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TMI Blog2017 (10) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... lete the same. - I.T.A. No. 4591 and 4592 /Mum/2016, I.T.A. No. 1055/Mum/2016 - - - Dated:- 5-10-2017 - Shri D. T. Garasia, JM And Shri Rajesh Kumar, AM Assessee by : Shri Arvind Sonde Revenue by : Shri B Puresh ORDER Per Rajesh Kumar, A. M. The captioned are appeals by the assessees and the revenue pertaining to assessment year 2010-11 and 2011 -12. The appeals bearing ITA No.4591 and 4592/Mum/2016 are directed against the order of ld.CIT(A) dated 17.5.2016 and the appeal bearing No.1055/Mum/2016 is against the order of ld.CIT(A), dated 12.12.2015. Since the issues agitated in all these appeals are almost identical in nature, we shall take up the appeal relating to the assessment year 2010-11 filed by the assessee first as this being the lead case. The facts relating to the issues under consideration are discussed hereunder with reference to A.Y 2010-11. ITA No.4591/Mum/2016 2. The facts of the case are that the assessee filed return of income on 26.7.2010 declaring total income of ₹ 1,44,340/- which was processed under section 143(1) of the Act. Subsequently, the AO received a letter from the erstwhile ACIT-18(1), Mumbai that the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 59,55,59,630/- was received out of the corpus of the trust. The assessee was one of the beneficiaries of the trust and the amount received was shown as a capital receipt in the books of account of the assessee. However, the AO did not accept the contentions of the assessee and held that the income had accrued or arisen to the assessee outside India and his global income is taxable in India. The AO observed that the assessee was both a settler as well as beneficiary of the trust by referring to trust deed forwarded by the tax authority of Bahamas through Foreign Tax Tax Research Division (FT TR) , Ministry of Finance, Government of India, New Delhi. The AO observed that the transactions were routed in a way to bring in unaccounted money of the assessee through discretionary trust i.e AADT and therefore it should be treated as receipt from unexplained sources credited in the books of account of the assessee. Accordingly, the AO added the said receipt of ₹ 59,55,59,638/- to the income of the assessee by framing assessment u/s 147 r.w.s 147 of the Act vide order dated 31.3.2015. 4. Aggrieved by the order of the AO, the assessee preferred appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the income was received by the trust in F.Y. 2008-09 while the same has reached to the appellant in F.Y.s 2009-10 and 2010-11. Hence, the distributed amount is previous year's accumulation of funds. The AR of the appellant has also relied upon the Hon'ble Supreme Court judgment in the case of CIT vs Kamalini Khatau (supra) and hosts of other judgments. It is also submitted that in the case of Mrs. Kiran Agarwal, another beneficiary, similar receipt of ₹ 5,34,28,047/- in F.Y. 2010-11 relevant to A.Y.2011-12 was held to be non-taxable by the undersigned as first appellate authority in appeal no. CIT(A) 33/ Rg.21/ 269/ 2013- 14 dated 21.12.2015. 18. On careful examination of the facts of the instant case with the case of Mrs. Kiran Agarwal in appeal no. CIT(A) 33/ Rg.21/ 269/ 2013- 14 dated 21.12.2015, I find a no. of distinguishing features which will make the receipt of funds from the trust during F.Y.s 2009-10 and 2010-11 as taxable in the hands of Mr. Dwarka Prasad Agarwal when compared with the case of Mrs. Kiran Agarwal, wherein it was held to be tax free. This is further elaborated in the following paragraphs. 19. This first and foremost distinguishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust, (ii) the trustees make a choice to distribute the income (iii) the discretion used by the trustees are in accordance with the trust deed In my considered opinion, there can be no doubt that such discretion should be bonafide, confirm to the terms and conditions specified in the trust deed and properly communicated to the beneficiaries after adopting a specific resolution to that effect in the meeting of the Board of Trustees. Such communication of .. 22. If the cases of two beneficiaries are examined in the light of the above observation it is clear that both of them stand on different footings. While in the case of Mrs.Kiran Agarwal, there are two written resolutions dated 03.01.2011 and 26.1.2011 passed in the meetings of trustees before distribution of the income of the USD 675,000 and USD 5,00,000 respectively. Thus passing over the trust's income to Mrs. Kiran Agarwal, each time, is fully backed by the resolutions passed in the meetings of the trustees as approved by the Protector Mr. Anil Agarwal keeping in view the terms and conditions of the trust deed. The scanned copies of the resolutions are as under- Anil Agar'wal Discretionary T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1- respectively without any resolution or documented decision for distribution of the income of the trust in favour of the appellant. In other words, the trustees have not used their discretion before the income of the trust was diverted to the appellant in both the years. Even in the reply dated 02 .05.2016 of the AR of the appellant during appellate proceedings, as reproduced in the aforesaid paragraphs, two meetings of trustees dated 03.01.2011 and 26.01.2011 are mentioned, which actually pertain to Mrs. Kiran Agarwal and not Mr. Dwarka Prasad Aqarwal. Even the receipt of ₹ 59,55,59,638/- in F.Y. 2009-10 precedes the two meetings of trustees dated 03.01.2011 and 26.01.2011 cited above . 