Rajasthan High Court - Jaipur
Asstt. Cit vs Shyam Sunder Chhugani on 29 November, 2001
Equivalent citations: (2002)74TTJ(NULL)26
ORDER
S.R. Chauhan, J.M. As the above appeals are inter-related and involve common points so we are disposing them of by this common order for the sake of convenience.
2. ITA Nos. 2255/Jp/95, 727/Jp/96, 1113/Jp/94 and 230/Jp/95 are appeals by revenue for assessment years 1988-89, 1989-90, 1990-91 and 1991-92, respectively, and are directed against the order of Deputy Commissioner, Jodhpur, dated 9-10-1995, 29-1-1996, 2-11-1993, and 28-11-1994, respectively.
3. We have heard the arguments of both the sides and perused the records including written statement of the learned authorised representative of assessee furnished before us.
4. First we take up 1113/Jp/94 being for assessment year 1990-91 for the reason that the main order of learned Deputy Commissioner (Appeals) has stated to have been passed therein.
5. Ground No. 1 disputes the reduction of addition of Rs. 25,500 to 7,800 made on account of low household withdrawals. The learned Departmental Representative of revenue has referred to p 6 of the assessment order and contended that the assessees standard of living was quite high as he was having various luxurious items like colour T.V., V.C.P., A.C. etc. as noted by assessing officer. He has contended that in the circumstances, the assessing officer rightly estimated the household expenses of assessee at the rate of Rs. 3,000 per month and so giving credit of the withdrawals rightly made the addition. He has contended that the reduction in the aforesaid addition by the learned Deputy Commissioner (Appeals) is not proper. As against this, the learned authorised representative of assessee has contended that the assessees family was small consisting of assessee, his wife and small daughter. He has contended that the assessee was living in the house belonging to his brother and so was not paying any rent. It has been contended that the assessees household expenses were not more than Rs. 1,000 per month. It has also been contended that the assessee was not member of any club. He has contended that in view of the above facts the estimates of assessees household expenses at Rs. 1,500 p.m. made by Deputy Commissioner (Appeals) is quite reasonable.
6. We have considered the rival contentions as also material on record. From the perusal of record, we find that the assessees family, at the relevant time, consisted of self, wife and only one small child. The assessee had not to pay the rent for the residence. As such considering the fact-situation we find the learned Deputy Commissioner (Appeals)s estimation of assessees household expenses to be quite reasonable and suffering from no infirmity. We, therefore, decline to interfere with the same.
7. Ground No. 2 disputes the learned Deputy Commissioner (Appeals)s order for holding the interest income of Rs. 17,650 to be not includible in the hands of the assessee. The learned Departmental Representative of revenue has referred to para 3 of para 2 of the assessment order and contended that the assessing officer noted that the genuineness of deposits made in October, 1987 and March, 1988, in the name of assessees wife Smt. Laxmi Chhugani could not be examined for the reason that, return of income for assessment year 1988-89 was not filed. He had contended that the assessing officer rightly treated the said deposit to be of assessee and in turn rightly included interest income on the said deposit in assessees income on protective basis. He has relied on the assessing officers order. As against this the learned authorised representative of assessee, apart from furnishing his written statement in this appeal, has also relied on the contentions raised on similar issue in his written statement furnished for assessment year 1988-89, wherein these deposits have been treated as assessees income, and has contended that assessees wife Smt. Laxmi has earned interest on deposits belonging to and owned by her and the same cannot be treated as undisclosed income of assessee-respondent. It has been contended that she is an existing assessee and is being assessed since long, even much prior to her marriage with assessee in the year 1987. He has contended that before her marriage she was residing in Ahmedabad with her parents and she was having interest income on her deposits with some parties. He has contended that she was having deposit with M/s Meena Textiles, Ahmedabad, in the previous years 1984-85 and 1985-86. He has contended that she took away her deposit from the aforesaid firm during the previous year 1986-87 and deposited with M/s K.N. Silk Mill, Surat. He has contended that out of this said deposit, Rs. 40,000 were sent to Jodhpur on 3-10-1987, by DD being in favour of Shyam Sunder & Bros. a firm belonging to assessees brother. It has been contended that the firm paid back the said deposit along with interest aggregating to Rs. 40,366 on 16-10-1987, and the same was deposited in her bank a/c with Canara bank on 17-10-1987. It has been contended that she received a cash of Rs. 20,000 from Hargum Balani on 20-10-1987, just before her marriage. It has been contended that it is out of these amounts that she deposited Rs. 60,000 with M/s Mahendra Oil Industries and earned interest thereon. It has been contended that relevant supportive evidence including her accounts with aforesaid three firms and her bank statement along with explanation of entries and assessment order for assessment