TaxTMI 
TaxTMI 
2015 (12) TMI 761
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....,909/- and secondly on account of disallowance u/s. 14A r.w. Rule 8D amounting to Rs. 4,12,825/-. 2.1. The assessee is a proprietor of Nirmal Traders and is engaged in the business of General Commission Agents in yarn & fabrics. The assessee is also a share broker trading in shares & commodities. The return for the year was filed on 26.9.2008 declaring total income at Rs. 31,96,208/-. The returns were selected for scrutiny assessment. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has taken loans from - (i) Sumo Investment Pvt. Ltd., - Rs. 73,10,000.0 and (ii) Polyyarn Agencies Pvt. Ltd., - Rs. 1,27,71,834/-. On further probe, the Assessing Officer found that the accumulated prof....
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....business does not hold any water. 3.1. Applying the provisions of Sec. 2(22)(e) of the Act, the AO computed the deemed dividend in the case of M/s. Sumo Investment Pvt. Ltd. at Rs. 73,10,000/- and in the case of M/s. Polyyarn Agencies Pvt. Ltd. at Rs. 18,09,909/-, total addition was made u/s. 2(22)(e) of the Act at Rs. 91,19,909/-. 4. The assessee carried the matter before the Ld. CIT(A) but without any success. 5. Before us, the Ld. Counsel for the assessee reiterated what has been stated before the lower authorities. Drawing our attention to the copies of the ledger accounts of the two companies, the Ld. Counsel stated that in the case of M/s. Polyyarn Agencies Pvt. Ltd. upto 7.6.2007, there was a debit balance of Rs. 5,166/-. Dr....
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....eficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent. of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits; 8. A perusal of the aforementioned section clearly shows that the loan/advance to the shareholder can be treated as deemed dividend only to the extent to which the company possess accumulated profit....
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....ssment order. In our considered opinion, without pointing out any flaw or error in the calculation made by the assessee, the AO should not have proceeded by calculating the deemed dividend of its own. Further, the AO has not given any basis as to how he has come to the accumulated profit of the respective companies. This issue cannot be decided on incorrect facts therefore, we restore this issue to the file of the AO. The AO is directed to decide the issue afresh in the light of the workings given by the assessee after giving a reasonable opportunity of being heard to the assessee. Ground No. 1 is treated as allowed for statistical purpose. 11. Ground No. 2 relates to the disallowance made u/s. 14A r.w. Rule 8D. 12. While scrutinizing....