24. It is further observed from the careful reading of the various clauses of the trust settlement deed dated 11.12.2007 that the trustees with the prior written consent or Direction of Shri Anil Agarwal, the Protector can only distribute the income or the funds of the trust, In the instant case, when there was no approval or discretion used by the trustees and the income has reached to the appellant, there is no question of prior written consent or direction of Shri Anill Agarwal, Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Moreover, the appellant cannot claim that the receipts in his hands during F.Y.s 2Q09-10 and 2010-11 are capital receipts since it is just application of income of the trust received on 31.03.2009 and accrued and arisen to the appellant during the year under consideration. 26. Hon'ble Supreme Court in the cases of CIT vs Sitaldas Tirathdas (1961) 41 ITR 367 (Se) and Vibhuti Glass Works vs. CIT (1989) 177 ITR 439 (SC) have clearly held that where the income accrues to the assess.ee directly and is merely applied upon such accrual, it is a case of application of the income of the assessee. Hon'ble Supreme Court in another case of E.O. Sassoon Co. Ltd. vs CIT (1954) 26 ITR 27 has ruled that an obligation to use the income in a particular manner does not remove it from the category of income-tax; this is even if the obligation is a part of the original contract. 27. The second distinguishing feature of the appellant case with the other beneficiary Mrs. Kiran Agarwal is that while Mr. Dwarka Prasad Agarwal received the income of ₹ 59,55,59,638/- in less than one year, 365 days, of the receipt of dividend by the trust on 31st March, 2009 while Mrs. Kiran Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of another beneficiary of the Trust Smt. Kiran Agarwal in appeal no. CIT(A) 33/ Rg.21/ 269/ 2013-14 dated 21.12.2015 in which the similar distribution of amount out corpus funds by AADT as received by Smt Kiran Agarwal one of the beneficiaries of AADT was treated to be a capital receipt not liable to tax. The ld. AR stated that the sole basis on which the ld.CIT(A) upheld the order of the AO was threefold namely(i) the assessee being the beneficiary as well as settler of the discretionary trust; (ii) the receipt of amount by the assessee was without any resolution or documentation distributing the income in favour of the assessee; and (iii) the assessee received the amount within less than 365 days whereas Mrs.Kiran Agarwal another beneficiary of AADT received amount of distribution by AADT well beyond one year and therefore the ld.CIT(A) was totally erred in holding that the case of the assessee stood on different footings and distinguishable to that of Mrs. Kiran Agarwal despite that Mrs.Kiran Agarwal as well the assessee both were beneficiaries of AADT and received the amountdistributed in the like manner. So far as the resolutions authorizing distribution the income by the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neficiaries and therefore ,it was decided that the surplus be transferred to the corpus fund of the Trust and be accumulated until distributed to the beneficiaries in the meeting that - It was resolved that the surplus arising out of the Income and Expenditure Account of Anil Agarwal Discretionary Trust amounting to USD 20,00,000 for the period ended 31st Mar., 2009 be transferred to the corpus fund of the trust and be accumulated until distributed to the beneficiaries. The ld AR took us through the manner and mode of distribution by the Trustees of AADT to the Appellant Assessee.The ld. AR submitted that from the above undisputed details, the following facts have been established that the AADT is a discretionary trust, it has received income in financial year 2008-09 and accumulated the same to the corpus. The assessee received by way of distribution from the corpus of AADT an aggregate amount USD 12,660,000 in financial year 2009-10 relevant to the impugned assessment year 2010-11. The ld AR also took us through the details of money received from AAD amounting to ₹ 59,55,59,638/-. To sum up, the ld.AR submitted that the dividend declared and paid in March, 2009 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust. The ld DR submitted that it is only on account of these shares the said trust received dividend USD 20,000,000/-. The ld. DR argued that the AO has relied on the decision in the case of Shri Mohan Manoj Dhupelia, in ITA No.3544/Mum/2011 to 3546/Mum/2011 and rightly treated the amount received as taxable income from other sources. The ld. DR stated that the assessee has relied heavily on the decision of the Supreme Court in the case of Kamalini Khatau-209 ITR 101(SC); and the decision of the ld.CIT(A) in the case of Mrs.Kiran Agarwal (supra) to claim above sum as not taxable whereas the ld.CIT(A) has clearly distinguished these case laws relied upon by the assessee. Thus the defence of the ld AR has been demolished. 