2017 (2) TMI 271

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.... the Income Tax Act, 1961. 2. That the appellant prays to add, amend and delete any ground of appeal." 2. The Ld. AR at the time of hearing, inviting attention to order dated 27.01.2016 in ITA No.2444/Del/2015 in the case of Sh.Nalin Gupta vs ACIT pertaining to 2007-08 assessment year submitted that the point at issue is fully covered in favour of the assessee by the aforesaid order of the ITAT. 2.1. Relying upon the said order, it was submitted that the CIT(A), Faridabad in the facts of that case vide order dated 04.03.2015 had confirmed the addition made by way of a disallowance on identical facts and circumstances. In the facts of that case also, it was submitted another Director of M/s Prescomec Auto Company Private Limited had....

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.... vs CIT-V, (WB) (2011) 15 Taxman.com 66 (Calcutta) and ACIT vs Smt.G.Sreevidya (2012) 24 Taxmann.com 75 (Chennai) the issue is fully covered in favour of the assessee. 3. The Ld. Sr.DR considering the facts on record though relied upon the impugned order, however, could not cite any reason why the decision of the ITAT should not be followed. 4. Having heard the rival submissions and perused the material available on record, I find that the assessee is also a director in the said company M/s Prescomec Autocomp Pvt.Ltd. and is also a principal shareholder. The assessee has a running account with the company in which the amount contributed by the assessee is added and the amount drawn by the assessee is reduced. During the year on 27.04.....

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....s. 8,84,029/- can be held as deemed dividends u/s 2(22)(e) of the Act. 3.1. The Hon'ble Calcutta High Court in the case of Pradeep Kumar Malhotra vs. CIT-V, (WB) (2011) 15 Taxman.com 66(Calcutta) at para 11 held as follows. "10. After hearing the Ld.Counsel for the parties and after going through the aforesaid provisions of the Act, we are of the opinion that the phrase "by way of advance or loan" appearing in sub clause (e) must be construed to mean those advances or loans which a share holder enjoys for simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of t....

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....pany to reap the benefit of loan as deemed dividend within the meaning of S.2(22)(e) of the Act." 3.2. The Chennai A Bench of the Tribunal in the case of ACIT vs. Smt. G.Sreevidya (2012) 24 Taxmann.com 75 (Chennai) held as follows "Held: In order to attract the provisions of S.2(22)(e), the important consideration is that there should be loan/advance by a company to its shareholder. Every amount paid must make the company a creditor of the shareholder of that amount. At the same time, it is to be borne in mind that every payment by a company to its shareholders may not be loan/advance. In the present case, the amount was withdrawn by the assessee from the company only to meet her short term cash requirements. By virtue of offeri....