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TMI Blog2009 (11) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... he accumulated profit available as on 01.04.2001, and the balance shall be treated to be accumulated profit available to the be considered against the loans and advances taken by the assessee in the current F.Y 2001-02 relevant to the A.Y. 2002-03. As per assessee total amount of loan taken during the current financial year on various dates can only be treated to be the deemed dividend u/s. 2(22)(e) to the extent of the accumulated profit that was available on the date on which amount of loan taken - There is no dispute in the proposition that the loan taken by the assessee can be regarded as deemed dividend u/s. 2(22)(e) of the Act only to the extent of accumulated profit available on the date when the loan was taken - we, therefore, restore this issue back to the file of the AO for walking out of the actual amount of loans or advances which could be treated as deemed dividend u/s. 2(22)(e) in the year under consideration. The assessee shall submit his working before the AO regarding the actual amount of deemed dividend that could be taxed in the A.Y. 2001-02, and the actual amount of deemed dividend that is taxable in the current assessment year i.e. A.Y. 2002-03. Deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has adopted a contradictory stand in claiming the house tax paid - we are in agreement with the orders of the authorities below in rejecting the assessee's claim on account of deduction on house tax paid by cheque on 30.03.2001. Thus, this ground raised by the assessee is rejected. Determination of ALV by computing notional interest - actual rent received - excess addition by adopting the notional interest @ 18% - HELD THAT:- Respectfully following the Tribunal's order passed in A.Y. 1996-97 and 1991-99, we decide this issue in favour of the assessee. In order for the A.Y. 1998-99, the Hon'ble Tribunal has directed the AO to accept the Annual Letting Value shown by the assessee in respect of M-block property, and the determination of ALV by computing notional interest was deleted. Addition on Annual Letting Value of the property - HELD THAT:- This issue has been decided in the case of CIT vs. A R Chadha and Co. India [ 2000 (9) TMI 63 - DELHI HIGH COURT] , where it has been held that the property in question did not belong to the assessee. We, therefore, decide this issue in favour of the assessee accordingly. Disallowance on deduction u/s. 80G - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i C.L. Sethi:- 1. The assessee is in appeal against the order dated 30.12.2005 passed by the ld. CIT(A) in the matter of an assessment made u/s. 143(3) of the Income Tax Act, 1961 ( the Act ) for the A.Y. 2002-03. 2. Ground no.1 is as under:- That having to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in making an addition of ₹ 1,38,00,000/- account of deemed dividend u/s. 2(22)(e) in respect of M/s. Atma Ram Construction Pvt. Ltd. more so when necessary ingredients of that section are missing more so when necessary ingredients of that section are missing. 3. In the course of assessment proceedings, it was noticed by the AO that the assessee had received various amounts from M/s. Atma Ram Properties Ltd (in short. ARPL). The opening balance of the amount received from M/s. ARPL was shown at ₹ 61,97,474/-. During the year, the assessee had received ₹ 1,38,00,000/-. The assessee is the majority share holder in M/s. ARPL holding 47.5% of shares of ARPL. The assessee was, thus, asked by the AO to show cause as to why the amount received from M/s. ARPL should not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee drew our attention to the balance sheet of M/s. ARPL for 31.3.2000 and 31.03.2001, according to which reserve and surplus were to the tune of ₹ 59,62,679/- as on 31.03.2001, and same was nil as on 31.03.2000, meaning thereby that the entire reserve of ₹ 59,62,679/- were made in the previous year relevant to the AY. 2001-02. The learned counsel for the assessee further pointed out that as per balance sheet of M/s. ARPL as on 31.03.2002, the reserve and surplus are of ₹ 1,63,52,490/- meaning thereby that there was increase of reserve and surplus to the extent of ₹ 1,03,89,811/- for the year ended on 31.03.2002. It was further submitted that the assessee was having holding of shares to the extent of ₹ 47.5% in M/s. ARPL in earlier years also and, therefore, the amount of loan of ₹ 61,97,474/- taken in F.Y. 2000-01 could be deemed to be dividend in AY. 2001-02 to the extent of accumulated profit of ₹ 59,62,679/- available in that year as on 31.03.2001. Therefore, the learned counsel for the assessee submitted that accumulated profit to be taken into account in the year under consideration could be ₹ 1,03,89,811/- and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvances taken in earlier years ending on 31.03.2001 to the extent of ₹ 59,62,679/- being the reserve and surplus for the year ended on 31.03.2001 could be treated as deemed dividend u/s. 2(22)(e) for the year ended on 31.03.2001. The ld. counsel for the assessee has also accepted this position that deemed dividend to the extent of ₹ 59,62,679/- was includable in the period relevant to the A.Y. 2001-02 during which, the assessee had taken loans and advances leaving a closing balance of ₹ 61,97,474/-. 