M/S LOKNATH PROPERTIES & DEVELOPERS PVT LTD,KOLKATA vs. I.T.O WD - 6(2),KOLKATA, KOLKATA

The assessee in the present case is a Company, which is engaged in the business of dealing in property and investment. The return of income for the year under consideration was filed by it on 30.09.2008 declaring total income at NIL. During the year under consideration, the assessee- company had claimed to have developed one property in joint venture with one Mr. Sisir Roy with profit ratio of 50: 50. In its return of income, ./2013 Assessment year: 2008-2009 Page 2 of 4 50% of the value of purchases and sale proceeds were declared by the assessee. According to the Assessing Officer, the assessee-company however failed to establish its claim of joint venture with Mr. Sisir Roy. He, therefore, treated Mr. Sisir Roy as a dummy entity introduced by the assessee in order to show only the half share of business and to evade the tax. Accordingly he considered even the balance 50% profit amounting to Rs.6,90,600/- as income of the assessee and the same was added by him to its total income.

On perusal of Purchase Deed of Mrs. Jyoti Agarwal and Mr. Subhash Agarwal dated 04.06.2008, it was noticed by the Assessing Officer that the assessee-company has received a total amount of Rs.3,62,000/- from the said party during the year under consideration but the same was not shown by it in the books of account. He accordingly treated the amount of Rs.3,62,000/- as undisclosed income of the assessee and added the same to its total income. The total income of the assessee thus was determined by the Assessing Officer at Rs.8,56,750/- in the assessment completed under section 143(3)/144 vide order dated 30.12.2010.

Against the order passed by the Assessing Officer under section 143(3)/144, an appeal was preferred by the assesese before the ld. CIT(Appeals) challenging both the additions made by the Assessing Officer to its total income and since the submission made before him by the assessee in support of its case was not found acceptable by him, the ld. CIT(Appeals) upheld the order of the Assessing Officer on both the issues in principle. He, however, found that the profit earned from the joint venture project was only Rs.2,81,200/- and the 50% share in the said profit of the so-called joint venture partner Mr. Sisir Roy was only Rs.1,40,600/-. He, therefore, restricted the addition of Rs.6,91,600/- made by the Assessing Officer on this issue to Rs.1,40,600/-. The appeal of the assessee thus was partly allowed by the ld. CIT(Appeals) and still aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal. ./2013 Assessment year: 2008-2009 Page 3 of 4

I have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. representatives of both the sides have raised various contentions in support of their stand on the issues involved in this appeal, I am of the view that the issues involved in this appeal lie in a narrow compass and the same can be decided on factual issues pointed out by the ld. counsel for the assessee instead of going into complex legal issues, which were neither raised before the authorities below nor is their sufficient material available on record to adjudicate upon the same. As regards the addition of Rs.1,40,600/- made to the total income of the assessee on account of the profit share of its joint venture partner Mr. Sisir Roy by treating the same as a dummy entity, the ld. counsel for the assessee has submitted that Mr. Sisir Roy is regularly assessed to tax and his Permanent Account Number was provided to the Assessing Officer. As submitted by him, the Assessing Officer, however, has not made any inquiry to find out as to whether Mr. Sisir Roy has already offered his share of profit from the joint venture to tax in his return of income. In my opinion, it is a crucial matter, which clinches the issue, inasmuch as, if Mr. Sisir Roy has already offered the share of his profit in the joint venture with the assessee, there is no justifiable reason to treat him as a dummy entity in the joint venture and bring to tax his share of profit in the hands of the assessee resulting into double taxation of the said income. I, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer to verify this factual aspect and decide the issue accordingly.

As regards the second addition of Rs.3,62,000/- made to the total income of the assessee on account of advance received from Mrs. Jyoti Agarwal and Mr. Subhash Agarwal, the ld. counsel for the assessee has submitted before me that the said advance was actually received by Mr. Sisir Roy in the year under consideration and since the same was introduced in the joint venture only in the subsequent year, the assessee ./2013 Assessment year: 2008-2009 Page 4 of 4 considered 50% of the said amount in that year for computing its income chargeable to tax. This factual aspect again requires verification by the Assessing Officer. I, therefore, restore this issue also to the file of the Assessing Officer with a direction to verify the stand of the assessee and if it is found on such verification that the amount in question has already been considered by the assessee in the subsequent year for computing its total income, the Assessing Officer shall not assess the same in the hands of the assessee in the year under consideration as it will amount to double taxation of the same income.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.