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of <h1>Court allows appeal after delay, Revenue challenges ITAT order on deemed dividend under Income Tax Act.</h1> <h3>Pr. Commissioner of Income Tax (Central) -2 Versus M/s. Forum Agro Foods Pvt. Ltd.</h3> The Court condoned the delay in re-filing the appeal and allowed the application. The main issue was the appeal by the Revenue against an ITAT order ... Revision u/s 263 - Addition u/s 2(22)(e) - ITAT quashing the order passed by PCIT u/s 263 holding that the provision of Section 2 (22) (e) in respect of the issue of deemed dividend would not be attracted in the facts and circumstances of this case - HELD THAT:- Exercise of sending the matter back to the AO for a fresh assessment pursuant to the impugned order of the PCIT under Section 263 is not warranted. The Revenue has not been able to persuade this Court that the amount received from AAPIL was not converted to share capital and remained in the nature of loans and advances. That fact is reflected as such in the balance sheet. Consequently, the observation of the ITAT that the order passed by the AO is not erroneous and Section 2(22)(e) of the Act is not attracted, does not call for interference. It would be a mere academic exercise to require the AO to undertake a fresh assessment - no substantial question of law Issues:1. Delay in re-filing the appeal2. Justification of quashing the order under Section 263 of the Income Tax Act3. Applicability of Section 2(22)(e) of the Act4. Proper examination of the transaction with another company5. Substitution of view by ITAT for that of the AO6. Necessity of a fresh assessment exercise7. Conversion of amount received to share capital8. Interpretation of the balance sheet9. Existence of substantial question of lawAnalysis:1. The judgment begins by condoning the delay in re-filing the appeal and allowing the application.2. The main issue revolves around the appeal by the Revenue against an ITAT order quashing the PCIT's order under Section 263 of the Income Tax Act. The question of law is whether the provision of Section 2(22)(e) of the Act regarding deemed dividend applies in this case.3. A search and seizure operation was conducted, leading to assessment proceedings against the Assessee. The PCIT invoked Section 263, alleging errors in the assessment related to a transaction with another company and the applicability of Section 2(22)(e).4. The ITAT noted that the amount received by the Assessee was converted to shares, as reflected in the balance sheet for the Assessment Year 2014-15.5. The Revenue argued that the ITAT should not have substituted its view for that of the AO, emphasizing the need for a fresh assessment exercise.6. The Court disagreed, stating that the matter did not warrant a fresh assessment as the amount received was converted to share capital, as shown in the balance sheet, and Section 2(22)(e) was not attracted.7. Consequently, the Court found no substantial question of law arising from the ITAT's order and dismissed the appeal.
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