 2 CIT(A) FOR THE ASSESSMENT YEAR 2003-04. BOTH THESE APP EALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIE NCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DIRECTOR IN M/S. MEGA ACE CONSULTANCY (INDIA) (P.) LTD. (MACPL) AND DERIVES INCOME FROM SALARY HOUSE PROPERTY PROFESSIONAL FEES CAP ITAL GAIN AND OTHER SOURCES. THE RETURN WAS FILED DECLARING INCOME OF RS.1 96 04 316/- . HOWEVER THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.2 15 24 580/- VIDE ORDER DATED 27.3.2006 PASSED U/S. 143(3) OF THE INCOME TAX ACT 1961 (THE ACT) AS UNDER :- 1. INCOME FROM SALARY RS.8 80 887 ADD: PERQUSITE VALUE OF BENEFITS RECEIVED AS DIRECTOR OF M/S.MACPL RS.14 45 99 RS.23 26 883 2. INCOME FROM HOUSE PROPERTY RS.4 83 916 3. INCOME FROM PROFESSION RS.5 50 000 4. CAPITAL GAIN (LOSS CARRIED FORWARD) (RS.3 363) 5. INCOME FROM OTHER SOURCES RS.1 81 80 700 GROSS TOTAL INCOME RS.2 15 41 499 LESS: DED.U/CH. VIA RS. 16 923 TOTAL INCOME RS.2 15 24 576 R/OFF TO RS.2 15 24 580 ITA NO.5968 & 6236/M/06 A.Y:03-04 3 3. ON APPEAL THE LD. CIT(A) PARTLY ALLOWED THE APPE AL. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE AND ASSESSEE BOTH ARE IN APPEAL BEFORE US. ITA NO.5968/MUM/2006 (A.Y.: 2003-04)(REVENUES APPE AL): 5. GROUND NO.(1) (I) TO (III) READ AS FOLLOWS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN :- (I) DELETING ADDITION OF RS.11 64 727/- ON ACCOUNT OF TRAVELING EXPENSES AS PERQUISITES ON SUBJECTIVE BA SIS AS THE SAME WERE INCURRED ON ACCOUNT OF PERSONAL EXPENDITURE BY THE COMPANY M/S. MEGA ACE CONSULTANC Y (I) PVT. LTD. IN WHICH THE ASSESSEE WAS A CHAIRPERS ON AND DIRECTOR. (II) ADMITTING ADDITIONAL EVIDENCE IN FORM OF TRAVE L VOUCHERS TO HOLD SUCH EXPENSES OF RS.11 64 727/- A S BUSINESS EXPENDITURE. (III) GIVING PART RELIEF FOR CREDIT CARD EXPENSES T O THE EXTENT OF RS.69 323/- ON SUBJECTIVE BASIS FOR NO CO GENT REASONS. 6. THE BRIEF FACTS OF THE ABOVE ISSUES ARE THAT IT WAS OB SERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN SALARY INCOME FROM ALPIC INVESTMENT SERVICES LTD. AS CHAIRPERSON AMOUNTING T O RS.8 97 580/-. THE ASSESSEE IS ALSO DIRECTOR IN MEGA ACE CO NSULTANCY (INDIA) (P.) LTD. (MACPL) WHEREIN SHE ALSO HOLDS 3499 80 SHARES OUT OF TOTAL SUBSCRIBED SHARES OF 450000. THERE ARE SIX OTHER PERSONS INCLUDING TWO DAUGHTERS OF THE ASSESSEE WHO HOLD 49950 SH ARES EACH AND OTHER FOUR PERSONS HOLD 30 SHARES EACH. THEREFORE THE ASSESSEE HERSELF HOLDS 77% OF THE SHARES AND HER FAMILY HOLDS 99 % OF THE SHARES IN THE ASSESSEE COMPANY. IN THIS BACKGROUND THE ASSESSI NG ITA NO.5968 & 6236/M/06 A.Y:03-04 4 OFFICER OBSERVED THAT IN THE CASE OF MACPL A FINDING HA S ALREADY BEEN GIVEN THAT THE TRAVELING EXPENSES ARE NOT IN THE NATU RE OF BUSINESS EXPENSES OF THE COMPANY. THE ASSESSEE HAS AVAILED TRAVELLI NG AND OTHER EXPENSES WHICH WERE INCURRED BY MACPL ON HER BEH ALF WHICH HAD NOTHING TO DO WITH THE BUSINESS OF MACPL HENCE THE ASSE SSING OFFICER TREATED THE SAID EXPENSES IN THE NATURE OF PERQUISITES. THE ASSESSING OFFICER AFTER EXTRACTING THE RELEVANT FINDING GIVEN I N THE CASE OF MACPL APPEARING AT PAGE 7 AND 8 OF ASSESSMENT ORDER HAS ADDED RS.11 67 777/- TO THE INCOME OF THE ASSESSEE AS PERQUISIT ES RECEIVED FROM MACPL. APART FROM THIS FOR THE SAME REASONS THE A SSESSING OFFICER HAS ALSO ADDED CREDIT CARD EXPENSES RS.1 39 323/- B EING EXPENSES REIMBURSED BY MACPL TO THE INCOME OF THE ASSESSEE . 