TaxTMI 
TaxTMI 
2015 (4) TMI 1047
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....011 for A.Y. 2007-08, Revenue has filed the appeal on the following grounds: "1(a) On the facts and in the circumstances of the case and in law, the ld.CIT(Appeals) erred in deleting the addition of Rs. 26,54,225/- made u/s.2(22)(e) of the Act on account of advance received from M/s.Giriraj Developers Pvt. Ltd. as unsecured loan without appreciating the deeming provisions u/s.2(22)(e) of the Act. 1(b) On the facts and in the circumstances of the case and in law, the ld.CIT(Appeals) erred in appreciating the fact that in the case of the assessee provisions of section 2(22)(e) is applicable in view of the fact that the common directors of both the assessee (the borrower) and Giriraj Developers Pvt.Ltd. (the lender) namely Sh....
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....uashed. 3. Initiation of levy of interest u/s 234A/ 234B/ 234C & 234D of the Act is not justified. 4. Initiation of penalty u/s 271 (1) (c) of the Act is not justified." 3. First issue in Revenue's appeal is with regards to disallowance of Rs. 26,54,225/- made u/s.2(22)(e) of the Act on account of advance received from M/s. Giriraj Developers Pvt. Ltd. Assessee company has received unsecured loan of Rs. 26,54,225/- from M/s. Giriraj Developers Pvt. Ltd., a company having common directors/shareholders with assessee company, namely, Shri Chhaganbhai H. Patel and Shri Jaydevbhai C Patel both holding shares in excess of 10% of voting power. M/s Giriraj Developers Pvt. Ltd as per its balance sheet as on 31.3.2007 had accumul....
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.... Rs. 26,54,225/- was directed to be deleted in the hands of assessee. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 3.2 CIT(A) having said so, further held that deeming fiction u/s. 2(22)(e) is to be applied in the hands of shareholders and payment in question i.e. 'deemed dividend' was taxable in the hands of common shareholders having more than specified shareholding in both the companies and concern. CIT(A) further held that deemed dividend of Rs. 26,54,225/- was therefore to be taxed in the hands of the shareholders, i.e. Shri Chhaganbhai H. Patel and Shri Jaydevbhai C Patel in the ratio of their shareholding, i.e. 18010 shares : 15510 shares in Giriraj Developers Pvt. Ltd. as on 31.....
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.... of assessee. Having considered the same, CIT(A) held that merely because of lapse of period of three years, it cannot be said that liabilities had ceased or were remitted. Assessee is liable to pay certain amounts and liability. Once assessee recognize this as its liability, it does not cease to be its liability. Provisions of limitations are not applicable to the person liable for making payment. Under the facts and circumstances, CIT(A) was justified in deleting the addition of Rs. 7,59,469/-made u/s. 41(1) of the Act. In respect of creditors remained unpaid. Same is upheld. 5. Issue of interest u/s. 234A/234B/234C/234D is consequential while issue ins pending u/s. 271(1)(c) is premature. 6. As a result, Revenue's appeal is dismiss....