7. As regards, the additional evidence filed by the assessee, the ld. DR submitted that these evidences were not submitted before the ld.CIT(A) during the appellate proceedings and whatever data in the case of Mrs. Kiran Agarwal received through FT TR Division, Ministry of Finance, Government of India, New Delhi was examined. Therefore the additional evidences were an afterthought and not genuine and should be rejected. The ld. DR submitted that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by the ld.CIT(A) should be upheld. 8. In the rejoinder, the ld.AR submitted that the documents relied upon by the assessee were same and therefore did not form part of the new materials. So far as the additional evidence are concerned, he has specifically pointed out that in the case of Mrs. Kiran Agarwal these documents were called for and submitted before the ld.CIT(A). However in the case of Dwarka Prasad Agarwal, these documents were not called possibly for the reasons that these were called for by the ld.CIT(A) in the case of Mrs. Kiran Agarwal and it was a covered issue so far as the case of Dwarka Prasad Agarwal was concerned. Nevertheless, the ld.AR moved an application under rule 29 of the ITAT Rules for filing the additional evidences and resolutions etc in the form of additional evidences in the right spirit and perspective. The ld. AR while distinguishing the case laws relied upon by the revenue submitted that in the case of Twinstar Holdings Ltd (supra) the entire case altogether was on different footings. The issuance of no objection certificate u/s 281 of the Act, the transactions were took place in the year 1999 and therefore they have no relevance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The beneficiaries of AADT are Mrs. Kiran Agarwal, Mr. Dwarka Prasad Agarwal and Mr.Agnivesh Agarwal. The objects/obligations and duties of the trustees are set out in the trust deed executed on 11.12.2007. As per the trust deed the trustees were under obligation to accumulate the surplus income and deal with the same as if it were capital of the trust. The trust deed further stipulates that the trust fund shall be for the advancement and maintenance of the beneficiaries at the discretion of the Protector. The ld. AR invited our attention to the relevant articles in the Trust Deed filed at pages 1-11 of the paper book. In the financial year 2008-09, AADT received USD 20,000,000 from Volcan Investments Ltd, a company formed under the laws of the Commonwealth of Bahamas by way of dividend on shares held by the AADT in Volcan Investments Ltd. The source from which the dividend of UDS 20,000,000 was declared by Volcan Investments Ltd was received by the said company by way of dividend from Vedanta Resources Plc, a company incorporated in UK. The Volcan Investments held about 58.8% of the share capital of Vedanta Resources Plc at the relevant point of time. The dividend received by AAD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of earlier years. In terms of the Trust Deed the Trustees received the consent of the Protector Anil Agarwal. b) The amount of USD 350,000 was debited to the bank account of AADT on 16th Dec., 2009 in account no 2015075. c) The Assessee received the amount of USD 350,000 in Indian Rupee on 17th Dec 2009 in his bank account with ICICI Bank Account no 000401556481. The amount in Indian Rupee was ₹ 1,63,61,667/-. (iv) Receipt of USD 200,000 = INR 92,16,446/- a) The Trustees in their meeting held on 4th Jan., 2010 resolved to make distribution of USD 200,000 to DP Agarwal (the Assessee). The Trustees also noted that this distribution would be from the accumulated funds of the trust arising out of income of earlier years. In terms of the Trust Deed the Trustees received the consent of the Protector Anil Agarwal b) The amount of USD 200,000 was debited to the bank account of AADT on 6th Jan., 2010 in account no 2015075. c) The Assessee received the amount of USD 200,000 in Indian Rupee on 6th Jan., 2010 in his bank account with ICICI Bank Account no 00401556481. The amount in Indian Rupee was ₹ 92,16,446 (Rs.91,64,554 9plus 51,892/-) (v) Receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficiary of the same trsut. We are therefore inclined to admit the same. We have also perused the orders, material and copy of resolutions passed by the Trustees in the meeting and entries in the books of account of AADT of the respective amounts of USD 20,000,000 with Deutshe Bank and receipt of the same in Indian Rupees on various dates in the account of assessee with ICICI Bank. We also noted that the Revenue obtained all these documents from Commonwealth of Bahamas through FT TR , Ministry of Finance which were sought from Commonwealth of Bahamas under TIEA in the case of Mrs.Kiran Agarwal in whose case similar addition was made by the AO while framing assessment u/s 143(3) of the Act. The CIT on 21.2.2014 sought inquiry into the tax affairs of Kiran Agarwals with respect to Bahamas entity AADT by invoking Indo Bahamas TIEA and the said inquiry was made through Ministry of Finance, FT