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Before: Shri Amit Shukla & Shri L.P. Sahu
ORDER Per L.P. Sahu, A.M.: These two appeals have been filed by different assessees against the orders of ld. CIT(A)-37 dated 19.10.2016 and CIT(A)-III dated 29.05.2017 for the assessment year 2012-13. The issues involved in both the these appeals are common and the same were heard together. Therefore, for the sake of brevity and convenience, we take up the appeal of Dr. Manju Dang, the decision on which shall be equally applicable to the appeal of Dr. Navin Dang, as admitted by both the parties. Dr. Manju Dang has raised following grounds in her appeal :
That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 11,34,0007- on account of income from house property and that too on notional basis and that too by recording incorrect facts and findings and without observing the principles of natural justice.
2. That in any case and in any view of the matter, the action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.l 1,34,0007- on account of income from house property on notional basis for the basement floor, ground floor and the first floor at par ignoring the rent agreement, municipal valuations and the legal disputes against the property; is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in disallowing Rs.6,06,650/- on account of commission expenses paid on the sale of house property. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.2,50,00,000/- on account of deemed dividend u/s 2(22)(e) and that too by recording incorrect facts and findings and without observing the principles of natural justice. 5. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.2,50,00,000/- on account of deemed dividend u/s 2(22)(e) is bad in law and against the facts and circumstances of the case. 6. That in any case and in any view of the matter, the Ld. CIT(A) has erred in confirming the action of Ld. AO in not treating the 'rent security deposit' to be a business / commercial transaction and thus wrongly termed it to be in the nature of an 'advance’ as envisaged in section 2(22)(e) in the hands of the assessee.”
The brief facts of the case are that the assessee is an individual and doctor by profession declaring income from salary, house property, income from capital gain and other sources. The assessee filed her return of income on 30.09.2012 declaring income of Rs.1,44,99,560/-.. The case was selected for scrutiny and statutory notices were issued to the assessee. In the assessment proceedings, the Assessing Officer observed that the assessee has received rent from M/s. Medical Diagonostic Centre as per rent agreement dated 01.10.2009 for letting out the property at D-1 Hauz Khas, New Delhi and received Rs.1.5 lacs per month as rent. The assessee had also received a security deposit of Rs.1.00 crore from the tenant. In this regarding the assessee issued show cause notice. In response, the assessee submitted as under :
"Dr. Dangs Lab Private Limned has been operating a pathology laboratory from D-1, Hauz Khas, New Delhi since long. The assesses has received a rent security of Rs. 1 Crore against property no. D-1, Hauz Khas, New Delhi. It is submitted that the assessee received security deposit from M/s Medical Diagnostic centre under a rent agreement dated 01.10.2009 for renting out basement, ground floor and First floor of property no D-1, Haus Khas New Delhi. The assesses has presently received a monthly rent of Rs. 1.50 lacs from Dr. Dangs Lab Private Limited. As regards the justification of rent security, it is submitted that the total covered area of the property is 5700 sq. ft approx and the property is a corner plot with two side opening. Thus, keeping in view the market rent to be Rs. 100/- per sqft, the 50% of the rent in open market would work out to Rs. 2,85,000/- per month. Thus the interest component @ 9% per annum of the rent security of Rs. 1 Crores keeping in view the bank rates, would work out to Rs. 75,000/- per month. In view of this, the rent security stands justified as the payment of rent is on the lower side."
