2021 (10) TMI 35 - HC - Income Tax

Court Upholds CIT(A) & Tribunal, Advance Not Section 2(22)(e)

Pr. Commissioner of Tax Versus Sh. Anumod Sharma

The court upheld the findings of the CIT(A) and Tribunal that the advance received was for a commercial space, not falling under section 2(22)(e) of the ... Deemed dividend addition u/s 2(22)(e) - ITAT deleted the addition - HELD THAT:- In the present case, both the CIT(A) as well as Tribunal have given findings of the fact that the advance received from the company by the assessee was in the nature of trade advanced booking of commercial place being built by the assessee. Both the CIT(A) as well as the Tribunal have further held that in the present case, it was the company which owed money to the assessee rather than the other way round. This his Court is of the view that the said findings should not be lightly interfered with. In fact, the Supreme Court in Hero Vinoth (Minor) vs. Seshammal [2006 (5) TMI 478 - SUPREME COURT] has also held that “in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible.” It has also held that there is a difference between question of law and a “substantial question of law”. Revenue appeal dismissed. Issues:Challenge to ITAT order under ITA No. 6892/DEL/2015 regarding addition under section 2(22)(e) of the Income Tax Act, 1961.Analysis:The appellant challenged the ITAT order dated 26th February, 2019, proposing questions of law related to the deletion of addition made by the Assessing Officer under section 2(22)(e) of the Income Tax Act, 1961. The appellant argued that the agreement between the parties was not registered and was made on a stamp paper of Rs. 100. However, the court found that the issue raised during the hearing did not align with the proposed questions of law, which focused on whether the ITAT erred in deleting the addition. The Supreme Court's dismissal of a Special Leave Petition against a similar case was cited, emphasizing that such dismissal does not imply approval of the High Court's view. The Division Bench's decision in the previous case highlighted that the transaction was a cover-up to avoid contravention under section 2(22)(e) of the Act.The CIT(A) and Tribunal both found that the advance received by the assessee from the company was for a commercial place and not a loan or advance under section 2(22)(e). The CIT(A) noted that the appellant had outstanding amounts from the company, indicating a trade advance rather than a loan. The Tribunal also concluded that the advance was for a commercial space developed by the assessee, not falling under section 2(22)(e). The court upheld these findings, citing the principle that when two factual inferences are possible, the lower appellate court's decision should not be interfered with. The judgment was deemed not in contravention of a previous case and the appeal was dismissed.