Delhi H.C : Whether the Tribunal was correct in law in allowing the assessee’s claim of loss of Rs. 4.32 crores and not agreeing with the AO who had not accepted the loan transaction in respect of purchase of unquoted shares by the assessee as a genuine transaction ?

High Court Of Delhi

CIT vs. Subrata Roy

Section 4, 28(iv), 260A

Madan B. Lokur & V.B. Gupta, JJ.

IT Appeal Nos. 114 to 1117, 1119, 1177 & 1810 of 2005,

137, 235, 236, 410, 411, 413, 436, 437, 439 & 440 of 2006

20th March, 2007

Counsel Appeared :

R.D. Jolly, for the Appellant : Aarohi Bhalla, for the Respondent

JUDGMENT

By the court :

C.M. No. 15992 of 2005 : Allowed, subject to all just exceptions.

2. C.M. stands disposed of. ITA No. 1117 of 2005 :

3. The Revenue seeks the framing of four substantial questions of law. We are of the view that two of the questions raised are substantial questions of law but two are not.

4. The first question urged is that the assessee ought to be taxed under s. 28(iv) of the IT Act, 1961, on account of perquisite benefits such as a house provided to him by the company, servants, chauffeur and gardener.

5. The AO had imposed tax on these items but the appellate authorities disagreed with the view of the AO.

6. It was held by the appellate authorities that the company had claimed a deduction on the expenses incurred in respect of these items. The deductions were disallowed and the company was taxed on that amount. Once the company has been taxed on that amount, the assessee cannot be taxed on the same amount again . Moreover, the benefits given to the assessee are personal to the assessee and the benefits are not intended to be for general use.

7. We find no error in the view expressed by the appellate authorities and are of the view that no substantial question of law arises in so far as this issue is concerned.

8. The second issue which arises for consideration is with regard to the salary payment of Rs. 60,000 to the wife of the assessee. According to the AO, the wife of the assessee was not entitled to this amount but the appellate authorities found that she was a qualified professional who was looking after the running of Children Welfare Scheme for a long time. She had long experience and, therefore, her income could not be clubbed with that of the assessee. We find no error in the view taken by the appellate authorities in this regard. We also find that the amount is really inconsequential and is relevant for only one assessment year. No substantial question of law arises for consideration.

9. In respect of the other two issues, we admit the appeal and frame the following substantial questions of law :

“(1) Whether the Tribunal was correct in law in allowing the assessee’s claim of loss of Rs. 4.32 crores and not agreeing with the AO who had not accepted the loan transaction in respect of purchase of unquoted shares by the assessee as a genuine transaction ?

(2) Whether the Tribunal was correct in law in deleting the addition made under s. 2(24)(iv) of the IT Act, 1961, by holding that the assessee has no substantial interest in the company from which he had taken a loan at 18 per cent per annum interest as against 24 per cent per annum interest recoverable from others ?”

Paper books be filed in accordance with the High Court Rules.

It is made clear that since we are dealing with a large number of ITAs, the amounts may be different in each case but the substance of the questions remain the same.

12. This appeal will be taken up as the main case in this batch.

[Citation : 292 ITR 627]

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