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2020 (4) TMI 841 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - as contended on behalf of the assessee that this amount was received by the assessee in the course of regular course of business - HELD THAT - As per Section 2(22)(e) the addition on account of deemed dividend is to be restricted to accumulated profits. As both sides agree to this, we direct the Assessing Officer to compute accumulated profits (possessed by M/s. Mittal Construction Real Estate Pvt. Ltd.) as per law, and restrict the addition u/s 2(22)(e) on account of deemed dividend to the extent of aforesaid accumulated profits. For the limited purpose of computation of aforesaid accumulated profits as per law, this issue is remanded to the file of the Assessing Officer, for fresh order as per law in accordance with aforesaid direction. Claim of brought forward capital loss - disallow assessee s claim of set off of brought forward capital loss on the ground that the assessee has not filed Return of Income - HELD THAT - Perusal of records shows that the assessee had filed ROI for assessment year 2009-10 in the office of ITO, Ward 19(2), New Delhi; wherein claim for long term capital loss to be carry forward has been made. Therefore, the basis on which the assessee s claim for brought forward capital loss had been rejected by the Assessing Officer is incorrect. Further, if the date of filing of ROI is not clearly visible in the stamp; it is not the fault of the assessee. The assessee does not bring its own acknowledgement stamp to be fixed on ROI; and the assessee does not himself fix the stamp. It is a stamp of Income Tax Department, and the stamp is fixed by officials of Income Tax Department. If the date of acknowledgement is not clearly visible in the ROI; it is the mistake of Revenue officials. Even when the date of receipt of ROI in Income Tax Department is not clearly visible in the acknowledgement; it is easy for Revenue officials to ascertain date of receipt from reference to records of Income Tax Department. We record our displeasure that no effort was made during appellate proceedings before Ld. CIT(A) to ascertain this date. -direct AO to allow the assessee s claim for long term capital loss unless there is evidence in records of Income Tax Department to show that the return for assessment year 2009-10 was not filed by the assessee within prescribed time limit u/s 139(1) - For this limited purpose, this issue is remanded to the file of the Assessing Officer for fresh order Addition under the head Income from House Property - properties at shop no. 4 and 5 at Kamla Nagar although not occupied by the assessee, was to be deemed to be let out - CIT(A) said assessee was to be treated as owner of the properties u/s 269 UA of Income Tax Act as the assessee had entered into the lease agreement with Sh. N.M. Mittal for a period of 30 years in respect of these properties.HELD THAT - On perusal of materials before us, we find that the lease deed between Sh. Naresh Mohan Mittal and the assessee, dated 7th January, 1993 was for a period of 4 years only, and not for 30 years as alleged by the Ld. CIT(A). Therefore, Section 269UA(2)(f) has no application to the facts of the case. Moreover, this is not a case of purchase of the properties by central government under chapter XX-C of I.T.Act; and therefore, in any case, S. 269 UA has no application to facts of this case. Thus, the Ld. CIT(A) was in error, both on facts as well as in law, in confirming the aforesaid additions of ₹ 49,000/-. In view of the foregoing, the aforesaid addition has no legs to stand, and we accordingly direct the Assessing Officer to delete this addition. Addition u/s 69 - cash deposit made in the bank accounts of minor children of the assessee - HELD THAT -Having regard to the fact that the amounts are very small and insignificant in nature; and further, that it is customary and common practice in society to make gifts to the children on ceremonial occasions such as birthdays; we direct the Assessing Officer to reconsider the matter; and to treat a reasonable amount as explained through gifts received by the minor children on ceremonial occasions such as birthdays. For this limited purpose, this issue is remanded to the file of the Assessing Officer for fresh order in accordance with our aforesaid direction. Addition u/s 50C - addition was made in respect of immovable property sold by the Assessee - it is the case of the assessee that the difference between value determined by the DVO and sale consideration as per sale deed, is less than 5% thus the assessee is entitled to benefit under 3rd proviso to Section 50C(1) - HELD THAT - In the case before us the value as per Stamp Valuation Authority is more than 105 percent of the sale consideration as per sale deed . For the purposes of third proviso to S. 50C(1) of I.T.Act; the valuation of the property by DVO has no relevance; and what is material is the valuation by Stamp Valuation Authority. When the value as per Stamp Valuation Authority is more than 105 percent of sale consideration as per sale deed; the assessee is not eligible for benefit under third proviso to S. 50C(1) of I.T.Act, even when valuation by DVO is less than 105 percent of sale consideration as per sale deed - we decline to interfere with impugned order of the Ld. CIT(A) on this issue.