7. ON APPEAL THE LD. CIT(A) FOLLOWING THE APPELLATE ORDER IN THE CASE OF MACPL WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO DISALLOW THE FOREIGN TRAVEL AS WELL AS DOMESTIC TRAVELLING EXPENSES IN RESPECT OF THE DIRECTOR I.E. THE APPELLANTS TOUR THE ADDITION IN SUBSTANCE HAD BEEN DELETED EXCEPT FOR CERTAIN AMOUNTS FOR WHICH NO PRO PER VOUCHERS/DETAILS/BILLS WERE SUBMITTED BY THAT COMPANY DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.11 67 777/- MADE IN THIS REGARD. WIT H REGARD TO THE REIMBURSEMENT OF CREDIT CARD EXPENSES RS.1 75 000/- THE L D. CIT(A) FOLLOWING THE APPELLATE ORDER IN THE CASE OF MACPL W HEREIN IT HAS BEEN HELD THAT THE EXPENSES AS INCURRED BY THE APPELLANT THROUGH CREDIT CARD ARE PARTLY FOR THE PURPOSE OF BUSINESS OF THAT COMPANY AND PAR T OF THE EXPENSES ARE PERSONAL IN NATURE HELD THAT THE EXPENSES WHICH HAVE BEEN HELD TO BE PER SONAL IN NATURE OF THE APPELLANT ARE TO THE TUNE OF RS.70 000 /- BEING 40% OF RS.1 75 000/- AND HENCE HE UPHELD THE ADDITION TO THE EXTENT OF RS.70 000/- AND BALANCE WAS DELETED. 8. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE OR DER OF THE ASSESSING OFFICER. ITA NO.5968 & 6236/M/06 A.Y:03-04 5 9. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE SUB MITS THAT THE TRIBUNAL IN THE CASE OF M/S. MEGA ACE CONSULTANCY (I NDIA) PVT. LTD. VS. ACIT AND VICE VERSA IN ITA NO.6237/MUM/06 AND ITA NO.5696/MUM/06 ORDER DATED 10.12.2008 FOR ASSESSMENT YE AR 2003- 04 HAS HELD THAT THE EXPENSES WERE INCURRED FOR BUSINESS P URPOSE CONFIRMED THE ORDER PASSED BY THE LD. CIT(A) IN DELET ING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. HE FURTHER SUBM ITS THAT IT CANNOT BE SAID THAT THE ASSESSEE HAD A VESTED RIGHT IN THE COMPANY IN RESPECT OF TRAVEL EXPENSES AND HENCE CANNOT BE TREATED A S PERQUISITE. HE FURTHER SUBMITS THAT THE ASSESSING OFFICER HAS NOT BROUGH T OUT ANY MATERIAL TO SHOW THAT THE FOREIGN/DOMESTIC TRAVEL WAS P ERSONAL IN NATURE AND NOT FOR THE COMPANY. RELIANCE WAS ALSO PLACE D ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN SAIPEM SPA VS. ITO (2001) 76 ITD 101 (DEL.)(SB) WHEREIN IT HAS BEEN HEL D THAT THE ASSESSEE DOES NOT HAVE VESTED RIGHT THE SAME COULD NEITHE R BE TREATED AS BENEFIT NOR AN AMENITY NOR FACILITY OR ADV ANTAGE. HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. CIT (A) BE UPHELD. 10. WITH REGARD TO THE PART RELIEF ALLOWED BY THE L D. CIT(A) ON THE CREDIT CARD EXPENSES THE LD. COUNSEL FOR THE ASSESSEE SUBMIT S THAT IN THE CASE OF MPCPL THE TRIBUNAL HAS RESTORED BACK THE MAT TER TO THE FILE OF THE ASSESSING OFFICER. HE FURTHER SUBMITS THAT SINCE THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE CO MPANY THEREFORE THE ORDER OF THE LD. CIT(A) MAY BE UPHEL D. FURTHER THERE CANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE AS S HE HAS NOT CLAIMED THE SAME AS EXPENDITURE AND LASTLY IN VIEW OF T HE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN SAIPEM SPA SUPRA THE SAID AMOUNT CANNOT BE