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| The Tax Publishers2020 TaxPub(DT) 3215 (Mum-Trib) INCOME TAX ACT, 1961
Section ????
Where alleged expenditure was incurred by assessee for and on behalf of the company in which he was a shareholder, the CIT(A) was not justified in sustaining addition of such expenditure as personal expenditure of the assessee.
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Assessee was holding 22% shares of an entity 'P'. AO noted that the 'P' made payment for a credit card held by the assessee. Therefore, it was alleged that the 'P' was making some kind of advances to the assessee in the form of credit card balance. Accordingly, the said payment was treated as deemed dividend under section 2(22)(e). Further, CIT (A) held that provisions of section 2(22)(e) were not applicable as the payment was in the nature of reimbursement received from 'P' for expenses incurred by the assessee for and on behalf of the 'P'; however, he concluded that it would be personal expenses for the assessee, which was met by the 'P' and therefore, the addition would have to be confirmed. Held: It was rightly held by CIT (A) that the provisions of section 2(22)(e) were not applicable since the payment was mere reimbursement of expenditure by 'P' to assessee. However, the CIT (A) proceeded on wrong footing that the same would be personal expenditure and hence, disallowed completely overlooking the fact that the said expenditure had never been claimed by the assessee anywhere while computing his income. Further, the said expenditure was booked as business expenditure by the 'P'. Therefore, the addition as confirmed by CIT (A) could not be sustained.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, MUMBAI BENCH
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