TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 818
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....er holding shares of 85.50% in M/S Sunil Mantri Reality Ltd, which made advances/loans to various concerns in which Shri Sunil P. Mantri was holding shares. The details of the share holding pattern of Shri Sunil P. Mantri in various concerns to which M/S Sunil Mantri Reality Ltd made the advances/loans during the years under consideration and the respective amounts are as below:- In the assessment framed u/s 143(3) read with section 153A, the AO after observing the aforementioned shareholding pattern, invoked section 2(22)(e) of the Act and thereby treated the said amounts as deemed dividend in the hands of common share holder, Sunil P. Mantri as he was holding substantial control over the lender concern, M/S Sunil Mantri Reality Ltd. The said additions of the total amounts advanced to various concerns have been made in the hands of Sunil P. Mantri on substantive basis. The amounts received by the respective concerns were added on protective basis in the hands of the said concerns respectively. 3. On appeal, the Ld.CIT(A) confirmed the additions made in the hands of Sunil P.Mantri on account of the loans/advances made to various concerns. However, for the a.y 2008-09, the Ld.CIT(....
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....s does not pertain to the loans received during the year. The adjudication of the issues raised in the 12 bunches of appeals, cross appeals and the cross objections are discussed in the succeeding paragraphs. 5. Firstly, as regards the addition made on substantive basis in the hands of Shri Sunil P. Mantri, it is the contention of the assessee that Sunil Mantri Reality Ltd., has made payments directly to the four group concerns and since no payment either directly or indirectly made to the assessee, there is no individual benefit received by the assessee. Further, Sunil Mantri Reality Ltd. has made payments to the said concerns in the normal course of business wherein provisions of section 2(22)(e) shall not apply. It is also the contention of the assessee that the MOU dated 15th May, 2007 evidences payments of advances towards awarding of preferential contract to lender concern of any new project that may arise in future by the recipient concerns. Alternatively, the Ld.AR has argued that in case if the Bench arrives at a decision that Sunil P.Mantri's case falls within the provisions of section 2(22)(e), in such an event, the addition is to be restricted only to the extent of the....
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....which does not quantify any amounts of consideration. Also, it has not been proved that the MoU has resulted in any such project or the parties have acted in furtherance of the MoU. In view of the aforementioned discussions, we are of the considered opinion that the Ld.CIT(A) has rightly decided that the case of Sunil P.Mantri clearly falls u/s 2(22)(e) of the Act. However, we are inclined to accept the alternate arguments of the Ld.AR that the additions are to be restricted only to the extent of the accumulated profits of the lender concern up to March 31st of the previous years relevant to the assessment years under consideration during which the loans/advances have been made to various concerns. Therefore, as regards the additions made in the hands of Sunil P.Mantri for assessment years 2008-09 and 2009-10, we direct the AO to restrict the additions based on the accumulated profits of M/s Sunil Mantri Realty Ltd as on 31.03.2007 and 31.03.2008 respectively, corresponding to the loans/advances made for the relevant assessment years i.e., 2008-09 and 2009-10. 5.1.1 Secondly, as regards the issue raised in the appeal of the Revenue in the case of Sunil Mantri, for the assessment y....
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....ceedings. Accordingly, we do not find any merit in the contention of the Ld.AR that the estimation of gross annual value ought to have been made as per the rent fixed by the municipal authority. In view of that matter, we do not find any justifiable reason to interfere with the decision of the Ld.CIT(A) that the gross rent estimated by AO @ 7% of cost of the property is reasonable. The fact that the assessee has paid interest on borrowed capital is also not disputed. Therefore, we do not find any infirmity in the decision of the Ld.CIT(A) that the assessee is eligible for claim of deduction in respect of interest paid. 5.1.5 Resultantly, (i) the additions confirmed by the Ld.CIT(A) u/s 2(22)(e) in the hands of Sunil P. Mantri on the substantive basis for the assessment years 2008-09 & 2009-10, subject to our direction that the additions made for the said assessment years is to be restricted to the extent of the accumulated profits of M/s Sunil Mantri Realty Ltd as on 31.03.2007 and 31.03.2008 respectively, corresponding to the loans/advances made for the relevant assessment years i.e., 2008-09 and 2009-10 (ii) the decision of the Ld.CIT(A) deleting the addition made by the AO in t....