ACIT, Circle - 52, Kolkata, Kolkata v. Shri Tapan Kandi Mukherjee, Kolkata

ITA 812/KOL/2010 | misc
Pronouncement Date: 30-09-2010

Appeal Details

RSA Number 81223514 RSA 2010
Assessee PAN AFBPM4074J
Bench Kolkata
Appeal Number ITA 812/KOL/2010
Duration Of Justice 40 year(s) 8 month(s) 29 day(s)
Appellant ACIT, Circle - 52, Kolkata, Kolkata
Respondent Shri Tapan Kandi Mukherjee, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2010
Appeal Filed By Department
Assessment Year misc
Appeal Filed On 01-01-1970
Judgment Text
ITA NO. 812/KOL/10 & CO 64/KOL/10 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENCH- B KOLKATA () BEFORE . . SHRI D.K.TYAGI JUDICIAL MEMBER. . !'# /AND ..$ % SHRI B.K.HALDAR ACCOUNTANT MEMBER #& / I.T.A.NO.812/KOL/2010 '() '*+ / ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME- TAX CIRCLE-52 KOLKATA - '( - - VERSUS -. SHRI TAPAN KANTI MUKHERJEE PAN:AFBPM4074J [ ./ /APPELLANT] [ 0./ / RESPONDENT ] 1) 23 / CROSS OBJECTION 64 / KOL/2010 [ ARISING OUT OF ITA NO.812/KOL/2010 AY 2006-07] SHRI TAPAN KANTI MUKHERJEE PAN:AFBPM4074J - '( - - VERSUS -. ASSTT. COMMISSIONER OF INCOME- TAX CIRCLE-52 KOLKATA 1) 4 /CROSS OBJECTOR 2'5 /DEPARTMENT 2'5 6 7 / FOR THE DEPARTMENT: / SHRI PIYUSH KOLHE LD.DR 1) 4 6 7 / FOR THE CROSS OBJECTOR : / SHRI SUDHINDRA NATH NAG LD.AR 8 / ORDER . .. . . .. .$ $ $ $ % SHRI B.K.HALDAR ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(A) XXXII KOLKATA DATED 19-01-2010 FOR THE ASSESSMENT YEAR 2 006-07 AND THE CORRESPONDING CROSS OBJECTION TAKEN BY THE ASSESSEE. 2. THE APPEAL OF THE REVENUE IS LATE BY 3 DAYS FOR WHICH A CONDONATION PETITION HAS BEEN FILED. AFTER PERUSING THE SAME IMPUGNED DELAY IS CONDONED AND THE APPEAL OF THE REVENUE IS ADMITTED. ITA NO.812/KOL/2010 AY 2006-07 [BY THE REVENUE] 3. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEA L:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) WAS NOT JUSTIFIED IN EXCLUDING RS. 5 68 100/- BEING A PART OF THE LOANS AND ADVANCES OF RS.11 62 560 FROM THE PURVIEW OF SECTION 2(22)(E) OF ITA NO. 812/KOL/10 & CO 64/KOL/10 2 I.T. ACT 1961 INASMUCH AS THE METHOD ADOPTED BY HIM TO ASCERTAIN THE DATE ON WHICH THE ASSESSEE TURNED INTO A DEBTOR OF THE COMPANY FROM A CREDITOR IS FLAWED. 2. THE APPELLANT CRAVES LEAVE TO ADD TO OR MODIFY O R AFTER THE GROUND OF APPEAL AND OR ADDUCE ADDITION EVIDENC E ON OR BEFORE THE DATE OF HEARING. C.O NO.64/KOL/2010 [BY THE ASSESSEE] ARISING OUT OF ITA NO.812/KOL/2010 AY 2006-07 [BY THE REVENUE] 4. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. A.C.I.T. CIRCLE-52 KOLKATA IS NOT JUSTIFIED I N INTERPRETING THE AMOUNT TAKEN IN QUESTION TO MEAN A LOAN IN GROUNDS OF APPEAL FILED BEFORE THE INCOME T AX APPELLATE TRIBUNAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE AMOUNT RECEIVED OF RS. 11 62 560/- BY PETITIONER ON ACCOUNT OF DIRECTORS REMUNERATION AND RENT RELATIN G TO ASSESSMENT YEAR 2005-06 AND 2006-07 THE LD. D.C.1.T. CIRCLE-52 IS WRONG IN CONSIDERING AS DEEM ED DIVIDEND U/S 2(22)(E) AS PER ASSESSMENT ORDER U/S 143(3) WHICH IS BAD IN LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE INDEBTEDNESS OF THE COMPANY TOWARDS THE DIRECTOR WA S PRE-EXISTS AND PRECEDED THE EVENT OF SUCH WITHDRAWA L AND THUS THE ACCUMULATED PROFIT HAS NO ROLE IN SUCH WITHDRAWAL. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. C.I.T. APPEAL XXXIII IS NOT JUSTIFIED IN CONSID ERING THE PAYMENT OF RS. 5 94 560/- AS LOAN/ADVANCES AND QUALIFY THE SAME AS INCOME OF ASSESSEE U/S 2(22)(E) RESULTING THE DEMAND OF TAX IS BAD IN LAW. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THERE WILL BE DOUBLE TAXATION ON SAME INCOME AGAINST WHIC H THE PAYMENTS RECEIVED BY THE ASSESSEE AND SAID INCO ME ALREADY DISCLOSE IN HIS RETURN OF INCOME FILED BEFO RE THE INCOME TAX DEPARTMENT IN TWO ASSESSMENT YEAR I. E. 2005-06 AND 2006-07. 6. FOR THAT THE GROUNDS OF APPEAL AS FILED BY THE APPELLANT MAY SET ASIDE OR MODIFY BY HIGHER FORUM A ND THEREFORE THE HONOURABLE TRIBUNAL MAY CONSIDER OUR CROSS-OBJECTIONS AS BONAFIED GROUNDS AT THE TIME OF PASSING THE VALUED ORDER. ITA NO. 812/KOL/10 & CO 64/KOL/10 3 7. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD ALTE R OR AMEND ANY FURTHER GROUNDS BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 5. THE ASSESSEE IS A DIRECTOR OF M/S. IMCP [IMMUNO MEDICAL CENTRE PRIVATE ] LIMITED IN WHICH HE HOLDS 30% OF SHARES. THE AO DUR ING THE ASSESSMENT PROCEEDINGS NOTED THAT IN THE BALANCE SHEET FILED B Y THE ASSESSEE HE HAD SHOWN RS. 10 LAKHS AS INVESTMENT IN MUTUAL FUND AND RS. 10 LA KHS AS LOAN RECEIPT FROM M/S. IMCP LIMITED. AS PER AUDITED ACCOUNT OF M/S. IMCP L IMITED ENDING ON MARCH06 THE COMPANY HAD ACCUMULATED PROFIT OF RS.51 74 937/ - AS ON 1-4-05 AND THE SAME AS ON 31-3-06 WAS RS.57 16 731/-. IT WAS ALSO NOTED BY THE AO THAT THE ASSESSEE ALSO RECEIVED FURTHER AMOUNT OF RS.1 62 560/- ON VA RIOUS DATES DURING THE PREVIOUS YEAR FROM M/S. IMCP LIMITED . THE AO THEREFORE CO NSIDERED THE AMOUNT OF RS.11 62 560/- AS DEEMED DIVIDEND U/S.2(22)(E) OF T HE ACT. RELIANCE WAS PLACED BY HIM ON THE FOLLOWINGS:- A. CIT VS. M.K.SHAH 290 ITR 433(SC) B. CIT VS. P.K. ABABUKAR 259 ITR 507(MAD) C. CIT VS. M.D JINDAL 164 ITR 28(CAL) D. CIT VS. K.SRINIVASAN 59 ITR 788(MAD) 6. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A). 