TaxTMI 
TaxTMI 
2015 (5) TMI 972
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....rt 'the Act'). 3. Sh. Pathlavath Peerya, the Ld. Departmental Representative, submitted that the assessee is one of the major shareholders in M/s Aachi Masala Foods Private Limied. According to the Ld. D.R., the assessee has inflated purchases to the extent of Rs. 10.64 Crores in the case of Nazareth Enterprises and paid the same to Pandian Enterprises. According to the Ld. D.R., Pandian Enterprises is a proprietary concern of one Shri Ramesh Pandian, who is none other than the brother-in-law of the assessee. The money paid to Pandian Enterprises was actually taken back by the assessee. Therefore, according to the Ld. D.R., the accumulated profit of M/s Aachi Masala Foods Private Limited was paid to the assessee by giving credit in....
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....31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial 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 but "dividend" does not include- (i) a distribution made in accordance with sub-clause (c) or subclause ....
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...., 1948, and before the 1st day of April, 1956. Explanation 2.-The expression "accumulated profits" in sub-clauses (a), (b), (d) and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause (c) shall include all profits of the company up to the date of liquidation, [but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place]. [Explanation 3.-For the pu....
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....nflating the purchase amount, at the best, we can say that the recipient has to appropriate the amount. Therefore, it cannot be construed as loan or advance within the meaning of Section 2(22)(e) of the Act. Once it cannot be construed as loan or advance, the provisions of Section 2(22)(e) are not applicable. If there is any evidence to show that M/s Aachi Masala Foods Pvt. Ltd. has inflated the purchase, it is for the Assessing Officer to examine and disallow the expenditure claimed by M/s Aachi Masala Foods Pvt. Ltd. towards purchase of spices. At any stretch of imagination, such inflated purchase cannot be treated as loan or advance. Therefore, this Tribunal is of the considered opinion that here is no infirmity in the order of the CIT(A....