SHRI HARSH VARDHAN BHUWALKA,KOLKATA vs. ITO, WD-30(1), KOLKATA, KOLKATA

The assessee is an individual. He is the Managing Director of M/s.VBL Innovations Pvt. Ltd which was subsequently known as Vardhan Bandar Ltd. The AO was in possession of information that assessee had spent Rs.2,56,406/- on credit cards. The source of making the aforesaid payment was questioned by the AO. Assessee submitted that he was the Managing Director of M/s. VBL Innovations Pvt. Ltd and the aforesaid company had made payment of the credit card bills. Assessee further explained that the expenses were incurred by the assessee for the following purposes: 1. Repayment of loan taken by the Company from State Bank of Patiala Rs.1,97,111,68 (Principal) Rs. 16,440.34(Interest) Rs.2,13,551 2. Business Promotion Expenses Rs.15,234 3. Foreign Travelling expenses Rs.27,620 4. Office Expenses Rs.899 Total Rs.2,57,305/-

The AO as well as CIT(A) were of the view that the plea of reimbursement of loan, and reimbursement of expenditure incurred on behalf of the company by the assessee was not established. Accordingly, the aforesaid sum was treated as perquisites in the hands of the assessee and brought to tax by the revenue authorities.

Before us the ld. Counsel for the assessee brought to our notice that M/s. VBL Innovations Pvt. Ltd had confirmed the fact that a sum of Rs.1,97,112/-was a loan given by the assessee to company on which a sum of Rs.,16,440/- was interest payable. Besides the above the assessee had incurred expenses on behalf of the company which were all reimbursed by the company. The details in this regard filed by the assessee which was duly confirmed by the company are annexed to the order. Our attention was also drawn to the fact that the loan by the assesse to the company is duly reflected in the balance sheet under the head “unsecured loans’. The revenue authorities refused to believe the assesse for the reason that initially assesee took a stand that FBT has been paid on the aforesaid sum by the company and had not given the details of FBT paid. The explanation later put forth before the revenue authorities according to the revenue authorities was an after thought. I am of the view that the evidence filed by the assessee substantiated the plea of the assessee that the amount paid by the company was repayment of the loan and reimbursement of the expenditure incurred by the assessee on behalf of the company. Therefore addition made cannot be sustained. Accordingly the same is deleted.