TR, of Government of India and pending the information from Bahamas and FT TR, the AO passed the assessment on 21.3.2014 in respect of Kiran Agarwal. The Commonwealth of Bahamas replied to FT TR vide their letter dated 14.10.2014 which is placed on record at page 103 of the paper book sending vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the decision of the apex court in Kamalini Khatau (supra) which is discussed as under:- In the case of Kamalini Khatau (supra), the Hon ble Supreme Court held that the Revenue has the option to assessee and recover tax from either the trustees or the beneficiaries of a discretionary trust in respect of such income thereof as has been distributed to and received by the beneficiaries in the course of the accounting year. The operative part of the judgment is as under: 25. Why, then, should the beneficiary of a discretionary trust stand on a footing different from that of the beneficiary of a specific trust? It is true that the language of section 166 does not avail the revenue because it states that sections 160 to 165 do not prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable or the recovery from such person of tax payable in respect of such income. The section is clearly clarificatory. It does not empower any assessment or recovery by itself. It only makes it clear that sections 160 to 165 do not bar the direct assessment of the person on whose behalf or for whose benefit the income is receivab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(2) and 4 of the UK Trusts in holding that the same are specific trusts and not discretionary trusts? (ii) Whether on the facts and circumstances of the case, the Tribunal has erred in holding that even if UK settlements are to be treated as discretionary trusts, assessee shall be liable to be taxed under Section 166 of the IT Act for the income not distributed or receivable on his behalf, entire income of the trust having been retained by the trustees? (iii) Whether on the facts and in the circumstances of the case, the Tribunal has erred in law in following the order of Settlement Commission as well as the Hon'ble Supreme Court for earlier assessment years in spite of the fact that the appellant has not received any income from any of the trusts for the year under appeals? The High Court held as under : The trustees have exercised. their discretion by retention. The UK Trusts are discretionary trusts and not specific trusts as the net income of the trusts by positive act retained by the trustees and carried forward and brought forward from year to year. This positive act taken by the trustees sufficiently establishes that the trusts are discretionary trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for one or more beneficiaries, it being left to the discretion of the trustees whether or not the income should be distributed to one or more of the beneficiaries or not at all . The decision of Gujarat High Court was appealed by the revenue authorities in the Supreme Court. The Supreme Court in the case of Vikramsinh Ji Gondal s (referred in para 5.3 above) affirming the view held as under : 19. Having regard to he above legal position about the discretionary trust which is also applied by this court in the earlier judgment and the fact that the income has been retained and not disbursed to the beneficiaries, the view taken by the High Court cannot be said to be legally flawed . In the case of Shanta Ben Patel (supra) the Tribunal held as under : 7. We agree with the findings of the ld.CIT(A) that the distribution was made out of the income of the earlier years or out of corpus of the trust. As per section 5 the basis of chargeability is the receipt or accrual in the hands of the trust in the relevant previous years cannot be said to have accrued once again in the hands of the beneficiary in the year of is distribution.. The revenue also relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was concerned, the tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by restoring to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. Courts are now concerning themselves not merely with the genuineness of a transaction, but with the intended effect of it for fiscal purposes. No one can now get away with a tax avoidance project with the mere statement that there is nothing illegal about it. Accordingly, the High Court was right in the instant case in rejecting the appellant's claims . In the case of Twinstar Holdings Ltd (supra), the Bombay High Court held as under : 16. In conclusion, we may refer to the judgment of the Supreme Court in the case of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 1 in which it has been held that even if the transaction is genuine and even if it is actually acted upon, but if the transaction is entered into with the intention of tax avoidance, then the transaction would constitute a colourable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the provision should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. It is up to the court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and to consider whether the situation created by the devices could be related to the existing legislation with the aid of emerging