AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 379
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....r of dispute represented only advances paid by the company in which he is a director for purchase of land and towards other expenses and did in fact not represent loan or advance falling within the ambit of Section 2(22)(e) of the Income Tax Act, 1961. 3. The Ld Commissioner of Income Tax (Appeals)-I, Hyderabad ought to have noticed that it is a well settled law that the way in which the entries are made by the assessee in the books of account is not determinative of the question whether the assessee has income assessable to tax and going by this concept he should not have sustained addition u/s 2(22)(e) of the Income Tax Act, 1961 merely on the ground that the company maintained separate accounts for land advance and other loans and that the amount was not reflected in the accounts of the land advance. 4. The Ld Commissioner of Income Tax (Appeals)-I, Hyderabad ought to have noticed that the claim of the assessee contained in his reply dated 0111212010 to the effect that the impugned advance for purchase of lands was summarily rejected by the Assessing Officer without affording any opportunity to defend his stand and thereby patent ly there was non-adherence of principles of....
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.... of Rs. 3,53,000/- and agreed to file the revised return. Consequent to search, the assessee case was notified and notice under sec. 153A of the Income tax Act, 1961 dated 30-11-2009 was issued. In response to notice, the assessee filed his return of income for the A.Y. 2007-08 on 30-07-2010 declaring total income of Rs. 30,98,669/-. The case was selected for scrutiny, accordingly, notice u/s 143(2) and 142(1) of the Act were issued. In response to notice, the authorised representative of the assessee appeared from time to time and furnished the details called for. During the course of assessment proceedings, the A.O. noticed that, during the course of search operation, the assessee has admitted additional income in the form of deemed dividend of Rs. 3,53,000/- and pay taxes. However, the A.O. found that in the return filed under sec. 153A of the Act, for the A.Y. 2007-08, no such income was admitted. Therefore, issued a show cause notice and asked the assessee as to why the said loan amount shall not be treated as deemed dividend under sec. 2(22)(e) of the Act. In reply, the assessee submitted that, by mistake, I have admitted the additional income at the time of search, but, the ....
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.... Choudhary was granted housing loan of Rs. 3,00,000/- in the same period. Similarly, the company has granted housing loan to the assessee as an employee, but not in the capacity of director. The A.O. has failed to take note of the said vital fact at the time of assessment proceedings, simply believed the sworn statement and made the addition. The CIT(A) confirmed the additions in a routine manner based on the findings of the Assessing Officer. The A.R. further submitted that the CIT(A) was erred in rejecting the claim made for telescoping the additional income declared against the deemed dividend. The A.R. further submitted that the assessee has made voluntary disclosure of Rs. 16,65,000/- to cover up the inherent deficiencies in the books of accounts. Therefore, the A.O. ought to have telescoped the additional income to the income voluntary disclosed at the time of search. 6. The learned authorised representative made an alternative plea and submitted that without prejudice to the claim that the addition towards deemed dividend under sec. 2(22)(e) of the Act is not sustainable in the hands of assessee, if at all the dividend is taxable, it is just and reasonable to consider addit....
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....he books of accounts of the company to the extent of Rs. 3,53,661/- is not disputed. The only dispute with regard to, whether the said debit balance in the name of the assessee in the company's books is a loan or deposit which attracts provisions of section 2(22)(e) or which is merely a advance in the normal course of business for the purpose of purchase of land for company, is the question before us for our consideration. In this case, the A.O. invoked the provisions of section 2(22)(e) of the Act, for the reason that the assessee has received loan from the company out of the accumulated profits, therefore it is taxable as deemed dividend under sec. 2(22)(e). The A.O. was of the opinion that the assessee has drawn amount from the company for his personal purpose which is nothing but gratuitous payments, therefore, attract the provisions of section 2(22)(e) of the Act. The assessee contention is that the company has granted housing loan in the normal course of business like in other cases, but not in the capacity of director, therefore, the same cannot be treated as loan within the meaning of sec. 2(22)(e) of the Act. 10. We have gone through the provisions of section 2(22)( e) of....
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....finding that the company has maintained separate accounts for different types of payments which includes land advance, housing loan and loan. A plain reading of section 2(22)(e) of the act, made it clear that any payment by a company, of any sum by way of advance or loan to a share holder, for the individual benefit of any such shareholder comes within the ambit of sec. 2(22)(e) of the Act. In the present case on hand, the assessee claimed that he has taken housing loan from company and the company has charged interest on such loan. However, on perusal of ledger account copy, we find that no such interest is debited to assessee account. The assessee has merely claims that the he has taken housing loan from the company, but, failed to prove that the said advance is nothing but housing loan with any material evidence. Therefore, we are of the opinion that the loans and advances are hit by the provisions of sec. 2(22)(e) of the Act. The A.O. has rightly held that the loan taken by the assessee is deemed dividend within the meaning of sec. 2(22)(e) of the Act. The CIT(A) rightly upheld the addition and his order does not require any interference. 11. Coming to the alternative plea of ....