TREATED AS PERQUISITE IN THE HANDS O F THE ASSESSEE. HE THEREFORE SUBMITS THAT ORDER PASSED BY THE LD. CIT(A ) BE UPHELD. ITA NO.5968 & 6236/M/06 A.Y:03-04 6 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIN D THAT THE ASSESSING OFFICER HAS MADE AN ADDITION ON THE FINDING RECO RDED IN THE CASE OF MAPCL THAT THE TRAVELLING EXPENSES ARE NOT IN T HE NATURE OF BUSINESS PURPOSES AND THE SAID EXPENSES WERE INCURRED FOR TH E PERSONAL BENEFIT OF THE DIRECTOR OF THE COMPANY MRS. PO ONAM KUMAR AND SHOULD BE TAXED IN HER HANDS AS PERQUISITES OF THE COMPANY. HOWEVER WE FIND THE TRIBUNAL IN THE CASE OF MAPCL SUPR A IN THE APPEAL FILED BY THE REVENUE AGAINST THE DELETION OF ADDITION OF TRAVELLING EXPENSES BY THE LD. CIT(A) HAS HELD THAT T HE EXPENDITURE HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PUR POSE OF BUSINESS OF THE ASSESSEE COMPANY AND ACCORDINGLY THE LD. CIT(A) WA S JUSTIFIED IN DELETING THE DISALLOWANCE. SINCE THE TRIBUNAL HAS TREATED THE TRAVELLING EXPENSES HAVING BEEN INCURRED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE COMPANY THEREFORE WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE A DDITION MADE BY THE ASSESSING OFFICER. THE GROUNDS NO.(I) AND (II) TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 12. WITH REGARD TO THE PART RELIEF ALLOWED BY THE L D. CIT(A) IN RESPECT OF CREDIT CARD EXPENSES WE FIND THAT IN THE CASE OF MACPL THE TRIBUNAL HAS RESTORED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF VERIFICATION THEREFORE FOLLOWING THE SAME VIEW WE RESTORE BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE SAME AFRESH BY A SPEAKING ORDER IN THE LIGH T OF THE DIRECTION OF THE TRIBUNAL IN THE CASE OF MACPL AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. THE GROUND NO.(III) TAKEN BY THE REVENUE IS THEREFO RE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.5968 & 6236/M/06 A.Y:03-04 7 13. GROUND NO.IV IS AGAINST THE DELETION OF ADDITION OF RS.4 20 000/- ON ACCOUNT OF FAIR MARKET RENT OF KHANDALA PROPERTY. 14. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS O BSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE OWNS A BUNGALOW AT PRIME LOCATION AT KHANDALA. THE BUNGALOW IS POSH WITH SWIMMING POOL AND ITS COST HAS BEEN SHOWN AT RS.59 41 650/-. THIS BUNGALOW WAS GI VEN ON A YEARLY RENT OF RS.1 20 000/- TO MEGADI SERVICES (P.) LTD. ANOTHER COMPANY IN WHICH THE ASSESSEE HAS CONTROLLING INTEREST. THE ASSESSING OFFICER AFTER CONSIDERING THAT THE RENT IS NOT COMMENSURA TE WITH THE COST OF BUNGALOW AND TAKING INTO ACCOUNT THE LAVISHNESS OF BUNGALOW AND THE CONTROLLING INTEREST OF THE ASSESSEE ESTIMATED THE ANNUAL LETTING VALUE (ALV) OF THE BUNGALOW AT RS.7 20 000/- PER ANNUM BEING 12% ON COST OF BUNGALOW AND AFTER ALLOWING MUNICIPAL TAXES AND DEDUCTION U/S.24 ASSESSED INCOME FROM HOUSE PROPERTY AT RS.4 83 916/- IN THE HANDS OF THE ASSESSEE. ON APPEAL TH E LD. CIT(A) IN THE ABSENCE OF ANY BASIS OF TAKING ALV @ 12% OF THE COST OF THE BUNGALOW AND ANY COMPARABLE CASE SHOWING HIGHER ALV IN THE SAME VICINITY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING THE RENTAL VALUE OF BUNGALOW AT RS.7 20 000/- AND ACCORDIN GLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 15. