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TMI Blog2014 (11) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... . Addition of amount as deemed dividend – Held that:- Out of the total loan amount, a sum of ₹ 17 lakhs was received by the assessee and the addition on account of deemed dividend u/s 2(22)(e) can be made in the case of the assessee only to the extent of ₹ 10 lakhs, being the amount received during the year – thus, the matter is remitted back to the AO for verification of claim of assessee – Decided in favour of assessee. Addition of gross receipts relating to business of interior design works – Held that:- Assessee has not been able to rebut or controvert the findings of fact recorded by the AO as well as the CIT(A) to dispute the genuineness of his claim of having carried on the business of interior designing work - He has also not been able to produce any evidence whatsoever to establish that any such business was actually carried on by him or any of the expenditure claimed in relation to the said business was actually incurred by him – thus, there is no reason to interfere in the order of the AO in treating the claim of the assessee of having carried on the business of interior designing work as bogus or false – Decided against assessee. Reimbursement of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, invoking the said provision, he added the amount of ₹ 1,29,22,613 to the total income of the assessee on account of deemed dividend. On appeal, the learned CIT(A) confirmed the said addition made by the Assessing Officer. 4. We have heard the arguments of both the sides and also perused the relevant material on record. The only contention raised by the learned counsel for the assessee is that M/s. Speed Projects and Infrastructure Pvt. Ltd. had not commenced business at the relevant time and consequently, the said company did not have any accumulated profits out of which the loans in question could be said to have been advanced to the assessee. He has contended that the said loans therefore, cannot be treated as deemed dividend income of the assessee under S.2(22)(e). As rightly contended by the learned counsel for the assessee, the payment made by a company, which is covered by the provisions of S.2(22)(e), can be treated as deemed dividend only to the extent to which such company possesses accumulated profits, and this position clearly evident from the provisions of S.2(22)(e) is not disputed even by the Learned Departmental Representative. It is, however, observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The Learned Departmental Representative, on the other hand, has contended that this aspect of the matter requires verification by the Assessing Officer. We find merit in this contention of the Learned Departmental Representative. Accordingly, we restore this issue to the file of the Assessing Officer for the limited purpose of verifying the claim of the assessee that out of ₹ 27 lakhs, loan ₹ 10 lakhs only was received in the year under consideration, and the balance amount of ₹ 17 lakhs was received in earlier years and deciding the issue afresh in accordance with law. Needless to observe that the Assessing Officer shall afford sufficient opportunity of hearing to the assessee. Ground No.2 is accordingly treated as allowed for statistical purposes. 8. Grounds No.3 and 5 involve a common issue relating to addition of ₹ 39,50,000 made by the Assessing Officer and confirmed by the learned CIT(A) on account of gross receipts shown by the assessee relating to his business of interior design works. 9. In his return of income for the year under consideration, a loss of ₹ 19,86,680 was claimed by the assessee relating to the business of interior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the Business Income comprising Business Receipts are received after incurring certain expenditure which is incidental to the Business and the legitimate Business expenses are all to be allowed as per Section 37 of the Income Tax Act, for the General Business Expenses and as per Section 32 for the Depreciation of the Asset which are put to use for the Business of the Assessee are to be allowed in total. As such the Business expenditure of ₹ 59,36,677/-, including Depreciation of ₹ 26,50143/- as claimed may be allowed. 11. The learned CIT(A) did not find merit in the submissions made by the assessee and upheld the action of the Assessing Officer in treating the gross receipts of ₹ 39,50,000 as income of the assessee, but chargeable to tax as income from other sources for the following reasons given in paragraphs 6.2 and 6.3 of the impugned order- 6.2. I have seen carefully all the facts and the evidence in this regard. It is very clear that no interior designing work was carried out by the appellant. The Appellant has neither demonstrated any knowledge or skills regarding this work and has also not provided any evidence whatsoever that such designi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. On appeal, the learned CIT(A) also found on verification of the relevant facts and evidence that no interior designing work was actually carried out by the assessee. He also noted that there was nothing brought on record by the assessee to demonstrate that any knowledge or skill required to carry out such work was possessed by him. He also found that not a single voucher or evidence was presented by the assessee in support of his claim of having incurred expenditure in relation to the said work. As noted by him, not even a copy of any agreement with any one was produced by the assessee to support its claim of having done the interior designing work and also no details were furnished to show any kind of design that was made by him. On the basis of these findings, the learned CIT(A) upheld the action of the Assessing Officer in treating the claim of the assessee of having carried on the business of interior designing work as false and added the gross receipts of ₹ 39,50,000 to the total income of the assessee, although under a different head income from other sources . 15. At the time of hearing before us, the learned counsel for the assessee has not been able to rebut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not being in the nature of perquisite, specifically granted to meet expense wholly, necessarily and exclusively incurred for in the performance of the duty of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose, is exempt from tax. There is however, no evidence brought on record by the learned counsel for the assessee before us to show that any special allowance was specifically granted to the assessee by the employer to meet conveyance expense wholly, necessarily and exclusively in the performance of his duty. There is also no evidence placed on record before us to show that the amount in question claimed to be received by the assessee on account of conveyance allowance was actually incurred for such purpose. In the absence of such details and evidence, we are unable to accept the contention of the assessee that the amount in question is exempt from tax under S.10(14)(i) and rejecting the same, we uphold the disallowance made by the Assessing Officer and sustained by the learned CIT(A) on this issue. Ground No.4 of the assessee s appeal is accordingly dismissed. 19. As regards ground Nos.6 and 7, it is observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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