TaxTMI 
TaxTMI 
2014 (4) TMI 964
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....g to the issue under consideration are stated in brief. The assessee herein is one of the directors of M/s Designer Rocks Pvt Ltd and he holds more than 10% of voting rights in the above said company. The assessing officer noticed that the assessee is having a running account with the above said company. On examination of the same, the AO noticed that the assessee has withdrawn funds from the above said company. The AO also noticed that the above said company was having accumulated profits and hence he came to the conclusion that the amount withdrawn by the assessee partakes the character of income u/s 2(24) r.w.s. 2(22)(e) of the Act. Accordingly, the AO assessed a sum of Rs.47,93,410/- as deemed dividend u/s 2(22)(e) of the Act in the han....
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.... by the assessee from the company over and above the balance available in his account. The Ld A.R, inviting our attention to page 19 of the paper book, submitted that the authorized capital of the company as on 31.3.2009 was only Rs.2.00 crores and the same was increased to Rs.3.50 crores in the succeeding year. The subscribed capital and the share application money put together stood at Rs.3.44 crores as on 31.3.2009 and the shares were allotted only in the succeeding year. Accordingly, the Ld A.R submitted that the company, as on 31.3.2009, could not have allotted shares on the entire share application money without increasing its authorized share capital. Accordingly he submitted that the amount withdrawn by the assessee was related to t....
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....fications of the Ministry of Corporate affairs, wherein it was stated that the share application money shall be kept in a separate account and they shall be used to allotment of securities or for repayment of moneys if the company is unable to allot securities. Accordingly he submitted that the Share application money cannot be combined with the running account of the assessee, as sought by the Ld A.R. 6. We have heard the rival contentions and perused the record. There is no dispute with regard to the fact that the assessee has contributed substantial funds towards "Share Application account". There is also no dispute that the assessee is having a running account with the company, wherein the transactions relating to remuneration, rent,....
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....ns of the assessee that the refunds made by the company to the assessee represents Share Application money cannot be rejected without bringing any material to the contrary. In the instant case, no material was brought on record to disprove the said contentions. Hence, we find merit in the contentions of the assessee that the company has wrongly debited the said refunds to his "Running account", instead of debiting the same to the Share Application account. 9. The Ld A.R has pointed out that the notifications issued by the Department of Corporate affairs, which was considered by the Ld CIT(A), are applicable to the amounts collected by way of public subscriptions. The assessee herein is a private limited company and the restrictions place....
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....he relevant evidence as well as current account maintained between parties, it has been established that the payment made were result of trading transaction between the parties and the amount was not given by way of loan or advance." In the above said judgment, the Hon'ble Delhi High Court has also extracted the decision rendered by it in the case of CIT Vs. Rajkumar (318 ITR 462), wherein the High Court has discussed about the purpose of enactment of sec. 2(22)(e) of the Act as under:- "Therefore, if the said background is kept in mind, it is clear that Sub-clause (e) of Section 2(22) of the Act, which is parimateria with Clause (e) of Section2(6A) of the 1922 Act, plainly seeks to bring within the tax net accumulated profits which a....
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....scuss about the decision rendered by Hon'ble Calcutta High Court in the case of M.D. Jindal Vs. CIT (164 ITR 28 (Cal.)). In the above said case, the assessee therein had deposits with a Closely held company, wherein he was major shareholder. He was having business of construction of houses. The said company supplied steel materials to the assessee and treated the same as advance for purchase of a house. The Tribunal took the view that the supply of materials, which was treated as advance, would be hit by the provisions of sec. 2(22)(e) of the Act. However, the Tribunal netted off the debit and credit balances standing in the name of the company and treated the net amount as deemed dividend. The said view was upheld by the Hon'ble Calcutta H....