TaxTMI 
TaxTMI 
TaxTMI 
2010 (8) TMI 344
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....the Act if the following conditions are satisfied :- (i) the payment is made by a company in which public are not substantially interested, (ii) payment is made by way of loan or advance, (iii) payment is made to a shareholder holding not less than 10% of voting rights, and (iv) the amount is paid out of the accumulated profits. 3.1 He was of the view that all these conditions are satisfied in this case. Therefore, the amount has been included in the total income. 4. Aggrieved by this order, the assessee moved an appeal before the CIT(Appeals)-XXIII, who disposed it off on 12.3.2010 in appeal No. 332/08-09. It was submitted before him that the assessee had sufficient liquid financial resources and he has been a tax payer in India and the USA. The impugned amount was given to him by the company as "imprest amount" for the expenditure to be incurred on its behalf. After considering the submissions of the assessee, the ld. CIT(A) mentioned that the lender is admittedly a company in which public are not substantially interested. The assessee is admittedly a substantial shareholder in the company, having req....
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....onfirmation, it has been argued that the amount is not a loan or an advance. Reference has also been made to page no. 5 of the paper book, being copy of the bank account of the assessee with ICICI bank, showing credit of Rs. 3.70 lakh on 14.3.2006. Prior to that, the account of the assessee was in debit balance amounting to Rs. 3,44,33,788 arising primarily on account of two payments of Rs. 2.00 crore and Rs. 50.00 lakh on 23.2.2006 and 11.3.2006 respectively. On deposit of the amount, the debit balance has been reduced to Rs. 3,40,63,788. 5.1 The ld counsel relied on the decision in the case of CIT v. P.V. John [1990] 181 ITR 1 (Ker.) and CIT v. Raj Kumar [2009] 181 Taxman 155 (Del.) to argue that since the amount was not in the nature of a loan or an advance, it was not includible in the total income of the assessee. 5.2 In reply, the ld. DR relied on paragraph No. 30 of the impugned order to argue that the amount was a loan liable to be included in the total income u/s 2(22)(e) of the Act. For the sake of ready reference, this paragraph is reproduced below:- "30. The assessee has relied upon the decision of the jurisdictional High Court in the case of CIT v. Creative Dyeing &....
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....ve that the receipt was in the nature of security deposit. Therefore, it can only be said to be "other advances" as per evidence on record. The certificate from the company does not mention the purpose of the expenditure for which the advance was made. Therefore, there is no evidence on record to show that the amount was advanced for the business of the company. On the other hand, the bank account of the assessee ran into huge debit balance and even after credit of the amount in the bank, the debit balance stood at Rs. 3,40,63,788. Therefore, it can be said that the money was utilized by the assessee for her purposes, which leads to a clear factual inference that the amount was a loan. 6.1 In the case of Raj Kumar (supra), the question before Hon'ble Delhi High Court was whether, the trade advances given to the assessee by CEI can be treated as deemed dividend u/s 2(22)(e) of the Income-tax Act, 1961? The Hon'ble Court answered the question in favour of the assessee and against the revenue. As seen from the question itself, it will be clear that the admitted position was that advance given by CEI to the assessee was a trade advance. Such is not the case here. Therefore, the facts ....
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....e conclusion of fact that a benefit accrued to the assessee in respect of Rs. 75,000 paid by the company to Indira & Company had become final and, therefore, this payment comes within the mischief of section 2(22)(e) of the Act. The case of the ld. DR is that when a loan is given indirectly to the assessee and it amounts to dividend u/s 2(22)(e), there is no reason, to hold that direct payment to the assessee in this case is not covered under the aforesaid provision. We have given consideration to this issue also. We have already recorded a finding that the money paid to the assessee was a loan, which was utilized by her by depositing the cheque in her account, thereby reducing her debit balance with the bank. The certificate of the company is not believable in this regard as no particular purpose has been mentioned. All other ingredients of section 2(22)(e) stand satisfied Therefore, we are of the view that the amount is covered within the meaning of section 2(22)(e) of the Act. 6.2 In the result, the ground is dismissed. 7. Ground No. 2 is that the ld. CIT(A) erred on facts and in law in disallowing the amount of Rs. 86,804 as cost of improvement while calculating capital gains....
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.... third payment of Rs. 39,760 was also made on 3.6.2004 to DLF and the ostensible purpose is fees for late construction. It has been submitted before us that the construction could not be started in time leading to the aforesaid payment of Rs. 39,760. The ld. CIT(Appeals) has mentioned that there is no evidence to the effect that this payment of Rs. 39,760 has been paid as penal charges for not starting the construction within the stipulated period. No such evidence has been filed before us also. Since the intent and purpose of payment is not known, it cannot be termed as cost of improvement and, therefore, it is held that this amount cannot be claimed as deduction for the computation of capital gains. Similarly, the purpose for which the sum of Rs. 5,000 has been paid has not been mentioned in the ledger account. The purpose has not been explained to us also. Therefore, this expenditure cannot be held to be for the improvement of the property. 7.5 We are now left with the issue whether maintenance charges for keep-up of the property could be taken as cost of improvement to the property? We have already mentioned the findings of the ld. CTT(A) in this matter that the expenditure is....
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....re, without any addition thereto, the expenditure incurred on its maintenance cannot be taken as the cost of improvement. Therefore, we do not think it necessary to make any interference in the order of the ld. CIT(A). ITA No. 2526(Del)/2010-Appeal of the revenue 8. The only substantive ground taken by the revenue in the appeal is that on the facts and in the circumstances of the case, the ld. CIT(Appeals) erred in holding that the date of purchase of property is the date of acquiring the asset and not the date on which registration was made. 8.1 The facts mentioned in the assessment order are that the assessee purchased a properly in December, 1996 but the actual possession of the property and the registration of the sale deed took place on 3.9.2004. The case of the assessee before the AO was that the seller transferred all valuable rights in the plot of land to the assessee on 28.12.1996. Therefore, this is the date of acquisition of the property. The AO was of the view that the dates of payment of the instalment are not material for this purpose. What is material is the date of possession. In this connection, he referred to the provision contained in section 2(47)(v) of the A....
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....edit in the account of Shri Ahuja to the name of the assessee on 28.12.1996. The facts thereafter are not clear. It is not clear whether at that time Shri Surinder M. Ahuja was in possession of the plot of land and also handed over the possession to the assessee with the company as confirming party. Admittedly, the sale was registered on 3.9.2004. The AO has mentioned that possession of the property was also given to the assessee on 3.9.2004. The ld. CIT(Appeals) mentioned that there is some confusion in the mind of the AO because the assessee had also sold another property. The ld. CIT(Appeals) has not given a clear finding about the date on which possession of the property was given to the assessee and the evidence on the basis of which this conclusion has been arrived at. He it appears, has inferred the "transfer" on the basis of the fact that the assessee was taken on record by the company on 28.12.1996 when her name was replaced in place of the name of Shri Ahuja. The consideration had also been paid by that date. But under the deeming provision of section 2(47)(v), the date of possession is the material date for finding out the date of transfer as the transfer takes place whe....