years 1980-81, 1983-84 have also been furnished. It has been contended that the assessment orders and copies of account show that the capital of Smt. Laxmi has been accumulated for a long period well before her marriage, which stands accepted by the revenue in the past. It has been contended that assessing officer has not pointed out any evidence to show the deposits in her bank a/c to have been the income of assessee. It has also been contended that all the particulars of the specific facts pertaining to Smt. Laxmi are verifiable from record and the assessing officer could have well verified but he made no such enquiry, nor did he examine the parties with whom the deposits were lying, nor did he even examine Smt. Laxmi. It has been contended that the assessing officer has not given specific opportunity to the assessee before making this addition. It has been contended that in the case of Smt. Laxmi, in appeal the learned Deputy Commissioner (Appeals) has directed the assessment of Smt. Laxmi Devi to be treated as substantive and not protective, and in her case the assessing officer has also given effect to the appellate order and no further appeal has been filed against the said appellate order of the Deputy Commissioner (Appeals) and thus assessing officer has virtually accepted the interest income of Smt. Laxmi as her own income. He has cited CIT v. Zafrul Hassan Iraqui (1998) 62 TTJ (Jp) 795, CIT v. Smt. Durgawati Singh (1998) 234 ITR 249 (All) and Madho Lal v. ITO (1991) 40 TTJ Up) (TM) 333.
8. We have considered the rival contentions as also cited decisions. Considering all the facts and circumstances, of the case, as revealed from the contentions as also from the discussion made in the two orders of the authorities below and taking circumspect view of the fact-situation in its entirety we find the disputed interest income to be not clubable in the hands of assessee, as the same is found to have been earned by Smt. Laxmi on the deposits which were made by her and which belonged to her and not to the assessee for there being no evidence to support the same. We, therefore, find no fault with the impugned order of learned Deputy Commissioner (Appeals) on this count, and so we decline to interfere with the same.
9. In the result, revenues appeal No. 1113/Jp/94 is dismissed.
10. Now, we take up ITA No. 2255/Jp/95 being for assessment year 1988-89.
11. Ground No. 1 disputes the allowing of standard deduction of Rs. 10,000. The learned Departmental Representative of revenue has contended that this issue has been dealt with by assessing officer in 3rd para of para 6 of his assessment order and the learned Deputy Commissioner (Appeals) has discussed the matter on para 2 of his order. He has contended that the main order on this issue has been passed in assessment year 1990-91. He has contended that the shares of the company are held substantially by assessee and his family members and remuneration to assessee was paid because of his shareholding. He has contended that the assessee did not furnish material on record to show terms and conditions of agreement and that the assessee did not render services to the company. As against this the learned authorised representative of assessee has contended that the assessing officers elaborate order was passed in assessment year 1990-91 filed in I.T.A. No. 1113/Jp/94. He has contended that the assessing officer made the disallowable for the reasons that the remuneration was paid only because of assessees shareholding. He has contended that for assessment year 1990-91 that addition was deleted by learned Deputy Commissioner (Appeals), vide para 2 of p 3 of his appellate order. And no second appeal by the department has been made on this ground in assessment year 1990-91. He has contended that in assessment year 1990-91 the assessee has explained elaborately to assessing officer that the assessee-director has been rendering such and such services to the company. He has contended that the assessee was a full-time director and rendering full services for the purpose of the business to the company. He has contended that the assessee was looking after the purchases, production, sales and day-to-day administration of the company. He has contended that the assessee was paid salary for his full-time services for the purpose of business to the company and not otherwise. He has contended that the fact of rendering of services by assessee has not been disputed by the assessing officer in the assessment order and also in his assessment order for assessment year 1990-91. He has contended that the factum of assessees rendering of services to the company is verifiable from the records of the company. He has contended that, as such, there is a definite employer-employee relationship between the assessee and the company, and so the assessee is eligible for deduction, out of his salary deduction under section 16(i) out of his salary income. He has also contended that the payment of salary was duly authorised by specific resolution of the company and is in accordance with the provisions of memorandum and articles of association, copies thereof being on per para 30 to 32 of the paper book. It has been contended that the tax has also been deducted at source and TDS certificate has been issued regarding assessees salary and deduction therefrom. Reliance has been placed on :
(i) ITO v. Shashi Kumar Mohata (1992) 42 TTJ (Jp) 663;
(ii) ITO v. P. Narayan Rao (1987) 27 TTJ (Hyd) 457; and
(iii) Ram Prasad v. CIT (1972) 86 ITR 122 (SC).
