S.M. ARSHAD,MANGALORE vs. DCIT, BANGALORE

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ITA 1385/BANG/2012Status: DisposedITAT Bangalore19 August 2016AY 2008-093 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal upheld the addition of deemed dividend, citing identical facts to a previous order. However, it directed the deletion of the addition related to the difference in income recognition, following the principle of consistency.

What were the facts?

The assessee appealed against the CIT(A)'s order concerning the assessment year 2008-09. The appeal involved the assessment of deemed dividend and an addition on account of income recognition difference.

What were the issues?

Whether the addition of deemed dividend is justified and whether the difference in income recognition based on cash versus mercantile system warrants an addition.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, BANGALORE

Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAOShri S.M.Arshad,

For Appellant: Shri R.Krishnan, CA
For Respondent: Shri Sanjay Kumar, CIT(DR)
Hearing: 25/07/2016Pronounced: 19/08/2016

Per INTURI RAMA RAO, AM :

1.

This is an appeal filed by the assessee directed against the order of the CIT(A)-VI, Bangalore, dated 16/08/2012 for the assessment year 2008-09.

2 The assessee raised the following grounds of appeal:

3.

Ground Nos.1 to 4 relate to assessment of deemed dividend of Rs.27,63,459/-. Facts of the case are identical to the facts in assessment year 2007-08 decided by us by order of even date in ITA No.1384/Bang/2012. For the same reasons stated in our order of even date, we uphold the addition and dismiss the grounds of appeal.

4. Ground No.5 relates to addition of Rs.36,686/- on account of difference in recognition of income following cash system of accounting. The Assessing Officer made addition taking into consideration gross receipts mentioned in TDS certifiate of Page 3 of 3 Rs.11,67,981/- in respect of income from M/s.H.M.Leisure. It was explained that income was offered in respect of M/s.H.M.Leisure on cash basis whereas TDS certificate was issued by the deductor on the basis of mercantile basis system. It was stated that the assessee was following consistently this method of recognising income in respect of M/s.H.M.Leisure , Following the principle of consistency,we hold that the addition of Rs.36,686/- is not warranted and therefore, we direct the AO to delete the addition.

5.

In the result, appeal filed by the assessee is partly allowed.

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