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TMI Blog2017 (10) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year. It was contended that since the assessee has not been able to purchase the new property within the specified period, he has declared this capital gain in the next assessment year. In this regard, attention was invited which is computation of income for the subsequent year. As per the assessee has declared the capital gain on this property in a subsequent year 2012-13. We are of the view that the issue needs to be set aside to the file of the AO with the directions that he shall verify the return for the next assessment year. In case the capital declared in the subsequent year, then the said capital gain need to be deleted. Accordingly, the AO is directed to verify the claim of the assessee. In case the AO is of the view that the capital gain is chargeable to tax in the year under consideration, then he shall delete the income in the subsequent assessment year 2012-13, as we are of the view that the same income cannot be taxed twice. Disallowance of an amount being brokerage and legal expenses paid while computing capital gain on the sale of property bearing No. B-7, Sector-72 - Held that:- We note that the AO had disallowed this expenditure on the ground that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of ₹ 3,09,38,391/- made by the AO invoking the provisions of Section 2(22)(e) of the Act. 3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above addition despite the fact that the said amount was never received by the assessee from the companies but was a fraudulent act committed by the officer of the bank. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the abovesaid amount was not in the nature of loans and advances. 4. Without prejudice to the above and in the alternative, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the computation of 'accumulated profits' made by the AO is wrong. 5(i) On the facts and circumstances of the case, the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 99,00,000/- from M/s CPC Polymers Pvt. Ltd. and in turn had provided an FDR to M/s Craftpac Containers Pvt. Ltd. Since no shareholding held by the assessee is more than the specified limit provided u/s 2(22)(e) of the Act the provisions of section 2(22)(e) of the Act have been attracted. Accordingly, the assessee was required to furnish his explanation. The assessee furnished its explanation vide letter dated 25.1.2013 and has relied upon various case laws. After considering the submissions and the case laws, the AO has completed the assessment of the assessee at an income of ₹ 3,77,96,067/- as against returned income of ₹ 3056940/- by making an addition of ₹ 30938391/- on account of deemed dividend and addition of ₹ 3948167/- be re-computing the capital gain declared by the assessee. The AO has also completed the assessment of company M/s Craftpac Containers Pvt. Ltd. whereby he made an addition of ₹ 10035866/- on account of deemed dividend. The AO completed the assessment at ₹ 3,77,96,067/- vide order dated 28.2.2014 passed u/s 143(3) of the Act. 3. Aggrieved with the assessment order dated 28.2.2014, the assessee preferred an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rongly confirmed the addition made by the AO, which needs to be deleted. 5.3 Apropos ground no. 7 relating to disallowance of deduction of ₹ 2,00,000/- being the expenditure incurred by the assessee in respect of property No. S-143, Greater Kailash, Part-II, New Delhi is concerned, Ld. Counsel of the assesee stated that this amount was incurred by the assessee on this property after the purchase and the same be included in the cost while computing the capital gain. The lower authorities have ignored the evidences of this expenditure, hence, he requested that the addition in dispute may be deleted. 5.4 With regard to ground no. 8 relating to disallowance of ₹ 1,00,000/- being the expenditure incurred on legal and brokerage at the time of sale of above property, Ld. Counsel of the assessee has stated that the as per the provisions of the Section 48, the capital gain is to be completed after deducting from the actual consideration received, the expenditure incurred in connection with such sales, hence, he requested that the addition in dispute may be deleted. 6. On the contrary, Ld. DR relied upon the orders of the authorities below and filed the written submissions cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether addition was justified - Held, yes [In favour of revenue]" 7. We have heard both the parties and perused the records especially the impugned order, written submissions filed by both the parties as well as the Paper Book filed by the assessee's counsel, containing pages 1 to 119 in which he has attached the copy of acknowledgement of income tax return alongwith computation of income for AY 2011-12; copy of reply filed before the AO, dated 20.11.2013; List of shareholders, copy of audited balance sheet and profit and loss account for the year ending on 31.3.2011, copy of ledger account of Harish Kanwar from 1.4.2010 to 31.3.2011, copy of Citi Bank ledger account from 30.6.2010 to 10.8.2010, copy of ledger account of M/s CPC Polymers Pvt. Ltd. from 10.4.2010 to 31.3.2014 (filed in the Case of M/s Craftpac Containers Pvt. Ltd.); List