DCIT, CHENNAI vs. THANGAPPAN CHITTYBABU, CHENNAI

आदेश / O R D E R

Per A. Mohan Alankamony, AM:- The appeal by the Revenue is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-1, Chennai, dated 15.02.2017 in New for the assessment year 2011-12 passed U/s.250(6) r.w.s. 143(3) of the Act.

Finally the assessment order was passed U/s.143(3) of the Act on 28.03.2014 wherein the Ld.AO made addition of Rs.65,40,120/- towards disallowance of project expenses and Rs.3,29,53,226/- towards deemed dividend U/s.2(22)(e) of the Act.

During the course of assessment proceedings, it was observed by the Ld.AO that the assessee had debited Rs.65,40,120/-

(related to Perumaleri Village) being the cost of land which was ignored to be transferred to TCBPT (T.Chitty Babu Property Trading, erstwhile proprietary concern of Shri T. Chittybabu) during the year FY 2009-10. On query, it was explained by the Ld.AR that these expenses pertains to Aikya project wrongly debited under Perumaleri village. Since, the explanation offered by the Ld.AR were not back by any evidence to show that the expenses were towards Aikya project, the Ld.AO disallowed the same based on his opinion that the explanation is an afterthought. Before the Ld.CIT(A), it was explained that the mistake of debiting the expense under the head Perumaleri Village is an inadvertent clerical mistake which was subsequently corrected and further, the rectification of the entries in the books of accounts does not have any impact on the overall profit of the assessee. Thereafter, on verifying the ledger accounts the Ld.CIT(A) agreed with the submission of the Ld.AR and deleted the addition. Since, the Ld.CIT(A) has arrived at his decision after verifying the books of accounts of the assessee, we do not find any reason for disbelieving the finding of the Ld.CIT(A). Therefore, we do not find it necessary to interfere in the order of the Ld.CIT(A) on this issue. Accordingly, the first ground raised by the Revenue is disposed off against it.

During the course of scrutiny assessment it was observed by the Ld.AO that the assessee had received an aggregate amount of Rs.3,29,53,226/- from M/s.Akshaya Homes Pvt. Ltd., the company in which the assessee had share holdings more than

10%. Therefore, the Ld.AO invoked the provisions of Sec.2(22)(e) of the Act and added the same to the income of the assessee because M/s.Akshaya Homes Pvt. Ltd., had accumulated profits more than that amount. On appeal, the Ld.CIT(A) deleted the deletion by observing as under:

“ I have carefully perused the facts in issue, submissions made by the appellant and material on record. The Appellant’s plea that there are many occasions that Mr.Citty Babu, originally the proprietor and the Managing Director of the corporate entity had been enabling the acquisition process of land holdings by using the funds of the company for strategic reasons, seems to be in order. This contention of the appellant is supported by the decision of the ITAT in its own case vide ITAT order in A Bench, Chennai, dated 19.09.2011 and duly followed for AY 2008-09 & 2009-10 vide ITA Nos.1339 & 1340/Mds/2012, C Bench, Chennai dated 22.05.2015 wherein it has been held that such amounts advanced did not take the character of deemed dividend in view of the commercial expediency involved in such kind of transactions. Respectfully following the same, this ground of appeal is allowed “.

Since, the Ld.CIT(A) has decided the issue following the decision of the Tribunal in the assessee’s own case in dated 19.09.2011 and ITA No.1339 & 1340/Mds/2012 dated 22.05.2015 wherein on the identical issue it was held that in the case of the assessee the amount advanced by M/s.Akshaya Homes Pvt. Ltd., to the assessee was due to commercial expediency and therefore, provisions of Sec.2(22)(e) cannot be invoked, we do not find it necessary to interfere in the order of the Ld.CIT(A) on this issue also.

Order pronounced on the 22nd May, 2018 at Chennai.