12. We have considered the rival contentions, the material on record as also the cited decisions. From the perusal of record we find that the assessing officer has followed his orders passed in assessment years 1990-91 and 1991-92 in the case of assessee. In assessing officers order dated 21-1-1993, passed for assessment year 1990-91 it has been mentioned as having been stated by the learned Departmental Representative of assessee that the assessee and his own family was holding just 5.23 per cent of total capital. The assessing officer has also observed therein that a director is not a servant or employee of the company and so the fees received by director is taxable under section 56 (income from other sources) and not as salary. A perusal of assessment order shows that the assessing officer has not disputed the rendering of services by assessee to the company. The record also reveals that the assessee is receiving remuneration not because of his shareholding but it is because of the services being rendered by assessee to the company. This is authorised under the memorandum and articles of association as also by the resolution. As such considering all the facts and circumstances of the case we find the assessee to be an employee of the company and that he was being paid remuneration for the services the assessee was rendering to the company. In that view of the matter in the facts and circumstances of the case we find that the remuneration received by assessee falls within the category of salary for the reason of the assessee being an employee/servant of company. That being the situation the assessee is found to be entitled to deduction under section 16(i) of the Act. As such the impugned order of learned Commissioner (Appeals) in allowing standard deduction under section 16(i) to the assessee out of the remuneration salary is quite justified and suffers from no infirmity. We, therefore, decline to interfere with the learned Commissioner (Appeals)s impugned order on this count.
13. Ground No. 2 disputes the deleting of addition of Rs. 60,346 made on account of unexplained cash credit in the name of assessees wife Smt. Laxmi, and of Rs. 2,600 being interest thereon. This ground is covered by our conclusion/decisions rendered above on ground No. 2 in assessment year 1990-91 in ITA No. 1113/Jp/94, where we have elaborately discussed the relevant facts together with the rival contentions and have held the deposits to be belonging to Smt. Laxmi and not to assessee due to there being no evidence to support that these deposits were made by assessee or belonged to him. Accordingly these credits/deposits in the bank account being of Smt. Laxmi, the addition in respect of the same in the hands of assessee is found to be uncalled for and so the deletion thereof by the learned Deputy Commissioner (Appeals)s quite justified and proper. We, therefore, decline to interfere with the same.
14. In the result the revenues appeal No. 2255/Jp/95 (for assessment year 1988-89) is dismissed.
15. Now we take up ITA No. 727/Jp/96. Ground No. 1 disputes the Deputy Commissioner (Appeals)s impugned order in directing the assessing officer to allow the assessees claim for standard deduction out of remuneration received from the company. Both the sides have relied on their same contentions as raised on similar grounds in ITA 2255/Jp/95 for assessment year 1988-89 for the reason that the facts are similar and the ground is common. As such, the facts being identical, this ground is squarely covered by our decision/conclusion made above on ground No. 1 in ITA No. 2255/Jp/95 for assessment year 1988-89 wherein we have held the relationship of employer and employee existing between the company and the assessee and so the remuneration received by assessee from the company constitutes salary, and in turn, the standard deduction under section 16(i) from the salary income has been held to be allowable. We, therefore, follow our aforesaid decision given in ITA No. 2255/Jp/95 and accordingly hold that the learned Deputy Commissioner (Appeals)s impugned order in allowing assessees claim for standard deduction under section 16(i) from the remuneration received by assessee from the company to be quite justified and so we make no interference therein.
16. Ground No. 2 disputes the Deputy Commissioner (Appeals)s direction to assessing officer to exclude the clubbed amount of assessees wifes income from the hands of the assessee. This ground is also covered by our decision rendered above on similar issue being ground No. 2 in ITA No. 2255/Jp/95 for assessment year 1989-90 and ground No. 2 in ITA No. 1113/Jp/94 for assessment year 1990-91 wherein we have held the assessees wife Smt. Laxmi Chhugani as an independent income-tax assessee and her income to be clubbable in the hands of assessee. The facts being identical, we follow our aforesaid decision on similar issue and accordingly find the learned Deputy Commissioner (Appeals)s impugned order in directing the assessing officer to exclude the clubbed amount of assessees wifes income from the hands of assessee to be quite proper and suffering from no infirmity. We, therefore, decline to interfere with the same.