Issues Involved:
1. Addition of ?18,42,000/- as deemed dividend under Section 2(22)(e) of the Income Tax Act. 2. Addition of ?50,000/- as deemed dividend under Section 2(22)(e) of the Income Tax Act. 3. Disallowance of set-off of brought forward capital loss amounting to ?3,61,646/-. 4. Addition of ?49,000/- under the head "Income from House Property". 5. Addition of ?4,60,000/- under Section 69 of the Income Tax Act. 6. Addition of ?34,00,000/- under Section 50C of the Income Tax Act. Detailed Analysis: 1. Addition of ?18,42,000/- as Deemed Dividend under Section 2(22)(e): The assessee contended that the amount received from M/s Mittal Construction & Real Estate Pvt. Ltd. was in the regular course of business. However, the assessee failed to provide evidence to support this claim. The Tribunal rejected the contention that the transaction was made in the regular course of business, thus attracting Section 2(22)(e). The Tribunal directed the Assessing Officer to compute the accumulated profits as per law and restrict the addition to the extent of these profits. 2. Addition of ?50,000/- as Deemed Dividend under Section 2(22)(e): The records showed no accumulated profit possessed by M/s Alumni Management Co. Pvt. Ltd. as of 31.03.2010. Since the addition under Section 2(22)(e) is restricted to accumulated profits, the Tribunal directed the Assessing Officer to delete the addition of ?50,000/-. 3. Disallowance of Set-off of Brought Forward Capital Loss: The Assessing Officer disallowed the claim of set-off of ?3,61,646/- on the grounds that the assessee had not filed the Return of Income for AY 2009-10. The Tribunal found that the assessee had indeed filed the return, bearing acknowledgment no. 1933002301. The Tribunal directed the Assessing Officer to allow the claim unless evidence shows the return was not filed within the prescribed time limit under Section 139(1). 4. Addition of ?49,000/- under the Head "Income from House Property": The addition was made on the grounds that properties at Shop No. 4 and 5, Kamla Nagar were deemed to be let out. The Tribunal found that the lease deed between Sh. Naresh Mohan Mittal and the assessee was for a period of 4 years and not 30 years as alleged. Therefore, Section 269UA(f) did not apply. The Tribunal directed the deletion of the addition of ?49,000/-. 5. Addition of ?4,60,000/- under Section 69: The Tribunal noted that the cash deposits in the bank accounts of the assessee's minor children were small and insignificant, likely received as gifts on ceremonial occasions. The Tribunal directed the Assessing Officer to reconsider the matter and treat a reasonable amount as explained through gifts, remanding the issue for fresh consideration. 6. Addition of ?34,00,000/- under Section 50C: The Tribunal noted that the difference between the valuation by the DVO and the sale consideration was less than 5%, but the value as per the Stamp Valuation Authority was more than 105% of the sale consideration. The Tribunal held that the third proviso to Section 50C(1) did not apply as the value by the Stamp Valuation Authority was more than 105% of the sale consideration. The Tribunal upheld the addition of ?1,83,000/- and dismissed the appeal on this ground. Conclusion: The Tribunal provided partial relief to the assessee by remanding certain issues for fresh consideration and directing the deletion of specific additions. The appeal was partly allowed for statistical purposes.
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