techniques of interpretation to expose the devices for what they really are and to refuse to give judicial benediction. The courts in such a case should not lay undue emphasis on the language of each individual document as that is not determinative of the controversy. What is really necessary to be considered in such cases is the true nature and effect of the transaction. If on such a consideration, the court arrived at a finding that the true nature was 'transfer of land' and the various steps originating from the affidavit and formation of partnership and culminating into dissolution of the same, in the process leaving the land with the company, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under : Conclusions Conclusions therefore, are as follows: (1) The respondent authorities did establish that it was not possible to recover the tax dues from the company. (2) The petitioner neither pleaded nor succeeded in establishing that such non-recovery was not attributable to any gross neglect, misfeasance or failure in discharging duty on his part in connection with the affairs of the company. (3) Being a public company, ordinarily, provisions of section 179(1) cannot be applied. However, if the factors noted by the Assistant Commissioner in his impugned order dated 15-4- 2002 and highlighted in this judgment are duly established, it would certainly be a fit case where invocation of principle of lifting of corporate veil would be justified. (4) However, the Assistant Commissioner proceeded to record such findings without giving sufficient opportunity of hearing to the petitioner and without disclosing the necessary materials for coming to such a conclusion. (5) The impugned orders dated 15-4-2002 and revisional order dated 9-4-2003 are quashed. (6) The proceedings are however, placed back before the Assistant Commissioner for procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer. [Para 20] The issue regarding jurisdiction of the Assessing Officer to go into the transaction and consider whether prerequisites for claiming deduction under section 57(iii ) have been complied with or not, was considered by a Division Bench of Allahabad High Court in CIT v. Smt. Swapna Roy [2010] 192 Taxman 105and it was opined that though it is not unfair to borrow money or take loan from one concern and invest the same in another concern for the purpose of profit or income, but in the process the assessee must act bona fide . The words 'wholly and exclusively for the purpose of making or earning such income' have to be given its true meaning. In case, the dominant purpose for making such investment was not to earn income, the deduction under section 57 may not be available. To ascertain the purpose, the courts may lift the veil. Even the Assessing Officer has the jurisdiction to find out the dominant purpose with regard to investment of borrowed money in the sister-concern. [Para 22] In view of our aforesaid discussion and pronunciation of law, the question referred for consideration by the larger Bench can very well be answered by opining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to delete the addition. The ground of appeal by the assessee is allowed. 12. The assessee in addition to the original grounds has also taken additional grounds which reads as under : 6. On the facts and circumstances of the case and law, the ld. CIT(A) erred in confirming the addition of ₹ 72,92,100/- towards gift of shares received by appellant from M/s Volcan Investment Ltd on the pretext that company cannot be held to make gift out of natural love and affection is totally wrong, arbitrary unjustified and illegal and is liable o to be delete; 7. On the facts and circumstances of the case and law, the ld CIT(A) failed to considered that receipt cannot be taxed if receipt is not fall within the definition of income or it is not chargeable to taxed when it is received or accrued; 13. The issue raised in additional grounds of appeal is with regard to the confirmation of addition of ₹ 72,92,100/- by the ld.CIT(A) as made by the AO. 14. Facts of the issue are that the assessee has received a gift of ₹ 72,92,100/- from M/s Volcan Investment Ltd. The AO added the same to the income of the assessee on the ground that the company is a corporate b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 1, 2009. In light of this, it is submitted that the gift in the present case is not taxable in the hands of the Assessee since the gift was received prior to the entry into force of the concerned provision. The gift deed evidencing the aforementioned gift has been attached to this letter as an annexure. 19. The AO was not convinced with the reply of the assessee on the ground that the gift received from a M/s Volcan Investment Ltd cannot be held to be under love and affection and accordingly, treated the same as income from undisclosed sources and added the same in the hands of the assessee and added the same to the total income of the assessee. Aggrieved by the order of AO, the assessee preferred appeal before the ld.CIT(A), who vide para 35 of the appellate order dismissed as under : 35. I have carefully considered the submissions of the appellant in the light of the findings made in the assessment order. My observations are as under. 