17. Ground No. 3 disputes the deletion of addition of Rs. 13,000 made by assessing officer on account of low household expenses. Both the sides have relied on their same arguments as raised on similar issue being ground No. 1 in ITA No. 1113/Jp/94 for assessment year 1990-91. The facts remaining identical, we follow our decision rendered above on ground No. 2 for assessment year 1990-91 wherein we have upheld the learned Deputy Commissioner (Appeals)s impugned order in estimating the assessees household expenditure at Rs. 15,000 p.m. and thereby deleting the addition made by assessing officer taking household expenditure of assessee at Rs. 3,000 p.m. Accordingly, we find no fault with the impugned order of learned Deputy Commissioner (Appeals) in estimating the assessees household expenditure for assessment year 1989-90 at Rs. 1,250 p.m. and in turn, deleting the addition of Rs. 13,000 made by assessing officer by estimating the household expenditure at Rs. 30,000 for the year under consideration. As such, the impugned order of learned Deputy Commissioner (Appeals) being quite justified on this count, so we decline to interfere with the same.
18. Ground No. 4 disputes the deletion of addition of Rs. 2,923 made by assessing officer on account of unexplained payment for N.P. The learned Departmental Representative has relied on the orders of the assessing officer. He has drawn our attention in para 5 of assessing officers order and these lines of Commissioner (Appeals)s order in this regard and has supported the assessing officers order and these lines of Commissioner (Appeals)s order in this regard and has supported the assessing officers order. The learned authorised representative of assessee has supported the learned Deputy Commissioner (Appeals)s impugned order and has relied on his written submission.
19. We have considered the rival contentions. From the perusal of para 5 of assessing officers order, we find that the assessing officer has made this addition for the reason that the assessing officer had noted that Smt. Laxmi Chhugani had claimed deduction for Rs. 2,923 under section 80C in her case and it was noted that she had not made any withdrawals for this payment. The assessing officer, therefore, treated this payment to have been out of assessees income and accordingly made the addition. The learned Deputy Commissioner (Appeals) has deleted this addition observing that he has found the income of assessees wife to be not clubbable in the hands of assessee for the reason mentioned in his order for assessment year 1990-91. Accordingly, he also held that this expenditure incurred by wife cannot be taken to have been incurred by assessee and so deleted the addition. In our view, the learned Deputy Commissioner (Appeals)s aforesaid action does not suffer from any infirmity and the order is quite justified, we, therefore, decline to interfere with the same.
20. Ground No. 5 disputes the deletion of addition of Rs. 2,507 made by assessing officer on account of unexplained credit in the bank account. The learned Departmental Representative of revenue has relied on the order of assessing officer, while the learned authorised representative of assessee has relied on the learned Deputy Commissioner (Appeals)s order and his written submission.
21. We have considered the rival contentions as also the material on record. From the perusal of para 3 of assessing officers order, we find that the assessing officer made this addition noting that Rs. 507 were deposited on 14-4-1988, and Rs. 2,000 on 3-3-1989, in assessees account with the Canara Bank and that the assessees explanation that these deposits were by transfer was not supported by any evidence. He, therefore, treated these deposits as unexplained, and in turn, out of assessees income from undisclosed sources and so made the addition. The learned Deputy Commissioner (Appeals) has discussed this issue on para 8 and has drawn his conclusion on para 9 of his appellate order. The learned Deputy Commissioner (Appeals) has observed that considering assessees cash withdrawals of Rs. 20,000 after allowing for household expenses and for donation under section 80C, there still remains balance of Rs. 17,000 which can account for this deposit. He also observed that the pass book itself shows these deposits by transfer and that unless the source from where the transfer took place is doubted, the deposit by way of transfer cannot be treated as unexplained. As such, in our opinion, considering the facts and circumstances of the case, the deletion made by learned Deputy Commissioner (Appeals) suffers from no fault and is quite justified. We, therefore, decline to interfere with the same.
22. Ground No. 6 disputes the learned Deputy Commissioner (Appeals)s order in directing the assessing officer to allow short-term capital loss of Rs. 15,841 in the year under appeal. The learned Departmental Representative of revenue has referred to para 6 of assessing officers order and para 9 of Deputy Commissioner (Appeals)s order regarding this issue and has relied on the findings of assessing officer. As against this, the learned authorised representative of assessee has contended that the assessing officer made this addition holding that the agreement to sell the plot, being dated 26-4-1989, fell in the next year and not within this year. He has contended that more than 90 per cent of the sale price was received during the year and details in the agreement are given and that the same is a sort of confirmation/declaration of the contract already concluded. He has, in this regard, referred to residuary clause of section 2(47)(vi) of the Income Tax Act and emphasised on the words "or any other manner". He has relied on his written submission and has specifically referred to para 34 of paper book being the sale and has specifically drawn our attention to the words "vikray kar diya hai" ("has been sold") as mentioned in the top lines of internal para 2 of the sale deed being para 35 of the paper book.