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FO R THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . 16. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE SU BMITS THAT ALV OF THE PROPERTY HAS TO BE DETERMINED AS PER ANNUA L RENT OR FAIR RENT WHICHEVER IS HIGHER. FAIR RENT CANNOT BE MORE T HAN THE STANDARD ITA NO.5968 & 6236/M/06 A.Y:03-04 8 RENT. IN CASE THE PROPERTY IS EXEMPTED FROM PROVISION S OF RENT CONTROL ACT FAIR RENT IS TO BE DETERMINED AS PER MUNI CIPAL RATABLE VALUE. AT THIS STAGE THE LD. COUNSEL FOR THE ASSESSEE H AS ALSO REFERRED TO THE ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF LONAVALA MUNICIPAL COUNCIL CERTIFICATE WHEREIN THE ANNUAL VALU E HAS BEEN MENTIONED AT RS.3 642/- OF THE SAME PROPERTY. THE RE LIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS :- 1. DCIT VS. RECLAMATION REALTY INDIA PVT. LTD. AND OTHERS ITA NO.1411/M/2007 AND OTHERS ORDER DATED 26.11.2010 FOR THE ASSESSMENT YEAR 2004-05 AND 2. ITO VS. SHRI GAUTAM KUMAR C. MEHTA ITA NO.1097/M/06 ORDER DATED 28.10.2010 FOR THE ASSESSMENT YEAR 2001-02. HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. C IT(A) BE UPHELD. 17. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVA L PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THERE IS NO DISPUTE THAT THE PROPERTY IS ASSESSED TO TAX BY MUNICIPAL COUNCIL OF LONAVALA. IN THE CASE OF RECLAMATION REALTY INDIA PVT . LTD. AND OTHERS SUPRA THE TRIBUNAL AFTER RELYING ON THE RATIO OF TH E DECISION IN CIT VS. J.K. INVESTORS (BOM.) LTD. 248 ITR 723 (BOM.) HELD TH AT THE ANNUAL VALUE ADOPTED BY THE MUNICIPAL AUTHORITES IN RESPECT O F THE PROPERTY SHOULD BE THE DETERMINING FACTOR FOR APPLYING THE PR OVISIONS OF SECTION 23(1)(A) OF THE ACT. IT HAS BEEN FURTHER HELD THAT SI NCE THE RENT RECEIVED BY THE ASSESSEE WAS MORE THAN THE SUM FOR WHICH TH E PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEA R TO YEAR THE ACTUAL RENT RECEIVED SHOULD BE THE ANNUAL VALUE OF THE PROPERTY UNDER SECTION 23(1)(B) OF THE ACT. IT HAS BEEN FURTHER HELD THAT NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT /RENT RECEIVE D IN ADVANCE ITA NO.5968 & 6236/M/06 A.Y:03-04 9 SHOULD NOT BE ADDED TO THE SAME IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF J.K. INVESTORS BOMBAY LTD. SUPRA. THE SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN TH E CASE OF SHRI GAUTAM KUMAR C. MEHTA SUPRA. IN THE ABSENCE OF ANY DI STINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFUL LY FOLLOWING THE CONSISTENT VIEWS OF THE TRIBUNAL HOLD THAT THE ASSESSING OF FICER WAS NOT JUSTIFIED IN TAKING THE ALV OF THE PROPERTY AT RS .7.20 LACS AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE SAME. THE GROUND TAKEN BY THE REVENUE IS THEREFORE REJECTED. 18. GROUND NO.(V) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE TAXABILITY OF KEYMAN INSURANE POLICY SHALL ARISE ONLY AT THE TIME OF ASSIGNMENT ON THE SURRENDER VALUE OF THE POLICY AND THE SUM RECEIVED ON MATURITY OF SUCH POLICY SHALL NOT BE TAXABLE AS THERE WAS NO EMPLOYER EMPLOYEE RELATION SHIP THEREBY IGNORING THE PROVISIONS OF SECTION 10(10D) OF THE ACT READ WITH SECTION 56(IV) OF THE ACT WHICH TAXES SUCH INCOME AS INCOME FROM OTHER SOURCES. 19. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS OBSERV ED BY THE ASSESSING OFFICER THAT THE COMPANY M/S. ALPIC FINANCE LTD. W HERE THE ASSESSEE WAS DIRECTOR HAD TAKEN INSURANCE POLICY KNOWN AS KE YMAN INSURANCE POLICY IN THE NAME OF ASSESSEE. THE INSURANCE PRE MIUM PAID IN RESPECT OF KEYMAN INSURANCE POLICY WAS CLAIMED AS D EDUCTION BY THE AFORESAID COMPANY UNDER SECTION 37 OF INCOME TAX ACT. THE TOTAL NUMBER OF SUCH POLICIES TAKEN IN FAVOUR OF ASSESSEE WERE FOUR IN NUMBER HAVING SUM ASSURED OF RS.50.00 LACS EACH IN SUCH POLI CIES. LATER ON THE ASSESSEE RESIGNED FROM M/S. ALPIC FINANCE LTD. AND THE POLICIES TAKEN AS KEYMAN INSURANCE POLICY WERE GOT ASSIGNED IN FAVOUR OF ASSESSEE IN DECEMBER 2002. THE SURRENDER VALUE OF TH ESE POLICIES ITA NO.5968 & 6236/M/06 A.Y:03-04 10 WHEN GOT ASSIGNED TO THE ASSESSEE WERE OFFERED FOR TAXATI ON BY THE ASSESSEE IN THE YEAR UNDER APPEAL AND THE ASSESSEE HAD PAID TAXES THEREON. THE SURRENDER VALUE OF THESE POLICIES AS OFFER ED FOR TAXATION BY THE ASSESSEE WAS RS.1 75 50 000/-. THESE POLICIES IN NORM AL COURSE WERE TO MATURE IN THE YEAR 2006. THE ASSESSING OFFICER WITHOUT MAKING ANY ADDITION IN THIS REGARD FOR THE YEAR UNDE R CONSIDERATION HAS TAKEN THE STAND THAT IT WAS INCORRECT ON THE PART OF THE ASSESSEE TO OFFER THE SURRENDER VALUE OF THESE POLICIES FOR TAXATIO N IN THE YEAR UNDER APPEAL AND THESE ARE REQUIRED TO BE TAXED IN T HE YEAR OF THEIR MATURITY I.E. IN THE YEAR 2006 RELEVANT TO ASSESSMENT YEAR 2006-07. 20. ON APPEAL THE LD. CIT(A) OBSERVED FROM THE LET TER OF LIC WHEREIN THE SURRENDER VALUE OF THESE INSURANCE POLICIES A T THE TIME OF ASSIGNMENT WAS SHOWN AT RS .2 01 63 700/- WHEREAS THE ASSESSEE HAD SHOWN THE SAME AT RS.1 75 50 000/- THEREFORE ACCORDING TO THE LD. CIT(A) THE APPELLANT HAD UNDER-STATED THE SURRENDER VALUE OF THESE POLICIES BY RS.26 13 200/- AND HENCE HE ISSUED A NOTICE FOR ENHANCEMENT AND IN RESPONSE THERETO THE ASSESSEE WHILE EXP LAINING THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE ACCEPTED THE ENHANCEMENT PROPOSED BY THE LD. CIT(A). THE LD. CIT(A) WHILE ACCEPTING THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE ENHANCED THE INCOME OF THE ASSESSEE BY RS.26 13 200/- AND FURTHER HELD THAT THE SURRENDER VALUE OF THE POLICIES ( FOUR IN NOS.) WOULD BE TAXABLE IN THE YEAR UNDER APPEAL AND NOT IN THE YEA R OF MATURITY I.E. ASSESSMENT YEAR 2006-07 AS OBSERVED BY THE ASSESSING OFFICER. 21. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE O RDER OF THE ASSESSING OFFICER. ITA NO.5968 & 6236/M/06 A.Y:03-04 11 22. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE W HILE RELYING ON THE ORDER OF THE LD. CIT(A) AND THE CBDT CIRCULAR NO.762 DATED 18.2.1998 FURTHER SUBMITS THAT AFTER THE ASSIGNMENT TH E KEYMAN INSURANCE POLICY BECOMES NORMAL LIC POLICY THEREFORE O N MATURITY THE SAME IS EXEMPTED FROM TAXATION AND PROVISION OF SE C. 2(24) IS NOT APPLICABLE. HE FURTHER SUBMITS THAT THE CIRCULAR IS BIND ING ON THE DEPARTMENT VIDE UCO BANK VS. CIT (1999) 237 ITR 889( SC) AT PAGE 901. HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 23. