TaxTMI 
TaxTMI 
2016 (5) TMI 722
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....the company. He further submitted that the assessee had entered into a sale agreement with the company towards sale of property and received advance. The company has not completed the sale transaction because of various reasons. However, the possession of the property has been handed over to the company and company has kept that property as a collateral security towards bank borrowings for the purpose of its business. Therefore, the issue involved in this case, is squarely covered by the decision of coordinate bench decision which was not considered by the Hon'ble Bench while disposing of the appeal. Therefore, it is a mistake apparent from the face of the order which requires rectification and hence, requested to recall the order passed by the Tribunal in ITA No.186/Vizag/2011 dated 11.12.2015. In support of his arguments, the Ld. A.R. placed his reliance on the judgement of Hon'ble Supreme Court of India, in the case of Honda Siel Power Products Ltd. Vs. CIT (2007) 295 ITR 466. 3. On the other hand, the Ld. D.R. did not object the miscellaneous petition filed by the assessee. 4. We have heard both the parties, perused the materials available on record. On verification of the or....
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....the said property was given to bank as a collateral security for availing the working capital loan for the company, therefore, the advance received from the company cannot be considered as loan or deposit within the meaning of section 2(22)(e) of the Act. However, the A.O. rejected the explanations offered by the assesse, after analyzing the provisions of section 2(22)(e) of the Act and also relying upon the several judicial decisions, held that the debit balance appearing in the books of the company in the name of the assesse, must be regarded as deemed dividend within the meaning of section 2(22)(e) of the Act. 6. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before CIT(A), the assessee submitted that the A.O. made the additions purely on guess and surmises without considering the fact that all debit balances cannot be considered as loan or deposit. The assesse further submitted that she had received the amount from the company towards sale of property, to this effect furnished a copy of the sale agreement entered into with the company. The assessee further submitted that she did not derive any individual benefit from the said amount, as ....
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....shown as director's advance in the company's books of accounts, it cannot be considered as loan or advance to the assesse within the meaning of section 2(22)( e ) of the Act. The Ld. A.R., in support of his arguments relied upon ITAT, Visakhapatbam bench decision in the case of Dr. Ch. Sri Padmavati Vs. DCIT in ITA No.624/Vizag/2013 dated 4.7.2014. On the other hand, the D.R. strongly supported the orders of CIT(A). 8. We have heard both the parties and perused the materials available on record. The facts with regard to the debit balance and the accumulated profits in the books of accounts of the company to the extent of Rs. 35,68,404/- is not disputed. The only dispute with regard to, whether the said debit balance in the name of the assesse in the company's books, is a loan or deposit which attracts provisions of section 2(22)( e) or which is merely a sale advance, 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 the loan from accumulated profits of the company. The A.O. was of the opinion that the assessee has periodically drawn the amount towards her pers....
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....e cannot come to the conclusion that the company is having the possession of the property and the assessee has entered into a sale agreement. 10. It is pertinent to discuss here the case law relied upon by the assessee. The assessee has relied upon the coordinate bench decision of Visakhapatnam ITAT, in the case of Ch. Sri Padmavati Vs. DCIT in ITA No.624/Vizag/2013 dated 4.7.2014 and submitted that the coordinate bench, under similar circumstances held that when assessee offered her personal property as collateral security to the borrowings of the company, then any advance received from the company is in the nature of loans and advances, which do not attracts deeming provisions u/s 2(22)(e) of the Act. We have gone through the case law relied upon by the assessee, in the light of the facts of the present case and find that the case law relied upon by the assessee has no application to the facts of the present case. The case before the coordinate bench of this Tribunal was that the assessee has entered into a sale agreement and also given her personal property on which sale agreement has been entered into the company as a collateral security for the borrowings of the company. Unde....