23. We have considered the rival contentions as also the relevant material on record. In the agreement dated 26-4-1989, placed on P.P. 34 to 36 of the paper book, it is revealed that the matter of sale stands already finalised as the words used in top para on P. 2 of the agreement placed on para 35 of the paper book are "has been sold" (vikray kar diya hai") and it is also mentioned there that the possession of the plot had been handed over by the seller to the buyer and that out of total sale consideration of Rs. 1,85,000, payment of Rs. 35,000 on 16-1-1989, Rs. 1,40,000 on 4-3-1989, and Rs. 10,000 on 11-4-1989, has been made. As such, the assessees plea that Rs. 1,75,000 (Rs, 35,000 + Rs. 1,40,000) were paid upto 31-3-1989, that is in assessment year 1989-90 itself and that the possession had also been handed over and so the transaction had practically/largely been completed in accounting year relevant to assessment year 1989-90 and so there was transfer within section 2(47), in the year under appeal itself, is found to have substance. In the circumstance considering all the facts and circumstances of the case, we find the short-term capital loss to be allowable in assessment year 1989-90, though in our view, the same being covered in clause (v) and not in clause (vi) of section 2(47). Accordingly, we find no fault with the learned Deputy Commissioner (Appeals)s impugned directions in his appellate order and so we make no interference therein.
24. In the result this revenues appeal No. 727/Jp/96 is dismissed.
25. Now we take up ITA No. 230/Jp/95 being for assessment year 1991-92.
26. Ground No. 1 disputes the learned Deputy Commissioner (Appeals)s order in directing the assessing officer to allow standard deduction of Rs. 12,000 under section 16(i). This ground is common with the similar ground No. 1 in assessment years 1989-90 and 1988-89. The facts being common, the ground is covered by our decision referred to above in similar ground in assessment years 1989-90 and 1988-89. We, therefore, follow our decision rendered above on similar ground and accordingly find no fault with the learned Deputy Commissioner (Appeals)s direction in allowing standard deduction under section 16(i) out of assessees salary/remuneration from the company. We, therefore, decline to interfere with the same.
27. Ground No. 2 disputes the deletion of addition of Rs. 15,360 on account of interest income in the name of assessees wife Smt. Laxmi Chhugani. This ground is also covered by our decision rendered above on similar issue contained in ground No. 2 in assessment year 1989-90, ground No. 2 in assessment year 1988-89 and ground No. 2 assessment year 1990-91. The facts, being identical, we follow our decision rendered above on the similar ground in assessment years 1988-89, 1989-90 and 1990-91 and accordingly the assessees wife Smt. Laxmi Chhugani being an independent assessee, her income is held to be not includible in the hands of the present assessee and so in the fact-situation of the case learned Deputy Commissioner (Appeals)s impugned direction cannot be said to be faulty or suffering from any infirmity. We, therefore, decline to interfere with the same.
28. Ground No. 2 disputes the learned Deputy Commissioner (Appeals)s order in allowing depreciation of Rs. 5,000 on taxi-car. The learned Departmental Representative of revenue has taken us through para 8 of assessing officers order and contended that the assessee did not obtain permit for the taxi-car from RTO. He has contended that the depreciation has rightly been disallowed by assessing officer. He has supported the assessing officers order. As against this the learned authorised representative of assessee has supported the learned Deputy Commissioner (Appeals)s order and has relied on his written submission.
29. We have considered the rival contentions as also the material on record. From the perusal of record, we find that the assessee has shown an income of Rs. 250 from the use of this car as taxi and assessing officer has included the said income of Rs. 250 from the said taxi-car in assessees total income, for the year under consideration. In that view of the matter, the learned Deputy Commissioner (Appeals) has held the depreciation on taxi-car to be allowable for the year under consideration and in our opinion rightly. So we find no fault with the learned Deputy Commissioner (Appeals)s order on this count in allowing depreciation and so we make no interference therein.
30. In the result, this appeal of the revenue for assessment year 1991-92 being ITA No. 230/Jp/95 is dismissed.