No need to prove occasion for receiving gifts from relative; ITAT Indore deleted sec. 68 additions
[2018] 97 taxmann.com 619 (Indore – Trib.)
IN THE ITAT INDORE BENCH
Smt. Geeta Dubey
v.
Income-tax Officer, 2(1) Ujjain*
KUL BHARAT, JUDICIAL MEMBER
AND MANISH BORAD, ACCOUNTANT MEMBER
IT APPEAL NOS. 108 TO 114 (INDORE) OF 2017
[ASSESSMENT YEARS 2004-05 TO 2010-11]
AUGUST 28, 2018
Section 153C, read with section 153A, of the Income-tax Act, 1961 – Search and seizure – Assessment of any other person (Period of limitation) – Assessment years 2004-05 to 2010-11 – Whether where search and seizure operation under section 132 were carried on 20-11-2009 and seized documents were handed over to Assessing Officer of assessee under section 153C in financial year 2011-12, order under section 153C should be passed by 31-3-2014 – Held, yes [Paras 9 to 11] [In favour of assessee]
II. Section 68, read with section 56, of the Income-tax Act, 1961 – Cash credits (Gifts) – Assessment years 2004-05 to 2006-07 – Assessee received gift of certain amount from her father and sister-in-law – Assessing Officer treated gift as unexplained for reason that assessee was unable to quote occasion for which she had received gifts and, accordingly, made addition under section 68 – It was undisputed that alleged gifts were received through proper banking channel and identity of donors was well established – It was also an undisputed fact that both donors i.e., father and sister-in-law, fell under category of relatives provided in Explanation (e) of section 56 of section (2) – Whether as per section 56(2)(v), for accepting a gift from any relative, no occasion needs to be proved – Held, yes – Whether, therefore, impugned addition on account of unexplained gifts was to be deleted – Held, yes [Para 14] [In favour of assessee]
III. Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Personal expenses) – Assessment years 2004-05 to 2010-11 – Assessee incurred expenditure on account of vehicle expenses and vehicle insurance – Assessing Officer made disallowance of 20 per cent of vehicle expenses and vehicle insurance on account of personal element of expenditure embedded therein – Whether since expenditure in nature of vehicle and vehicle insurance were incurred by assessee in course of business of earning commission and no amount was shown specifically under household drawing, Commissioner (Appeals) was justified in sustaining disallowance of 10 per cent of vehicle expenses and vehicle insurance – Held, yes [Para 16] [In favour of assessee]
IV. Section 69C of the Income-tax Act, 1961 – Unexplained expenditure (Interest) – Assessment year 2007-08 – During course of assessment proceedings, Assessing Officer while examining details of loan payment to ICICI bank by assessee, came to a conclusion that assessee had only reduced portion of principal amount of loan but had not disclosed portion of interest paid on loan – Accordingly, addition in respect of amount of interest was made under section 69C – It was noted that from perusal of records, balance sheet and capital account it was found that interest of Rs. 1.07 lakhs on loan was reflected in capital account and this interest amount was shown as a part of other withdrawal of Rs. 1.34 lakhs – Whether since assessee had duly disclosed interest expenditure, impugned addition for unexplained expenditure was unjustified – Held, yes [Paras 19 and 20] [In favour of assessee]
V. Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Interest) – Assessment years 2008-09 to 2010-11 – Assessee paid interest on loan taken to purchase a land – Assessee claimed that as land was purchased for business purpose, interest on loan needed to be allowed as an business expenditure – It was noted that assessee was not into business of purchase and sale of land – Assessee’s source of income was from commission – Further, land was shown by assessee under fixed asset – Whether since assessee failed to prove use of land for business purpose, there was no room available to claim alleged interest amount as business expenditure – Held, yes [Para 23] [In favour of revenue]
VI. Section 4 of the Income-tax Act, 1961 – Income – Chargeable as (Forfeited amount) – Assessment year 2008-09 – Assessee sold agricultural land and received an advance of certain amount – For some reason this sale of land could not be fructified – Assessee after forfeiting 10 per cent of advance amount received by her paid back remaining amount to proposed buyer – Whether assessee was justified in reducing forfeited amount from cost of land and Assessing Officer could not treat amount forfeited by assessee as income of assessee – Held, yes [Para 25] [In favour of assessee]
VII. Section 80C of the Income-tax Act, 1961 – Deductions – Life insurance premium, contribution to provident fund etc. – Assessment year 2010-11 – Whether where total investment eligible for section 80C included an amount towards repayment of housing loan, assessee was eligible for deduction on total investment after excluding such amount towards repayment of loan – Held, yes [Paras 28 and 29] [In favour of assessee]
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