Court confirms ITAT's decision on deemed dividend, highlights importance of relevant entries. Revenue's appeal dismissed.

The Court upheld the ITAT's decision, emphasizing the importance of considering relevant entries during the year for determining deemed dividend, as established in legal precedents. The Revenue's appeal was dismissed, with the Court finding no legal infirmity in the ITAT's order and stating that no substantial question of law arose for determination.

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Issues: Appeal by Revenue against ITAT order treating certain amounts received by the Assessee as deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961 for the Assessment Year 2009-10.

Analysis:

1. The Assessee, a shareholder of a company, received amounts from the company during the Assessment Year, which the Assessing Officer treated as deemed dividend under Section 2(22)(e) of the Act.

2. The Assessee's appeal was dismissed by the Commissioner of Income Tax (Appeals), following which an appeal was filed before the ITAT.

3. The ITAT examined the Assessee's account in the company's books and found that the transactions were related to cheque discounting, not loans or advances. The ITAT accepted the Assessee's explanation and reduced the deemed dividend amount to a nominal sum.

4. The Revenue contended that the outstanding debit balance in the account should be considered as a loan, and the repayments made by the Assessee were towards this loan. However, the Court disagreed, citing a decision by the High Court of Madras which held that only relevant entries during the year should be considered for determining deemed dividend.

5. The Court found no legal infirmity in the ITAT's order and dismissed the appeal, stating that no substantial question of law arose for determination.

In conclusion, the Court upheld the ITAT's decision, emphasizing the importance of considering relevant entries during the year for determining deemed dividend, as established in legal precedents.

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