35.1 It is observed that the assessee has shown receipt of shares of Hare Krishna Packing Private Ltd. worth ₹ 72,92,1001- from M/s. Volcan Investment Ltd. without any consideration and shown it as gift during the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from sale of finished goods value of the said raw materials and semi-finished needles would be deducted. Based on the facts, the ITO held that since raw materials and semi finished needless were received by way of gift from foreign collaborators, no amount was deductible in respect of value of those goods. On reference, the High Court, however, accepted assessee's claim that since raw materials and semi- finished needles were introduced in the business and converted into stock, their market value on the date of conversion would represent cost to business. The aforesaid conclusion was upheld by the Hon'ble Supreme Court.Thus it is clear that the ratio of this case nowhere helps the appellant as the Hon'ble High Court, and approved by the Hon'ble Supreme Court, did not accept the action of the AO in considering the material received from foreign company as gift. In the case of Asst. CIT Vis Set India (P:) Ltd. [2010) 3 ITR(TRIB.) 454 (MUM.), the gift involved the assessee company and its holding company. The Hon'ble Tribunal, to the fact of the case, held that money received from a holding company with which the assessee company does not have any trading or busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d perused the material placed before us. We find that the assessee has received gift from M/s Valcon Investment Ltd of ₹ 72,92,100/- in respect of 72 lakhs shares in Hare Krishna Packing Private Limited on 25.9.2009. The issue before us whether the gift from the company can be treated as gift or unexplained receipt in the hands of the assessee. For the sake of ready reference we reproduce the findings of the case relied upon by the assessee as above : In the case of DP World (P ) Ltd (supra) it has been held that : According to the scheme, the legislature has defined various privileges, benefits or amenities etc., which can be covered under the definition of 'fringe benefits' under section 115WB(1). Sub-section (2) deals with certain deemed fringe benefits which are basically originating from the expenditure incurred by a company during the course of business on certain activities, e.g., entertainment. Section 115WC has given the valuation rules which can be put on such fringe benefits. Therefore, it is clear that all the amenities, privileges, etc., cannot be brought to taxation under the chapter and it is only those privileges or amenities which have been s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had borrowed only a sum of ₹ 2.54 crore which means the balance of the security (total security ₹ 5 crore) has been given out of the assessee's own funds and, therefore, there was no cost to the assessee's own funds. Further, the Assessing Officer has adopted 9 per cent rate which was generally available on FDRs. One can argue that this rate may be 20 per cent which was applicable to intercorporate deposits. Therefore, no particular cost or valuation is appropriate and, accordingly, in the absence of any valuation rule in respect of such fringe benefit, the same cannot be subjected to tax. In above circumstances, the provision of security deposit is definitely in the nature of fringe benefit under clause (a) of sub-section (1) of section 115WB, but in the absence of valuation rules, the same cannot be subject to tax. Accordingly, the order of the Commissioner (Appeals) is to be set aside and the addition on account of fringe benefit of notional interest is to be deleted. [Para 10] In the result, the assessee's appeal is to be allowed. [Para 11] In the case of Redington (I) Ltd (supra) the Tribunal held as under : RGF Gulf is the whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T V/s KDA Enterprises (P) Ltd (2015) 57 taxmann.com 284 (Mumbai) it has been held 68. In view of the above discussion, assertions made by ld. AR and DR if kept in juxtaposition to the observation of the AO vis- -vis findings recorded by the CIT(A) in the impugned order, an irresistible conclusion is that the amount of gift so received is neither taxable as income from other sources u/s. 56 nor as capital gain nor as income u/s.2(22)(e) nor u/s.115JB of the I.T.Act. The detailed findings recorded by the CIT(A) are as per material on record, which do not require any interference on our part. Accordingly, we do not find any infirmity in the order of CIT(A). 69. In the result, appeal of the Revenue is dismissed. 23. In view of the above discussion and the ratio laid down in the above mentioned decisions the gift received by the assessee is permissible and the element of natural love and affection is not relevant and material. We ,therefore, following the ratio laid down in the above decision hold that corporate gift is valid. Accordingly, we set aside the order of ld.CIT(A) and direct the AO to delete the same. The additional ground raised by the assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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