of shareholders, copy of ledger account of Sh. Harish Kanwar from 1.4.2010 to 31.3.2011, copy of acknowledgement of income tax return alongwith computation of income for AY 2011-12, copy of Audited Balance Sheet and profit and loss account for the year ending on 31.3.2011 alongwith Directors Report, copy of ledger account of M/s Craftpac Containers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the company by ₹ 4,00,00,000/-. In the case of the assessee, the Ld. CIT(A) has confirmed the additions made by the AO. Assessee appealed against the order passed by the Ld. CIT(A) in the case of Craftpac Container Pvt. Ltd. wherein the ITAT vide its order dated 28.8.2017 passed in ITA No. 547/Del/2017 has deleted the addition in dispute. Now the assessee is appeal before the Tribunal and has raised as many as 09 grounds, as aforesaid. 8. Since the ground 1 and 9 are general in nature, hence, need not be adjudicated. 9. As regards Ground No.2 to 4 are in relation to the addition of ₹ 3,09,38,391/- confirmed by the Ld. CIT(A) on account of the deemed dividend is concerned, we find that this addition has been made on the allegation that assessee received ₹ 3,01,00,000/- from Craftpac Containers Pvt. Ltd. and ₹ 99,00,000/- from CPC Polymers Pvt. Ltd. which in turn were used for making FDR in the name of Craftpac Containers Pvt. Ltd. with Citi Bank. The addition has been restricted to the accumulated profit of ₹ 2,09,02,255/- in the case of Craftpac Containers Pvt. Ltd. and ₹ 1,00,35,866/- in the case of CPC Polymers Pvt. Ltd. merely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 2(22)(e) of the Income Tax Act. In this regard we draw support from the following judgments: i). In the case of CIT Vs. Universal Medical Pvt. Ltd. 324 ITR 263 (Bombay), which is squarely applicable to the facts of the present case wherein it was held that where the amount was transferred from bank account of the company to the bank account of the assessee and no loan or advance was granted and infact the amount in question has actually been defalcated and not shown in the books of accounts, the provision of Section 2(22)(e) of the Act could not be invoked to tax in assessee's hands. Relevant para is as under: "9. In order that the first part of clause (e) of section 2(22) is attracted, the payment by a company has to be by way of an advance or loan. The advance or loan has to be made, as the case may be, either to a shareholder, being a beneficial owner holding not less than ten per cent of the voting power or to any concern to which such a shareholder is a member or a partner and in which he has a substantial interest. The Tribunal in the present case has found that as a matter of fact no loan or advance was granted to the assessee, since the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as under: "6. Upon a bare perusal of the said provision and the transaction in question, the Tribunal concluded that in this case the transaction was a circuitous transaction and the money which initially belongs to M/s. Swati Energy and Projects Pvt. Ltd. was returned to the same company on the very same day through M/s. Power Service Corporation. The object and purpose of section 2(22)(e) was noted by the Tribunal. We need not go into that aspect or any wider controversy. The Tribunal, then, analyses this transaction and holds that there is no flow of fund or any benefit from M/s. Swati Energy and Projects Pvf. Ltd. to Mis. Sujyoti Enterprises or to its partner Mr. Pravin B. Chheda. Mr. Pravin Bhimshi Chheda is the respondent assessee before us. It is in these circumstances, that the Tribunal concluded that this is not a loan or advance so as to attract section 2(22)(e). We are not required to go into any further controversy or larger question. The Tribunal may have addressed itself to the status of Mr. Manish Oedhia and the financial position of M/s. Power Service Corporation possibly to take care of the argument of the revenue that these were entities closely connected and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, we are of the view that the issue needs to be set aside to the file of the AO with the directions that he shall verify the return for the next assessment year. In case the capital declared in the subsequent year, then the said capital gain needd to be deleted. Accordingly, the AO is directed to verify the claim of the assessee. In case the AO is of the view that the capital gain is chargeable to tax in the year under consideration, then he shall delete the income in the subsequent assessment year 2012-13, as we are of the view that the same income cannot be taxed twice. 11. Ground No. 6 is regarding disallowance of an amount of ₹ 1,13,375/- being brokerage and legal expenses paid by the assessee, while computing capital gain on the sale of property bearing No. B-7, Sector-72. We note that the AO had disallowed this expenditure on the ground that assessee has not filed the details. This is factually incorrect. A sum of ₹ 2,26,750/- was paid to Noida Authority as one time lease charges at the time of purchase of the Plot. The evidence of the same was submitted placed at PB. Pg. 99 along with the bank statement at page 101 whereby a sum of ₹ 113375/- (being 50% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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