The assessee vide letter dated 18.03.2015 also submitted as under : 3. As regards the justification of income from rent, the assessee hereby brings new facts in the case and it is requested that the same may please be considered before completing the assessment. It is very important to note the following facts:- a) that the property is a residential property and that noncommercial activities could be carried in the residential area. b) that the basement was sanctioned for a domestic storage use and not permissible as a dwelling unit as per the master plan. c) that the company carried commercial activities from the ground floor with open space only and the first floor was used for the residence of its junior staff members only. d) that the average rent rates for a residential property were Rs.30-37 per sqft and for an approved commercial property Rs.102-124 per sqft during the period ended 31.03.2012. 3.1 It is submitted that the assessee along with the other co-owner has let out the residential property situated at D-1, Hauz Khas, New Delhi to Dr. Dangs Lab Private Limited in the past. The company paid a monthly rent of Rs. 2 Lacs each up to the period ended on 31-3-2011. There was a sealing drive carried by MCD as per the orders of the Apex Court and the lab was under a threat of closure all the times. Since, no commercial activities could be carried on, the said property; the company still used the ground floor for its business activities. Thus, it reduced the rent from Rs. 2 Lacs to Rs.1.5 Lacs per month wef 1-4- 2011. 3.2 It is submitted that a property which is under a sealing drive, will never fetch commercial rent rates of Rs. 100 per sqft. Thus it would be justified to take an average of the two rates (residential & commercial properties) as given in para 3(c) above ie, Rs. 80/- per sqft. 3.3 It is submitted that out of the total covered area of 5,700 sqft approx in the property, the tenant used 1,900 sq ft approximately space at ground floor and the open space. The first floor was used for the residence of its junior staff members only & the average rent rates have adopted at Rs. 37/-.The floor was used for storage of discarded goods etc only. It is hereby confirmed that the basement floor has not been used for office and any other business activities. Thus, It is requested that this fact may please be kept in mind while completing the assessment. 3.4 Your honour kind attention is further invited to the relevant provisions of Section 23 are reproduced as under-
SECTION 23 (1) For the purposes of section 22, the annual value of any property shall be deemed to be- (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during the whole or any part of the pervious year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable : 3.5 i) It may be noted that the Vs. share of the assessee in the annual value as per MCD Valuation is Rs. 865,9047- (1/2 of Rs. 17,31,8087-) for the period ended 31-3-2012. ii) the actual rent received by the assessee is Rs.18,00,000/- as per Rent Agreement executed between the parties. In this case, the property was already let out at the beginning of the assessment year. A photocopy of rent agreement is also enclosed herewith. iii) a detailed chart of rent received keeping in view the standard rate in open market on average basis along with explanation is enclosed herewith. The 50% of the rent is estimated to be Rs. 1,50,000/- per month. In view of this, the actual rent received plus interest component on rent security is more than Municipal Valuation and the Standard Rent. Thus the same may please be accepted. 3.6 Your honour's kind attention is invited to the decision given in case of Addl. CIT v. Mrs. Leela Govindan [(1978) 113 ITR 136 (Mad)], the assessee purchased a house property subject to a lease yielding a specific sum of monthly rent. She filed her return of income on the basis of the actual rent received. The ITO took the figure on the basis of the municipal valuation which was higher. The AAC and the Tribunal accepted the assessee's basis. It was held, on facts, that as it could not be said that the rent fixed under the lease deed was not genuine or had been fixed under the lease deed at a lower figure for some ulterior reason by or other, it was not open to the revenue to ignore the rent actually received by the assessee. It is brought to your knowledge that during the course of assessment proceeding in the case of Dr Dang_Lab Path. Ltd, the Rent Agreement executed with the owners and tenant was accepted as genuine. The rent was not fixed with any ulterior reason; the income from such property has to be computed on the basis of actual rent and not on the basis of municipal valuation or standard rent even when the same are less than the actual rent. 3.7 It may not be out of place to submit here that both the assessee and the company are in the maximum tax bracket and no loss to revenue has been caused by not charging rent from the company. That if the rent was to be charged, the same could have been claimed as a deduction by the company u/s 30 of the Income Tax Act, 1961. No notional income can be taxed under the head 'House Property' except u/s 23(4) which is applicable for residential properties only. Also the assessee would have been benefited by claiming 30% deduction under section 24 and paying tax only on the 70% of the rent. 3.8. In view of this, the actual rent declared by the assessee from D-1, Hauz Khas, New Delhi stands justified and the same may please be accepted.”
From the above submissions, the Assessing Officer was not convinced and he referred to section 23 of the Act. Accordingly, as per submissions of the assessee dated 12.03.2015, in which the assessee had submitted that market rent of the property is Rs.100/- sq. ft. . Total covered area of the property was 5700 sq. ft.. Therefore, the total rent of the property worked out to Rs.5,70,0000/- per month, 50% of the assessee’s share comes to Rs.2,85,000/- per month whereas the assessee had shown the rent receipt at Rs.1,50,000/- per month. Therefore, the difference of the notional rent after giving standard deduction of Rs.11,34,000/- was added to the income of the assessee under the head income from house property.
