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TMI Blog2012 (6) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... letter for loan, name and capital account of the firm from which the withdrawals were allegedly made, proof of withdrawals from HUF out of sources from agricultural income were provided. Hence addition rightly made - Decided against assessee. - ITA No.505/Bang/2011 - - - Dated:- 11-5-2012 - P Madhavi Devi, Jason P Boaz, JJ. For Appellant: Shri Balram R Rao For Respondent: Shri Susan Thomas Jose ORDER Per: Jason P Boaz: This appeal by the assessee for Assessment Year 2007-08 is directed against the order of the Commissioner of Income Tax (Appeals)-II, Bangalore dated 27.12.2010. 2. The facts of the case, in brief, are as under : 2.1 The assessee, an individual, filed his return of income for Assessment Year 2007- 08 declaring income of Rs 1,28,330 on 9.3.2009. The return was processed under section 143(1) on 19.3.2009 and the case was taken up for scrutiny by issue of notice under section 143(2) and 142(1) of the Income Tax Act, 1961 (herein after referred as 'the Act'). The Assessing Officer noted that during the relevant period, the assessee was an MLA drawing pension, salary and other allowances from the Govt. of Karnataka. The assessee had claimed exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding the source of gift, the same also having been evidenced by the deed of gift, he ought to have deleted the addition made by the AO under s.68 of the Act. 7. Without prejudice, the additions disallowances as upheld by the CIT(A) are excessive, arbitrary and without basis and therefore, the same are required to be deleted in toto. 8. For these and other ground that may be urged at the time of hearing of the appeal, the appellant prays that the appeal may be allowed. 5.1 The grounds raised at S.Nos.1, 7 8 are general in nature and no adjudication is called for thereon. 5.2 In the grounds of appeal raised at S.Nos.2 to 5 , the assessee has challenged the learned CIT(A) s finding in not allowing exemption of expenditure for other allowances as was allowed for constituency allowance under section 10(17)(iii) or under section 10(14) of the Act and also deduction under section 57 considering that the assessee s income was assessable under section 56 as Income from other sources. 5.3 The learned counsel for the assessee submitted that the assessee being an MLA during the relevant period, the salary and other allowances received in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by him in such office even though that income is to be assessed not under the head salaries but as Income from other sources. In these circumstances, the learned Departmental Representative submitted that the assessee s grounds raised at S.Nos. 2 to 5 need to be rejected and prayed that the order of the lower authorities be upheld. 5.5 We have heard both parties, carefully perused the orders of the authorities below, the material on record and judicial decisions referred to. There is no dispute with regard to the fact that salary and other allowances received by an MLA, arising out of such position, are to be assessed to tax under the head Income from other sources as held in the case of CIT Vs. Shiv Charan Mathur reported in 306 ITR 126 (2008) (Raj) . As per the provisions of section 10(17)(i) and 10(17)(iii), the Assessing Officer allowed the assessee s claim for exemption of daily allowance of Rs. 1,19,400 under section 10(17)(i) and constituency allowance of Rs. 42,000 under section 10(17)(iii) out of a total claim of Rs. 4,37,881. The learned CIT(A) upheld the findings and action of the Assessing Officer in application of the provisions of section 10(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be allowed in the light of the judgment of the Rajasthan High Court in the case of Shiv Charan Mathur (supra). Otherwise, no exemption can be allowed as it does not fall either in the purview of section 10(14) and 10(17) of the Income Tax Act." Following the decision of the Visakhapatnam Tribunal in the case of M. Venkata Subbaiah, we have no hesitation in upholding the finding of the learned CIT(A) that the exemption under section 10(17) and 10(14) of the Act allowed by the Assessing Officer to the assessee from out of his salary and other allowances received as an MLA is in order and accordingly dismiss the ground raised by the assessee in this regard. 5.6 The assessee has also raised a ground that he be allowed deduction of various items of expenditure claimed by him under section 57(iii) of the Act from out of the salary and other allowances received by him in his status as an MLA since such income is assessable to tax under section 56 as income from other sources. After careful consideration of this claim, we are unable to agree with the assessee s contention. Our view is in keeping with the view expressed and finding rendered by the Indore Bench of the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applying the same ratio to the instant case, we uphold the learned CIT(A) s action in rejecting the assessee s claim for allowing deduction of expenditure under section 57 of the Act and accordingly dismiss the assessee s grounds raised at S.Nos. 2 to 5. 6.1 In the ground raised at S.No.6, the assessee has challenged the action of the CIT(A) in not accepting his explanation regarding the source of gift of Rs. 15 lakhs given by him to his son and in upholding the action of the Assessing Officer in treating it as an unexplained gift and consequent addition made by as unexplained cash credits under section 68. In the hearings before us, the learned Authorised Representative reiterated the claim that, sources of the gift of Rs.15 lakhs given by assessee to his son Sri B.N. Vijay Kumar was out of loan obtained from Canara Bank, withdrawals from partnership firm and agricultural income of HUF claiming that since all explanations have been furnished to the Assessing Officer and CIT(A) ought to have accepted the gift as genuine rather than treating the gift of Rs. 15 lakhs as unexplained gift and addition in the assessee s hand as unexplained cash credits under section 68 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the bank statement wherein the sanctioned loan was deposited, nature of loan, etc, could not furnish even the name of the firm capital account, etc from which withdrawals were claimed to have been made. It was also pointed out by the learned Departmental Representative that the learned CIT(A) in para 4.9 of his order noted that the existence of the HUF of the assessee was not borne by any document and that returns of income of the HUF were filed only on 5.10.2010 beyond the permissible time under section 139(4) and almost a year after the relevant assessment of the assessee for Assessment Year 2007-08 was completed on 24.12.2009. In these circumstances, the learned CIT(A) rejected the assessee s claims and upheld the finding of the Assessing Officer that the source of the alleged gift of Rs. 15 lakhs stood unexplained and was rightly brought to tax in the hands of the assessee as unexplained cash credits under section 68 of the Act. The learned Departmental Representative prayed that the assessee s ground be rejected and the findings of the lower authorities be upheld. 6.3 We have heard the arguments put forth by both parties, carefully examined the material on record and perus ..... 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