TaxTMI 
TaxTMI 
2016 (4) TMI 382
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....on and Steel Co.Pvt.Ltd(TISCPL) and had borrowed a sum of Rs. 11,62,15,929/- from the said company. The AO issued a show cause to the assessee to show cause as to why the provisions of section 2(22)(e) should not be applied and the amount taken as loan should not be taken as deemed dividend within the meaning of section 2(22)(e) of the Act. It was replied by the assessee that a sum of Rs. 10,26,20,000/- was received up to 11.8.2008 on which date the shareholdings by the assessee in TISCPL was 8.59% which was below the limits specified under section 2(22)(e) of the Act itself. The assessee also submitted a copy of ledger account of TISCPL for the financial year 2008-09, a copy of Bank account of State Bank of India of TISCPL, a copy of Demat account of the assessee on 14.10.2008 passed by TISCPL for approval of share transfer, a copy of share holding pattern of TISCPL as on 11.8.2008. The assessee stated that as on 11.8.2008, it was holding 624900 equity shares in TISCPL out of the total 7276090 shares which came to around 8.59% of the total share holding. Thereafter it purchased 641000 equity shares from Mrs. Arpita Bajla on 12.08.2008 and were transferred accordingly, whereupon th....
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...., the provisions of section 2(22)(e) of the Act were not applicable in respect of the above stated amount/loans/ advance received by the appellant from TISPL 2.5 Thereafter, the appellant further purchases shares of this company on 11-12-08-2008 and therefore, the appellant's shareholding in the said company increased, to 17.40%.'Therefore, any amount of loan/advance received by the appellant from this company after this date was subjected to provisions of-section 2(22)(e) of the Act. After 12./8/2008, the appellant further received amount /loan/advance totalling to Rs. 1,66,60,046/- on different dates from the. above said company. The appellant argued before the AO that the above said advances were received by the appellant from the said company towards purchase of machineries. It was also argued that the said associate concern has also purchased similar kind of machineries from the appellant during earlier years for business purposes. 2.6 In respect of amount received totalling to Rs. 1,09,75,000/- from the above said company, the appellant claimed that the same was received as advance for sale/supply of machineries to the said company. The AO made enquiries as to whether....
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....idend in the hands of appellant u/ s. 2(22)( e) and thereby making addition of the same to the income of the appellant. This ground of appeal is, therefore, dismissed." 4. The ld. AR submitted before us that these advances aggregating to Rs. 1,09,75,000/- were received on various dates during the year in the ordinary course of business against the sale and supplies to be made to M/S TISCPL against the supply orders dated 12.08.2008 for 200 TPH Primary Module and 07.12.2008 for 200 TPH VSI Module and were in the nature of trade advances and therefore the conclusions drawn by the lower authorities were wrong and contrary to the facts of the case in view of the fact that the assessee had been a regular supplier of machines and materials to M/S TISCPL. However, M/s TISCPL requested for cancelling the earlier purchase orders and therefore, no sales/supplies could not be made during the year against the said advances, however, as per revised supply order sales were made in subsequent year. In order to cover any advance,. received by the assessee under the provisions of section 2(22)(e) of the Act the primary condition is of holding of more than 10% in equity capital of the of the compa....
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....rs. Arpital Bajla thereby the total holding of the assessee company in the company shot up to 17.40%. The assessee had taken from TISCPL Rs. 75 lakhs on 8.9.2009; Rs. 3 lakhs on 6.11.2008; Rs. 25 lakhs on 5.1.2009 and Rs. 6.75 lakhs on 13.1.2009, besides other credits in the account of TISCPL such as interest of Rs. 54,50,011/- being interest on loan which was standing as on 11.8.2008 i.e. prior to the date on which the assessee increased its holding to more than 10%. We also note from the record before us that the assessee had sold the machinery to TISCPL during the financial years 2006-07 and 2007-08 which is also apparent from the copies of ledger accounts, sale bills filed in the paper books as pages 54 to 59 and 65-A. The assessee sold machines worth Rs. 52,06,477/- during FY 2006-07 as per page no 54 of PB and Rs. 1,64,84,748.27 during FY 2007-08 page no 62 of PB . Even during the current financial year 2008-09 the sales to the M/S TISPCL were Rs. 5,06,184/- page no 68 of the PB and in subsequent year the total sales to the said company were Rs. 3,49,99,934/- and freight charges of Rs. 4,75,000/- page no 70 and 71 of the PB. Thus this proves beyond doubt that the assessee was....