2.1 The Assessing Officer further noticed that the assessee had sold two properties E-3 and E-4, Hauz Khas Market, New Delhi, on which the assesse claimed capital loss of Rs.1,56,43,467/-. The assessee had claimed cost of furniture as cost of acquisition, but the AO observed that in the sale document, furniture was not sold with house property. Therefore, the Assessing Officer disallowed the cost of furniture claimed as cost of acquisition. Assessing Officer further observed that the assessee had paid commission expense for both the properties of Rs.3,03,325/- each to Lalji Propmart, the proof of commission expenses towards sale of properties is placed at paper book pages 89 to 92. The Commission expenses was not claimed in the original return, but such expenses have been claimed by the assessee in the revised computation filed by the assessee. The assessee failed to produce any evidence to whom such payment was made before the Assessing Officer. Accordingly, the Assessing Officer recomputed the capital loss of Rs.16,63,777/- which includes disallowance of commission expenses of Rs.6,06,650/-.
2.2 Further, the Assessing Officer noted that on the assessment record of Dr. Dangs Lab. Pvt. Ltd. of assessment year 2012-13, it reveals that this company has given a security deposit of Rs.5.00 crores to a builder M/s. Usual Leasing Finance Pvt. Ltd. (ULFPL) for taking on lease a property situated at C-2/1 SDA, New Delhi as per agreement dated 07.04.2011 which is placed at PB 102 to 105, but the transaction was not materialized. Thereafter, the said security deposit was transferred in the name of assessee along with Dr. Navin Dang. Thereafter a new agreement was executed between two co-owners and Dr. Dang Lab. Pvt. Ltd. on 25.05.2011 which is placed at page Nos. 110 to 111 of the paper book. An agreement was also made by Shri Prashant Jain with Dr. Navin Dang on 14.05.2011 for purchase of property, which is placed at page 108-109. The amount of security deposit of Rs.5 crores was kept as a security deposit by Smt. Manju Dang and Dr. Navin Dang. The said property was purchased in the name of both the directors (Navin Dang and Manju Dang). This property was let out to M/s. Dangs Lab. Pvt. Ltd. The assessee also filed written submissions on this issue. The Assessing Officer treated the security deposit of Rs.5 crores as deemed dividend u/s. 2(22)(e) in the hands of both the directors and made addition of Rs.2,50,00,000/- in the hands of each as deemed dividend. Feeling aggrieved from the above addition, the assessee appealed before the ld. CIT(A) where the assessee submitted detailed submissions and relied on case laws. The ld. CIT(A) after considering the submissions of the assessee, dismissed the appeal. Aggrieved, the assessee is in appeal before the Tribunal.
The ld. AR reiterated the submissions made before the lower authorities and he submitted a case law compilation containing 135 pages. He has also submitted a written synopsis, inter alia, stating that that actual rent received was Rs. 18,00,000/- whereas it has been assessed by Ld. AO at Rs. 30.20 Lacs on notional basis by adopting the fair market rental of Rs. 2,85,000/- per month. It was submitted that rent of Rs. 1,50,000/- per month was the actual rent received in A.Y. 2010-11, A.Y. 2011-12 and Dr. Dang Labs P. Ltd. running a diagnostic lab and it was residential property, no commercial activity was carried out and because of this there was serious dispute with neighbors and that Hon'ble Supreme Court ultimately ordered to close down the lab and therefore, in such circumstances, the rental value received by the assessee was more than fair market. It was, therefore, submitted that the assessee has brought on record evidences to prove that the rent received at Rs.1,50,000/- per month was fairly reasonable. In support the assessee had submitted the details of rent received (PB-86), copy of lease deed (PB-29-31), Order of Hon’ble Supreme Court (PB-32- 81). He has also relied on the following decisions : (i). Shyam Udyog P. Ltd. vs. ACIT, 3 SOT 98 (Delhi) (ii). Addl. CIT vs. Mrs. Leela Govindan, 113 ITR 136 (Mad.) (iii). Sheila Koushish vs. CIT, 131 ITR 435 (SC) (iv). Amolak Ram Khosla vs. CIT, 131 ITR 589(SC) (v). CIT vs. Kishanalal & Sons(Udyog) P. Ltd., 260 ITR 481(Cal) (vi). CIT v. Sardar Exhibitors P. Ltd., 203 Taxmann 640 (vii). CIT vs. Vinay Bharat Ram & Sons (HUF) 261 ITR 632 (Del) (viii). Dewan Daulat Rai Kapoor vs. N. Delhi Municipal Committee, 122 ITR 700 (SC) (ix). CIT vs. L. Bansidhar & Sons, 209 ITR 465 (Del)
Several other decisions have been referred to in the written synopsis by the assessee.
