TaxTMI 
TaxTMI 
2016 (4) TMI 655
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.... appeals are being disposed of by way of this consolidated order. 2. Grievances raised by the appellant, in these appeals, are that the learned CIT(A) erred in confirming the addition of Rs. 8,25,000 for the assessment year 2008-09 and of Rs. 60,80,000 for the assessment year 2009-10, in respect of deemed dividend under section 2(22)(e) of the Income Tax Act, 1961. 3. The relevant material facts are like this. During the course of the assessment proceedings, the Assessing Officer noticed that the assessee had received the loans of Rs. 8,25,000 and Rs. 69,55,000, during the period relevant to the assessment years 2008-09 and 2009-10 respectively. These loans were received by the assessee in his proprietorship concern, i.e. Vishal Overseas,....
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.... of business by the companies, which are no banking financial companies, section 2(22)(e) is not attracted". A reference was also made to Hon'ble Delhi High Court's judgment in the case of CIT v. Creative Dyeing & Printing (P.) Ltd. [2009] 318 ITR 476 in support of the proposition that when advances are given during the ordinary course of business, the same cannot be treated as deemed dividend. It was then also submitted that "the amount received by the assessee from company are in the nature of deposits" and that the deposits are not covered by the definition of deemed dividend under section 2(22)(e). Reliance was placed on the decision of a coordinate bench of this Tribunal, in the case of Seamist Properties (P.) Ltd v. ITO[2005....
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....ll so there is no question of advance against the same. As for the reliance on Tribunal's decision in the case of Usha Commercial (P.) Ltd. (supra), the Assessing Officer noted that it does not apply because VFPL is not a non banking finance company. As for assessee's reliance on Hon'ble Delhi High Court's judgment in the case of Creative Dyeing & Printing (P.) Ltd. (supra), the Assessing Officer noted that since the advances in question were not given in the ordinary course of business, this decision does not come to the rescue of the assessee. As for the advances being in the nature of deposits, the Assessing Officer was of the view that such a situation would arise only when the person placing deposits has surplus funds w....
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....re required to be treated as in consideration of this assistance. He then takes us through a recent judgment of Hon'ble Karnataka High Court, in the case of Bagmane Constructions Pvt Ltd Vs Commissioner of Income Tax (Tax Appeal No. 473 of 2013), to emphasize the point that "loan or advance given to the shareholders or to a concern, under normal circumstances, would not qualify as dividend if such loan or advance is given to such shareholder as a consequence of any further consideration, which is beneficial to the company, received from such a shareholder." He submits that, as held by Hon'ble Karnataka High Court, "in such a case, such advance or loan cannot be said to be deemed dividend". His erudite and very well researched argume....
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.... all the conditions attracting the provisions of S.2(22)(e) exist. It is the case of the assessee that since it has mortgaged its property with the bank to enable the company to avail finance facilities from the bank, the advance by the company is not a gratuitous loan or advance, but in return for an advantage which the company has already availed on account of mortgaging of properties done by the assessees. However, it is a fact on record that the assessees have not produced any documents to prove the fact that the personal properties of the assessees were actually mortgaged with the bank for the sake of availing loans by the company. The letter dated 31.5.2008 of the Andhra Bank, submitted in the paper-book does not establish the fact th....
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....sion being a deeming provision, it has to be interpreted strictly in accordance with the spirit of the language contained therein. As we have already reiterated hereinabove, the payments made by the company towards advances to the assessee fulfils all the characteristics of 'dividend' as envisaged in S.2(22)(e) of the Act. In the aforesaid circumstances, there can't be any other conclusion excepting to consider the advances given by the company to the assessees as deemed dividend at the hands of the assessee. The case-law relied upon by the learned Departmental Representative also supports this view." 9. We agree with this approach. There has to be some material on the record to demonstrate the factual elements embedded in the ....