7. BEFORE THE LD.CIT(A) IT WAS SUBMITTED BY THE AS SESSEE THAT AS ON 1-4-05 THE AMOUNT OF RS.4 30 000/- WAS RECEIVABLE BY THE ASSES SEE FROM M/S. IMCP LIMITED . THE ASSESSEE WAS FURTHER ENTITLED TO DIRECTORS RE MUNERATION OF RS.4 80 000/- AND RENT FOR OFFICE SPACE OF RS.72 000/- FOR THE RELEV ANT PREVIOUS YEAR. IT WAS ALSO SUBMITTED THAT RS.5 00 000/- WAS RECEIVED AS .AD VANCE FOR RENOVATION AND ALTERATIONS OF OFFICE PREMISES GIVEN TO THE COMPAN Y. IT WAS CLAIMED THAT SUCH PAYMENTS CANNOT BE CONSIDERED AS LOAN AND ADVANCES. IF AT THE POINT OF TIME WHEN PAYMENT WAS MADE TO THE SHAREHOLDER THE COMPANY W AS ALREADY A DEBTOR OF THE SHAREHOLDER THE PAYMENT WOULD BE ONLY TOWARDS DISCH ARGE OF SUCH DEBT BY THE COMPANY AND THE SAME THEREFORE CANNOT BE CONSIDER ED AS ADVANCE/LOAN GIVEN BY THE COMPANY TO THE SHAREHOLDER. IT WAS FURTHER CLA IMED THAT ADVANCES HAVING BEEN MADE IN THE ORDINARY COURSE OF BUSINESS FOR BUSINES S EXPEDIENCY THE SAME WOULD ALSO NOT COME WITHIN THE AMBIT OF SECTION 2(22)(E) OF THE ACT. ITA NO. 812/KOL/10 & CO 64/KOL/10 4 8. THE LD.CIT(A) ACCEPTED THE CONTENTION OF THE AP PELLANT THAT AT THE POINT OF TIME WHEN PAYMENT WAS MADE TO THE ASSESSEE BY THE C OMPANY IF THE COMPANY WAS A DEBTOR TO THE ASSESSEE SUCH PAYMENT WOULD NOT BE A LOAN/ADVANCE TO THE ASSESSEE. HE HOWEVER WAS OF THE OPINION THAT THE ABOVE POSI TION IS REQUIRED TO BE WORKED OUT ON DAY TO DAY BASIS. ON THIS BASIS THE LD.CIT( A) WORKED OUT THE QUANTUM OF LOAN/ADVANCES GIVEN BY THE COMPANY TO THE ASSESSEE AT A FIGURE OF RS.5 94 560/- AND HELD THAT THE SAME IS ASSESSABLE AS INCOME OF T HE ASSESSEE U/S.2(22)(E) OF THE ACT. 9. AGGRIEVE THE REVENUE HAS FILED APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE SAID APPEAL. 10. BEFORE US THE LD.DR RELIED ON THE ORDER OF THE AO. 11. THE LD.AR FOR THE ASSESSEE IN ADDITION TO THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW SUBMITTED THAT THE COMPUTATION MA DE BY THE LD.CIT(A) WAS ERRONEOUS. HE REFERRED TO SCHEDULE-C WHICH IS A C OPY OF PERSONAL ACCOUNT/LEDGER ACCOUNT OF THE ASSESSEE FOR THE PERIOD 1-4-05 TO 31 -3-06 IN THE BOOKS OF M/S. IMCP LIMITED . THE QUANTUM OF MAXIMUM LOANS/ADVAN CES GIVEN BY THE COMPANY TO THE ASSESSEE HAS BEEN WORKED OUT BY HIM AT A FI GURE OF RS.4 28 000/- WHEREAS THE SAME AT THE END OF THE YEAR IE. ON 31-3-06 HAS BEEN WORKED OUT BY HIM AT A FIGURE OF RS.1 80 580/-. IT WAS FURTHER CLAIMED BY HIM THAT AS THE ADVANCES WERE MADE DURING THE ORDINARY COURSE OF BUSINESS THE SAM E COULD NOT BE CONSIDERED AS INCOME U/S.2(22)(E) OF THE ACT. RELIANCE WAS PLACE D ON THE DECISION OF THE HONBLE ITAT CHANDIGARH BENCH CHANDIGARH IN THE CA SE OF DCIT VS. LAKRA BROS [106 TTJ 250 (CHD.)]