3.1 Regarding the second issue, it was submitted that the payment of commission was made through cheque on sale of property to M/s. Lalji Propmart and was reflected in the capital account of the assessee. He has submitted capital account at page 28 of the Paper book, in which the commission was adjusted in the capital. The assessee has submitted substantial evidences at page 89-92 to justify the payment of commission and the Assessing Officer was not justified to observe that no such evidence was filed.
3.2 It was next contended that that DDLPL was running a Laboratory in the premises namely D-1 Hauz Khas (owned by the appellant only) which was the residential area due to which there was intense dispute with the neighbors who were insisting that the commercial activity be not undertaken from the residential area and intense litigation was going on. Due to these factors, DDLPL was looking for some other premises and thus this amount was paid by DDLPL to an unrelated company M/s Usual Leasing & Finance P Ltd. (ULFPL) as interest free security for the premises which was to be owned by ULFPL and which DDLPL agreed to take on rent for shifting its lab from the existing residential area. But the property could not be acquired by ULFPL due to resource constraint at their end and then it was eventually purchased by the appellant & her husband to be used for giving on rent to DDLPL for shifting the Laboratory from existing residential area & which in fact later on was shifted to such newly purchased building too & rental income received by the appellant from DDLPL and hence such security was transferred/adjusted in the name of the appellant & his wife by DDLPL through book entry. It was submitted that firstly, there was no flow of money from DDLPL to the appellant which is must so as to attract section 2(22)(e) and in any case, even if there was flow of money from DDLPL to the appellant, it was a payment for business transaction i.e. security deposit for letting out the property in as much as the said premises purchased by the appellant was taken on rent by DDLPL by shifting its lab from existing residential area to the present premises. It was submitted that it was business transaction as is evident from above pleadings and evidences and could not be termed as loan/advance given to the shareholder and hence provision of section 2(22)(e) is not applicable. Reliance is placed on several decisions as under: (i). CIT vs. Raj Kumar 228 CTR 506(Del)/ 318 ITR 462(Del) (ii). CIT vs. Creative Dyeing & Printing P Ltd. 229 CTR 250(Del)/318 ITR 476(Del)
Second contention is that in any case, no payment was made by DDLPL in the year under appeal as noted by AO at page 12 of the assessment order and supported by PB 102-103 and thus, no addition can be made in the hands of the appellant in the year under consideration in view of the following judicial decisions:- 332 ITR 63 (Bom) 120 TTJ 1004 (Kol) 133 TTJ 490 (Del)
3.3 Third contention on behalf of the assessee has been that there was no flow of money from DDLPL to the appellant and transfer was by way of book entry, hence, provisions of section 2(22)(e) is not applicable as held in: (i). CIT vs. Smt. Savithri Sam 144 CTR 17 (Mad)/ 236 ITR 1003 (Mad) (ii). ACIT vs. Lakshmi Kutty Narayan 112 TTJ 396 (Cochin)
It is also submitted that ULFPL entered into agreement with the real owners for the purchase of property and paid an aggregate amount of Rs. 5 crores too, and if on the strength of such arrangement, they entered into agreement to lease out the property to be acquired, there is nothing which could be read as adverse. Similarly, if property could not be purchased by ULFPL and it was realized by them and they found the appellant to buy the property and agreed to adjust the security received into the account of the appellant, what adverse could be read into it is beyond comprehension. Reliance is also placed on the following decisions : (i). AR Chadha & Co. India (P) Ltd. Vs. DCIT, 133 TTJ 490 (ii). ITO vs. Usha Commercial Pvt. Ltd., 120 TTJ 1004.
On the strength of the above contentions, the ld. AR urged for allowing the appeal of assessee.
