2013 (7) TMI 1028

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.... erred in deleting the addition of Rs. 18,90,581/- made on account of deemed dividend u/s 2(22)(e) ? 2. Whether on the facts and circumstances of the case, the CIT (Appeals) has erred in deleting the addition of Rs. 88,000/- made on account of house hold expenses?" 3. The brief facts of the case are that the assessee drives income from salary share dealing and also enjoys interest income. A search operation under section 132 of the Income Tax Act, 1961 ('the Act' hereinafter) was conducted on 28.03.2008. During the assessment proceedings, on examination of the accounts of the assessee mentioned on tally system of computer showed that the assessee has received the following loans in the month of November, 2004 :- (Page 2, A.O.) ....

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....ional consultancy. Major portion of its receipts are generated from students fee which is collected in first 3-4 months of the enrolment. For the intervening period, it utilises the funds in giving loans and advances on interest as part of its business activities. Interest earned therefrom has also been declared regularly since last 6-7 years. It is also seen from records that the said company has received interest income of Rs. 3,78,330/- from the business of money lending out of profit of Rs. 4,48,918/- declared by it as per its return. It has been held by Hon'ble Bombay High Court in case of CIT vs. Parle Plastic Ltd. (2010) 8 Taxman 155 that where lending of money is a substantial part of the business of the company, even if not bei....

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....making the said addition in the absence of any incriminating material found during the course of search operations in the case of the appellant for the assessment year under consideration and solely on the ground that money lending is not the substantial part of company's business by applying provisions of Section 2(22)(e) in case of the appellant. Accordingly addition of Rs. 18,90,581/- is, hereby, deleted." 5. We have heard the ld. Representatives of the parties and records perused. Section 2(22)(e) provides that any payment by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares holding not less than ....

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....as been held that only that amount of loans and advances, which is actually received by assessee share holder from company during relevant assessment year, would fall within inclusive sub-clause(e) of definition of 'dividend' appearing in section 2(22)(e); opening words 'any payment' occurring in sub-clause (e) of section 2(22) contemplates actual payment made by company to assessee for being reacted as a dividend in computing income of assessee. The opening balance or loan taken in earlier year is not loan received by the assessee during the relevant previous year and could, therefore, be not treated as amount of loan or advance received by the assessee during the relevant previous year. Such amount, therefore, could not be included as dee....