. HOWEVER WHEN ASKED TO SHOW T HE EVIDENCE ON THE BASIS OF WHICH IT IS CLAIMED THAT THE ADVANCES WERE GIVEN DU RING THE NORMAL COURSE OF BUSINESS IT WAS SUBMITTED BY HIM THAT THE SAME IS EVIDENCED FROM THE PERSONAL LOAN ACCOUNT/LEDGER ACCOUNT TO THE ASSESSEE IN THE BOOKS OF M/S. IMCP LIMITED. 12. WE HAVE HEARD THE PARTIES AND PERUSED THE R ECORD. 12.1 AS REGARDS THE REVENUES APPEAL THE REVENUE HAS FAILED TO SHOW US AS TO HOW THE FINDING OF THE LD. CIT(A) THAT THE MAXIMU M AMOUNT OF LOAN/ADVANCE OUTSTANDING AGAINST THE ASSESSEE IN THE BOOK OF M/ S. IMCP LIMITED WAS ITA NO. 812/KOL/10 & CO 64/KOL/10 5 RS.5 94 560/- IS INCORRECT. IN THIS VIEW OF THE MAT TER WE DISMISS THE APPEAL OF THE REVENUE. 12.2 AS REGARDS THE CROSS OBJECTION [NO.64/KOL/10] FILED BY THE ASSESSEE WE FIND NO MERIT IN THE SUBMISSION OF THE LD.AR FOR THE ASS ESSEE THAT RS.5 00 000/- WAS GIVEN TO THE ASSESSEE BY THE COMPANY IN THE REGULAR COURSE OF BUSINESS ON A/C OF BUSINESS EXPEDIENCY AS NO EVIDENCE IN SUPPORT OF T HE ABOVE SUBMISSION HAS BEEN BROUGHT ON RECORD. HOWEVER THE REVENUE HAS NOT DIS PUTED THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF A/C OF M/S. IMCP LIMIT ED A COPY OF WHICH WAS FILED BEFORE US AS SCHEDULE-C. THE MAXIMUM AMOUNT OF LOAN /ADVANCE OUTSTANDING HAS BEEN WORKED OUT AT RS.4 28 000/- AS ON 31-7-05. HOW EVER WE FIND THAT THE MAXIMUM AMOUNT OF LOAN/ADVANCE OUTSTANDING AGAINST THE ASSESSEE IN THE BOOKS OF M/S. IMCP LIMITED WOULD BE AS ON 4-7-05 WHICH WORK S OUT TO RS.4 74 000/-. THE DIFFERENCE BETWEEN THE FIGURES WORKED OUT BY THE L D. CIT(A) AND THAT WORKED OUT BY US IS ON A/C OF REMUNERATION AND RENT RECEIVABL E BY THE ASSESSEE FROM THE SAID COMPANY UPTO 30-6-05. THUS WE HOLD THAT AMOUNT OF RS.4 74 000/- IS ONLY ASSESSABLE IN THE HAND OF THE ASSESSEE AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. THUS THE ASSESSEE GETS A RELIEF OF RS.1 20 560/-. 13. AS A RESULT THE C.O [NO.64/KOL/10 ] OF THE ASS ESSEE IS ALLOWED IN PART. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS D ISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED.. $ 8 %9 : 9( $; % 30-09-2010 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 30- 09-2010 ! / - ! / - [ . . ] [ ..$ % ] ( D.K.TYAGI) JUDICIAL MEMBER.) ( B.K.HALDAR ACCOUNTANT MEMBER) %) DATE : 30 TH SEPT 2010 . ITA NO. 812/KOL/10 & CO 64/KOL/10 6 *PP / SR. PRIVATE SECRETARY : 8 6 0''2 <2*=- COPY OF THE ORDER FORWARDED TO:- (./ / APPELLANT ) : ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-52 KOLKATA AAYKAR BHAWAN DAKSHIN 2 GARIAHAT (S) RD. KOL-68 . ( 0.// RESPONDENT) : SHRI TAPAN KANTI MUKHERJEE C-4 REGENT APARTMENT 10 N.N DUTTA RD. KOL-40. '8( / THE CIT '8( ( )/ THE CIT(A) '5' 0'( / DR KOLKATA BENCH > ?@ / GUARD FILE 2 0'/ TRUE COPY 8(9/ BY ORDER A #B /DEPUTY REGISTRAR . ITA NO. 812/KOL/10 & CO 64/KOL/10 7 ITA NO. 812/KOL/10 & CO 64/KOL/10 8