12. In this connection, a reliance has been placed upon the decision of the Income Tax Appellate Tribunal, Cochin Bench in the case of ITO vs. Gordhandas Khimji (supra) where it has been held that only the advances or loans to the extent to which they are backed up by accumulated profits as reduced by earlier advances or loans, can be treated as deemed dividend. In other words, it was held that the advances or loans in the earlier assessment had to be treated as dividend which the department omitted to assess, and the accumulated profits had to be reduced by the earlier loans or advances in spite of the fact that they were not assessed to tax as deemed dividends by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax was determined at ₹ 1,52,20,375/-, which was adjusted against the loss brought forward from earlier years amounting to ₹ 21,21,402/-, and was reduced by income tax paid of ₹ 71,36,294/-, leaving a balance of ₹ 59,62,679/-, which has been transferred to the reserve and surplus account. Therefore, there was accumulated profit of ₹ 59,62,679/- during the F.Y. 2000-01, during which the assessee had taken loans and advances amounting to ₹ 73,67,736/-. Therefore, the aforesaid amount of ₹ 73,67,936/- is to be considered for the purposes of determining deemed dividend u/s. 2(22)(e) with reference to the accumulated profit of ₹ 59,62,679/- The assessee had taken the sum of ₹ 73,67,736/- from time to time, and the amount so taken by the assessee can be treated to be deemed dividend to the extent of accumulated profit available on the very day on which the various amounting aggregating to ₹ 73,67,936/- were taken. It is also not in dispute that deemed dividend u/s. 2(22(e) has not been brought to tax in the assessment year 2001-02, and no actual quantification was also made. The ld. counsel for the assessee, in the course of argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the actual amount of deemed dividend that could be taxed in the A.Y. 2001-02, and the actual amount of deemed dividend that is taxable in the current assessment year i.e. A.Y. 2002-03. The AO shall examine and verify all the details and shall determine the actual amount of deemed dividend that could be taxed in the hands of the assessee in the A.Y. 2001 -02 and as well as the amount of deemed dividend that is taxable in A.Y. 2002-03. The AO may take necessary action to bring to tax the amount of deemed dividend assessable in the A.Y, 2001-02, in that A.Y. 2001-02 as per law, and in the light of our observation and finding given above. We order accordingly. 18. Ground no. 2 reads as follows:- That having to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in making an addition of ₹ 1.72,278/- on account of deemed dividend u/s. 2(22)(e) in respect of M/s. Atma Ram Construction Pvt. Ltd., more so when necessary ingredients of that section are missing more so when necessary ingredients of that section are missing. 19. The sum of ₹ 1,72,278/- has been treated as deemed dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the decision of Special Bench of Income Tax Appellate Tribunal Bombay Bench in the case of ACIT vs. Bhaumik Colour (P) Ltd. 120 TTJ 865 (SB)(Mum), where it has been held that deemed dividend can be assessed in the hands of a registered share holder, and, who, at the same time, should be a beneficiary. We, therefore, delete this addition. Thus, this issue decided in favour of the assessee. 23. In the ground no. 3, the assessee bas raised the issue which has already been raised in ground no. 1 and 2. Therefore, the ground no. 3 is redundant and need no adjudication in the light of our order in ground no. 1 and 2. 24. Ground no. 4 is as under:- That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the Ld. A.O. in not allowing the deduction of ₹ 26,28,712- on account of house tax against the Income From House Property. 25. During the course of assessment proceedings, it was noticed by the AO that assessee has claimed deduction of ₹ 20 lacs and 6.28 lacs aggregating to ₹ 26.28 lacs on account of house tax paid by the assessee. The assessee was asked by the AO to show cause as to why the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed as deduction. 30. The ld. DR, on the other hand, supported the orders of the authorities below. 31. We have heard both the parties and have carefully gone through the orders of the authorities below. 32. On perusal of house tax payment receipt issued by Municipal Corporation of Delhi, it is clear that the assessee paid the amount of ₹ 20 lacs and 6,28,712/- on 31.03.2001 by cheque. These cheques were cleared on April 24, 2001. The cheques so issued by the assessee on 31.03.2001 were not bounced, but were cleared and debited in the assessee's account by the bank on 24.04.2001. The payment by cheque is, thus, to be treated as the actual payment made by the assessee. Further, the sum of ₹ 30,00,000/- paid as house tax by cheque on 30.03.2002 has been claimed as deduction by the assessee, though the cheque was not cleared on that date. It is, thus, clear that assessee has adopted a contradictory stand in claiming the house tax paid as, on the one hand, be claimed the deduction of ₹ 20 lacs, and 6,28,712/- on the date when the cheques were cleared, but, on the other hand, the assessee claimed deduction of ₹ 30 lacs on the basis of handing ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, decide this issue in favour of the assessee accordingly. 38. Ground no. 7 relating to the addition of ₹ 56,37,055/-, which was made as patent error was not pressed by the ld. counsel for the assessee and hence, it is dismissed. 39. Ground no. 8 is as under:- That having regard to the facts and circumstances of the case. Ld. CIT(A) has erred in law and on facts in disallowing the deduction u/s. 80G of the Income Tax Act, 1961 amounting to ₹ 5,85,000/-. 40. We have heard both the parties and perused the orders of the authorities below. 41. The assessee has furnished the certificate from Atma Ram Sanatan Dharma College, placed at page 164 of the paper-book in support on the claims u/s. 80G of the Act. The assessee has not produced any copy of approval granted by the Income Tax Department to the Atma Ram Sanatan Dharma College in so far as the Eligibility of deduction u/s. 80G is concerned. The certificate of Atma Ram Sanatan Dharma College dated 05.11.2004, speaks about the approval granted to the University of Delhi and not to the Atma Ram Sanatan Dharma College. Mere because Atma Ram Sanatan Dharma College is affiliated to the University of Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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