On the other hand, the ld. DR relied on the order of the lower authorities and submitted that the assessee has himself accepted that there was a market rate for letting out the property at Rs.100 per sq. ft. Therefore, the ld. Assessing Officer has rightly determined the annual value of property of Rs.2,85,000/- per month. The assessee was also unable to produce any evidence before the Assessing Officer and the submission that payment has been paid by cheques for commission expenses is not acceptable because the payment through cheque would not prove that the commission has been paid for sale of the property. It was also submitted that payment of Rs.5 crores by the company to ULFP as security deposit later on passed to the directors, is clearly in the nature of deemed dividend. The ld. Authorities below have dealt with the issue in detail and have rightly held it as deemed dividend u/s. 2(22)(e) of the Act. The case laws relied by the assessee are not applicable to the present case.
We have considered the rival submissions and have gone through the entire material available on record. The first issue which needs adjudication is whether the fair market rent received by the assessee for letting out the impugned property @ 1,50,000/- per month was justified or not. A perusal of the orders of the authorities below reveal that they have determined the fair market rent of the said property at Rs.2,85,000/- per month and accordingly, considered the amount of difference amounting to Rs.1,35,000/- per month for addition to the total income of assessee. It also reveals that the Assessing Officer has given benefit of standard deduction of 30% of the total rent worked out for the whole year and accordingly worked out the notional rent of Rs.11,34,000/-. While examining the working of notional rent made by the Assessing Officer, we find that the assessee had received rent security of Rs.1,00,00,000/- from the tenant. The assessee was asked to justify the amount of this security received with reference to the fair market rent of the impugned property. While justifying the rent security receipt, the assessee itself admitted the fair market rent of the property let out, at Rs.100/- per sq. ft. vide reply dated 12.03.2015 submitted before the Assessing Officer and as reproduced above. At the cost of repetition, the relevant part of the said reply is again reproduced as under : As regards the justification of rent security, it is submitted that the total covered area of the property is 5700 sq. ft approx and the property is a corner plot with two side opening. Thus, keeping in view the market rent to be Rs. 100/- per sq. ft., the 50% of the rent in open market would work out to Rs. 2,85,000/- per month. Thus the interest component @ 9% per annum of the rent security of Rs. 1 Crores keeping in view the bank rates, would work out to Rs. 75,000/- per month. In view of this, the rent security stands justified as the payment of rent is on the lower side."
In view of the above reply of assessee, we do not find any justification to discard the following findings of the ld. CIT (appeal) reached in the impugned order : “What is interesting to note is that the appellant while justifying the receipt of security deposit of Rs 1 crore against the said property has emphasized the fact that said premises being rented out to Dr Dang Lab pvt. Ltd and that said premises would fetch a monthly rent of Rs 2,85,000/- Per month . But in second breath when asked to justify lower actual rent realized therefrom, harps on residential aspect of property completely masking the factum of MCD regularization certificate granted wef 11/7/2006 for its mixed land use (ie for commercial activity for running the pathological lab ) granted and operating in favour of appellant (respondent owners) as in AY 12-13 ( say till 20/4/2015). The appellant case holistically appreciating the matrix hence must fail.”
In view of the candid admission of the assessee regarding fair market rent of the above referred property at the rate of 2,85,000/- per month, in our opinion, the ld. Authorities below have rightly taken into account this rate as fair market rate for the purpose of determining the notional rent of the property received by the assessee. In fact, the working of the Assessing Officer in this regard is completely based on the working of fair market rent given by the assessee while justifying the rent security received. The assessee, thus, cannot be allowed to blow hot and cold in the same breath. In such view of the matter, the ld. CIT(A) was quite justified to sustain the conclusion of the Assessing Officer in view of the decision of Hon’ble Delhi High Court in the case of Moni Kumar Subba, 333 ITR 23 (Del) with reference to the decision of Hon’ble Supreme Court in Corpn. Of Calcutta vs. Smt. Padma Debit, AIR 1962 SC 151. Since the facts involved in the case in hand, as noted above, are not prevailing in the decisions relied by the assessee, the same are not applicable, being distinguishable on facts.
Apart from the above, it is worthwhile to note that the assessee while justifying the lower rent receipts, the assessee has categorically submitted before the Assessing Officer that the company paid a monthly rent of Rs.2 lacs upto the period ended on 31.03.2011 and it was on account of sealing drive carried by MCD that the rent was reduced from Rs.2 lacs to Rs.1.5 lacs per month w.e.f. 1.04.2011. This version of the assessee is also found contradictory to the contents of agreement dated 01.10.2009, which was executed in the year 2009 for three years at the rent of Rs.1.5 lacs per month, whereas the assessee has stated that rent of Rs.2 lacs per month was being received upto 31.03.2011 and it was reduced to Rs.1.5 lacs per month from 01.04.2011. In view of these facts, we find no infirmity in the decision reached by the ld. CIT(A) on this count. Accordingly, ground No. 1 raised by the assessee deserves to fail.