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVA L PARTIES AND PERUSING THE MATERIAL ON RECORD WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE LD . CIT(A) HAS ENHANCED THE INCOME OF THE ASSESSEE BY RS.26 13 200/- THE REFORE THERE SHOULD NOT BE ANY GRIEVANCE TO THE REVENUE. TH IS BEING SO AND IN THE ABSENCE OF ANY MATERIAL TO SHOW AS TO HOW THE PR OVISION OF SECTION 10(10D) R.W.S. 56(IV) ARE APPLICABLE IN THE CASE OF THE ASSESSEE AFTER RESIGNATION FROM ALPIC FINANCE LTD. AND THE POLI CY TAKEN AS KEYMAN INSURANCE POLICY WHICH WERE GOT ASSIGNED IN THE FA VOUR OF THE ASSESSEE IN DECEMBER 2002 WE ARE OF THE VIEW THAT THE GR OUND TAKEN BY THE REVENUE IS DEVOID OF ANY MERIT AND ACCORDINGLY THE SAME IS REJECTED. 24. GROUND NO. 2 AND 3 ARE GENERAL IN NATURE AND IN THE ABSENCE OF ANY SPECIFIC PLEA THE SAME ARE THEREFORE REJECTED. ITA NO.6236/M/2006 (A.Y.: 2003-04) (ASSESSEE'S A PPEAL):- 25. GROUND NO.1 READS AS UNDER :- ITA NO.5968 & 6236/M/06 A.Y:03-04 12 1. OBJECTION AGAINST DISALLOWANCE OF RS .70 000/- BEING THE REIMBURSEMENT OF CREDIT CARD EXPENSES INCURRED FOR THE PROMOTION OF BUSINESS OF THE COMPANY BY DIRECTO R TO BE TREATED AS PERSONAL EXPENSES OF THE DIRECTOR. 26. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF OUR FINDI NG RECORDED IN REVENUES APPEAL IN PARA -12 OF THIS ORDER THE GROUN D TAKEN BY THE ASSESSEE IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICE R WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF OUR DIRECTION G IVEN IN THE SAID PARA AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 27. GROUND NO.2 READS AS UNDER :- 2. OBJECTION AGAINST THE TREATMENT OF SUM OF RS.1 38 896/- INCURRED FOR GIFTING A KANGAN ITEM AS NON- BUSINESS EXPENDITURE AND NOT ALLOWING THE SAME AS BUSINESS PROMOTION EXPENDITURE. 28. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE ASSE SSING OFFICER IN VIEW OF THE ORDER PASSED IN MACPL SUPRA ADDED THE VALUE OF GOLD ARTICLE AMOUNTING TO RS.1 38 896/- AS PERQUISITE VALUE IN THE HANDS OF THE ASSESSEE. ON APPEAL THE LD. CIT(A) TREATING THE SA ME AS PERSONAL EXPENDITURE OF THE DIRECTOR CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER. 29. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT SINCE THE SAID EXPENSES HAVE BEEN DISALLOWED IN THE CASE OF MACPL THEREFORE THE SAME ADDITION MADE IN THE HAND S OF THE ASSESSEE WILL AMOUNT TO DOUBLE ADDITION AND THEREFORE THE SAME MAY BE DELETED. ITA NO.5968 & 6236/M/06 A.Y:03-04 13 30. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER O F THE ASSESSING OFFICER AND THE LD. CIT(A) . 31. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE PURCHASE OF KANGAN OF 22 CARAT AMOUNTING TO RS.1 38 896/- HAS BEEN TREATED AS P ERSONAL EXPENDITURE IN THE HANDS OF MACPL THEREFORE IN THE ABSENCE OF ANY OTHER SUPPORTING MATERIAL PLACED ON RECORD BY THE REVE NUE THE ADDITION OF THE SAME IN THE HANDS OF THE ASSESSEE AMOUNTS TO DOUBL E ADDITION AND ACCORDINGLY THE SAME IS DELETED. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 32. IN THE RESULT BOTH THE APPEALS STAND PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.1.2011. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 21.1.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.