9911796707
TMI Blog2012 (6) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 9,75,668, on account of interest earned on bank deposits made by the appellant-company (out of share capital, share application money, secured and unsecured loans meant for upgradation and renovation of hotel project) as margin money for obtaining bank guarantees/letter of credits for import of capital goods, for the purpose of renovation and upgradation of Hotel Indraprastha (a unit of appellant) and which was credited to the capital expenditure incurred by the company for substantial renovation/ upgradation of the hotel unit. The above actions being misconceived, erroneous and illegal must be quashed with directions for appropriate relief. 2. That the appellant craves leave to reserve itself to add, delete, amend and forgo any ground of appeal at or before the time of hear-ing." The assessee is a company incorporated on August 23, 2001 and was engaged in the business of providing hotel services under the disinvestment scheme of Government of India. The original name of the hotel was Ashoka Yatri Niwas and later on the name was changed to Indraprastha and both were under the ownership of ITDC. By the scheme of demerger the said hotel was demerged into Hotels Queen Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same was again credited in the same account of the appellant on June 1, 2005. It was submitted that these details were submitted before the Assessing Officer vide letter dated September 8, 2008, but the Assessing Officer did not make any reference to the said letter in the assessment order passed by him which is dated December 26, 2008. It was submitted that permanent account number of both companies were submitted before the Assessing Officer along with the letter dated September 8, 2008. It was further submitted that the Assessing Officer had made reference vide letter dated April 22, 2009 to the concerned Assessing Officer having jurisdiction over UCPL, i.e., Deputy CIT, Circle 12 and OLPL, i.e., ITO 13(4) and copies of these letters were submitted. It was further submitted that the assessee has obtained print out of company master details as downloaded from Registrar of Companies website which was also filed with the Assessing Officer along with the said letter. In this view of the situation, reliance was placed on the following decisions to contend that addition of Rs. 50 lakhs was not warranted:- (i) CIT v. Dwarkadhish Investment P. Ltd. [2011] 330 ITR 298 (Delhi); and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to financial crisis and, therefore, those companies are not co-operating and providing any information and, on the request of the assessee-company.it has been stated that they have been advised not to submit any information unless directly called for from the Assessing Officer, It was further submitted that both these parties are incorporated bodies and are registered with Registrar of Companies having independent identity where all the details including their annual accounts, list of shareholders and directors, registered office address, etc. are available. Print outs showing details of the said companies taken from the website of Registrar of Companies are enclosed. In case any information is desired the same may be procured directly from the Registrar of Companies or the share applicant companies at the cost of the assessee as the said applicants are not giving any confirmation to the assessee. Thereafter, reference was made to the judicial pronouncements to say that once identity is proved, the assessee has discharged the onus to prove the genuineness of the share application money. He further invited our attention towards the copy obtained from Registrar of Companies reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from both these parties and other particulars asked for by the Assessing Officer, even the initial burden was not discharged by the assessee. He submitted that the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction ; therefore, the learned Commissioner of Income-tax (Appeals) has rightly upheld the addition and his order should be upheld. We have carefully considered the rival submissions in the light of the material placed before us. It is the contention of the learned authorised representative that by placing the aforementioned evidence on record, the assessee has discharged the initial onus and thereafter it was the obligation of the Revenue to bring on record the material on the basis of which it can be said that the aforementioned amount of Rs. 50 lakhs was the income of the assessee from undisclosed sources. To examine such contention one has to properly appreciate the evidence on the basis of which this contention has been raised. The details of share application money were first filed by the assessee before the Assessing Officer vide letter dated December 8, 2008. After mentioning such details, the assessee stated before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to be received by the assessee which in absence of confirmation is absolutely necessary to ascertain the nature of the receipt by the assessee that whether it is truly in, the nature of share application money. In the absence of confirmation and copy of application submitted for allotment of share, the nature of money received by the assessee cannot be held to be money received as share application money. Therefore, according to the material available on record, it cannot be said that the amount claimed to have been received as share application money was in fact "share