In respect of commission expenses claimed by the assessee for working out the capital gains/losses on the sale of above referred properties, the assessee has submitted the invoice issued by brokers (PB 89-92), in which the recipient has acknowledged the receipt of commission by way of cheque regarding sale of above properties. Both the parties were agreed for verification of the payment received by the recipient and have no objection in setting aside the matter back to the file of Assessing Officer for this purpose. Therefore, in the interest of justice, we restore the matter back to the Assessing Officer for examination, whether the payment made to the recipient was in the nature of commission expenses or related to the sale of above referred property. The Assessing Officer is directed to verify the same to decide the issue afresh after giving reasonable opportunity of being heard to the assessee. Accordingly, this ground is allowed for statistical purposes.
Adverting to the last issue with respect to deemed dividend u/s. 2(22)(e) of the Act, it is born out of the records before us that the ld. Assessing Officer has treated the interest free rent security given by M/s. Dr. Dang’s Lab. Pvt. Ltd. (DDLPL) to M/s. Usual Leasing & Finance P. Ltd. (ULFPL) which was later on adjusted in the account of assessee and her husband, who were having substantial interest in the said company. The contention of the assessee has been from the beginning that DDLPL was running a Laboratory in the premises namely D-1 Hauz Khas, owned by assessee. It is also proved on record that the said premises was in the residential area due to which there was intense dispute with the neighbors who were insisting that the commercial activity be not undertaken from the residential area, as also held by Hon’ble Supreme Court vide their order dated 20.03.2015. Under these circumstances, it cannot be doubted that, DDLPL was looking for some other premises. The contention of assessee has been that this amount of Rs.5.00 crores was paid by DDLPL to an unrelated company M/s Usual Leasing & Finance P Ltd. (ULFPL) as interest free security for the premises which was to be owned by ULFPL, which DDLPL agreed to take on rent for shifting its lab from the existing residential area. However, the property to be let out could not be acquired by ULFPL due to resource constraint at their end and then it was eventually purchased by the assessee and her husband to be used for giving on rent to DDLPL for shifting the Laboratory from existing residential area. It was also the contention of the assessee that the said laboratory was later on shifted to such newly purchased building and rental income received by the assessee from DDLPL. When the property was purchased by assessee and her husband, the security given by DDLPL was transferred/adjusted in the name of the assessee and her husband by DDLPL through book entry. It is also clear from the submissions of the assessee that the property has been purchased at Rs.15 crores by the directors of the DDLPL and earlier the agreement for purchase was made by ULFPL with Kusum Jain & others at Rs.15.00 crores. From the above facts, it is clear that there was no flow of money from DDLPL to the appellant, which is imperative to attract the provisions section 2(22)(e) and in any case, even if it is taken for granted that there was flow of money from DDLPL to the appellant, it should be treated as a payment of DDLPL to the assessee for business transaction, i.e., security deposit for getting the property on lease. The aforesaid facts, also inspire commercial expediency before the company, M/s. DDLPL, under which they gave rent security under consideration and therefore, such a transactions could not be brought under the sweep of section 2(22)(e) of the Act in view of CBDT Circular No. 19/2017 dated 12.06.2017. It is also worthwhile to note that the assessee had also received rent security of Rs. 1 crore from DDLPL for letting out her residential property at D-1, Hauz Khas, New Delhi and the department did not consider it relevant for deemed dividend u/s. 2(22)(e). We, therefore, observe that the ld. Authorities below were not justified to treat this amount of security as interest free loans and advances given to the assessee so as to bring the about relevant for deemed dividend u/s. 2(22)(e) of the Act. Accordingly, this issue is decided in favour of the assessee and the Revenue. Therefore, grounds Nos. 4 to 6 of appeal deserve to be allowed. As a result, the appeal of the assessee deserves to be partly allowed.
As already noted, the issues involved in appeal of Dr. Manju Dang are identical to those involved in appeal of Dr. Navin Dang, our above decision shall apply mutatis mutandis in appeal filed by Dr. Navin Dang. Accordingly, the appeal in also deserves to be allowed in part.