application money". If it is so, then, the said amount of Rs. 50 lakhs will be in the nature of a simple loan or any other receipt which has been credited in the books of the assessee. Therefore; the relevant credit has to be examined only in the category of ordinary loan/credit found in the books of the assessee for which the assessee is under an obligation to explain the same as per the provisions of section 68 of the Income-tax Act, 1961. If the matter is examined in the light of the aforementioned discussion, then the assessee can be said to have discharged the initial onus only if it has furnished prima f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction, there is complete absence of any such material which can prove the genuineness of the transaction. Firstly, it has not been supported by any material that the said amount was actually share application money. Secondly, there is no material placed on record to show that the said amount had come out of the bank account of the party, who has provided such money to the assessee. Thirdly, there is no material on record to show that in fact the said amount was given by the said party to the assessee as even a copy of the share application has not been filed. Fourthly, the assessee has submitted before us one additional paper book containing pages from 115 to 145 of the paper book in which the aforementioned amount of Rs. 25 lakhs each in the hands of Orchid Leafin P. Ltd. and Unit Commercial P. Ltd. has been written back as being unclaimed in'the financial year 2009-10, i.e., for the assessment year 2010-11. Copy of account of both these parties are filed at pages 144 and 145 of the paper book. The details of the amount written back as unclaimed balances is filed at page 143 wherein an aggregate sum of Rs. 2,85,56,756.92 has been written back by the assessee in respect of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en credited by the assessee in its profit and loss account and it has neither returned to those parties nor is any share allotted to them. It is difficult to comprehend that a person will deposit Rs. 25 lakhs to get some shares and for the long time neither shares are allotted nor money is refunded and the said person will not try to get either the shares or refund of money. No document whatsoever has been filed to show that any such exercise was undertaken by the creditors. So, the contention that the assessee has a strained relationship with the creditors is wholly unsupported and cannot be accepted. Keeping in view the aforementioned discussion and going through the entirety of facts and circumstances of the case, we are of the opinion that there is no infirmity in the order of the Commissioner of Income-tax (Appeals) vide which the impugned addition has been upheld. Ground No. 1 of the assessee is dismissed. Apropos Ground No. 2, it is the case of the assessee that during the year under consideration the hotel operation was stopped and renovation was going on for restart of the hotel. For the purpose of renovation the assessee had arranged the money in the shape of loans from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made before the Assessing Officer and the Commissioner of Income-tax (Appeals), it was vehemently pleaded by the learned authorised representative that considering the ratio laid down by the hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. v. ITO [2009] 315 ITR 255 (Delhi), the learned Commissioner of Income-tax (Appeals) has wrongly upheld the addition and the addition deserves to be deleted. On the other hand, relying upon the order of the Assessing Officer and the Commissioner of Income-tax (Appeals) it was pleaded by the learned Departmental representative that the addition has rightly been upheld and this ground of the assessee should be dismissed. We have carefully considered the rival submissions in the light of the material placed before us. We have to appreciate the facts of the present case. The assessee in the present case was running a hotel which was temporarily closed for the renovation. However, the assessee has been showing profit and loss, whatever it may be, under the head "income from business or profession" and the same has also being assessed. For the year under consideration the assessee has claimed loss as per the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was deleted following the ratio of the decision of the hon'ble Supreme Court in the case of Bokaro Steel Ltd. [1999] 236 ITR 315 (SC). The Tribunal reversed the decision of the Commissioner of Income-tax (Appeals) and it was held by the hon'ble Delhi High Court that the Tribunal has misconstrued the ratio of decision of the hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. [1997] 227 ITR 172 (SC) and according to the ratio of that decision if funds have been borrowed for setting up of a plant and if the funds are "surplus" and then, by virtue of that circumstance, they are invested in fixed deposits the income earned in the form of interest will be taxable under the head "Income from other sources" whereas in the case of Bokaro Steel Ltd. [1999] 236 ITR 315 (SC) the ratio is that if the income is earned whether by way of interest or in any other manner on funds which are otherwise inextricably linked to the setting up of plant, such income is required to be capitalised to be set off against pre-operative expenses and after analysing the facts of the case their Lordships found that the funds in the form of share capital were infused for the spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
