TaxTMI 
TaxTMI 
2017 (5) TMI 60
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the basis of payment being made in ordinary course of business when the other condition required of payer company being involved in normal business of money lending not satisfied in the case of the assessee so that the assessee can escape from the ambit of sec.2(22)(e) of the I.T. Act? (ii) Whether on the facts and circumstances of the case, the Id. CIT(A) was right in deleting the addition made u/s 2(22)(e) of the I.T. Act when the additional evidence produced by the assessee was not produced at the time of assessment proceedings inspite of ample opportunities given by the A.O. to assessee and also that the A.O. in his remanded report had vehemently opposed the admission of additional evidence at the stage appeals? (iii) Whether on the facts and circumstances of the case, the Id. CIT (A) erred in deleting the addition made u/s 2(22)(e)of the I.T. Act only on the basis of remand report sent by the A.O. and by not giving his reasoning for deleting the said additions especially when the A.O. in his remand report has opposed the relief sought by the assessee? (iv) Whether on the facts and circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 16.71 la....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anglam Multiplex Private Limited (in short "Manglam") had paid Rs. 13.30 crores to M/s. 'Martial' during March, 2008 on various dates, which was paid back by M/s. 'Martial' on 26/03/2008. (ii) The detail of shareholding of Sh. Basant Bansal and Sh. Roop Bansal (i.e. the assessee) in above two companies was noted as under: name of the shareholder Martial Buildcon private limited Mangla multiplex private limited Basant Bansal 34% 74% Roop Bansal 33% 12% (iii) The learned AO observed that Sh. Basant Bansal and Sh. Roop Bansal each had more than 10% shares in M/s. 'Manglam', which has given loan and each had more than 20% shares of M/s 'Martial', which had received the advance. (iv) M/s 'Manglam', which had extended the advance, had accumulated profit amounting to Rs. 2,28,38,532/-as on 31/03/2008. (v) According to the learned AO, all the conditions of deemed dividend u/s 2(22)(e) of the Act were satisfied in the transaction and, thus, he proposed as why advance to the extent of accumulated profit i.e. Rs. 2,28,38,532/- might not be considered as deemed dividend in the hands of Sh. Basant Bansal and Sh. Roop Bansal (i.e. the assessee) in equal proportion. (vi) Bef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sant Bansal and Sh. Roop Bansal each had more than 10% shares in M/s. B&B, which has given the loan or advance and each had more than 20% shares of M/s 'Martial', which had received the advance. (iv) In view of above, the ld. AO was of the opinion that amount of Rs. 80,46,100/-paid by M/s 'B&B' to M/s. 'Martial' was amounted to deemed dividend in the hands of Sh. Basant Bansal and Sh. Roop Bansal( i.e. the assessee) in equal proportion in terms of 2(22)(e) of the Act. (v) The assessee submitted that that accumulated profit in the hands of M/s 'B&B' was consisted of surplus arising out of sale of Rural agriculture land, which was equivalent to a capital receipt not liable to tax and thus cannot be considered for distribution as deemed dividend. Further it was contended that M/s 'Martial' was having consolidation cum development agreement with M/s 'B&B', which was cancelled later on and thus the money was received-back under the normal business transaction. (vi) The ld. AO rejected the contention that surplus out of sale of agricultural land could not be considered for accumulated profit for the purpose of section 2(22)(e) of the Act on the ground that there was no such statutory ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpanies and accordingly held the amount of Rs. 11 crore advanced by M/s. 'Marigold' to M/s 'Nova' as deemed dividend in the hands of the assessee in terms of section 2(22)(e) of the Act. 5. In support of the contention, that the transaction in question between the parties was business and commercial transaction, the assessee submitted following documents as additional evidences before the ld. Commissioner of Income-tax (Appeals) [in short 'the CIT(A)]: "a) An Agreement to sale between M/s. Maglam Multiplex Pvt. Ltd. ("Manglam") and M/s. Martial Buildcon Pvt. Ltd. ("Martial) dated 04.02.2008. b) an MOU between M/s. Marigold Merchandise Pvt. ("Marigold") and M/s. Nova Realtor Pvt. Ltd. ("Nova") dated 26.03.2008. c) an MOU between M/s. B&B Mercantile Pvt. Ltd. ("B&B") and M/s. Martila Buildcon Pvt. Ltd. ("Martial") dated 25.01.2008. d) a balance sheet as on 31.03.2008 of M/s. Nova Realtors Pvt. Ltd. ("Nova")" 6. The Ld. CIT(A) forwarded above documents to the ld. AO calling for a remand report. In the remand report, the Ld. AO opposed admission of the additional evidences, however, submitted his comments on the merit of additional evidences also. 7. Before the ld. CIT(A), t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in furtherance of the contract as stated in the agreement/memorandum of understanding, responsibility of the party who terminated the agreement and compensation to other party etc. issues. She submitted that even the genuineness of the agreements or memorandum of understanding was not examined by the Assessing Officer. She contended that, if the Assessing Officer had not carried out any enquiries on said agreement/memorandum of understanding, the Ld. CIT(A) was required to be examine the additional evidences for justification of business connection between the parties. The Ld. CIT(A) could not close his eyes and accepted whatever was forwarded by the Assessing Officer in the remand report. The Ld. CIT(DR) submitted that in view of no enquiries done in respect of additional evidences, the matter might be restored to the file of the Assessing Officer for deciding afresh the issue of deemed dividend and business connection between the parties. 9. On the other hand, the Ld. counsel of the assessee relied on the finding of the Ld. CIT(A) and submitted that in case of first two additions of deemed dividend of Rs. 16.71 lakhs and Rs. 40.23 lakhs, the Ld. CIT(A) has relied on the decisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....clined dividend. Therefore, the addition of: Rs. 16,71,302/- is hereby deleted. 8.8 Second addition of Rs. 40,23,050/- u/s 2(22)(e) was made by the A.O. in the case of Sh. Roop Bansal and Sh. Basant Bansal on the similar reasoning rejecting the claim of the appellant that the said transaction was not a loan hut was a business transaction. However, after examination of additional evidence being MOU between M/s. B&B and M/s. Martial by the present A.O., the present AO has not made any adverse comment on this claim of the appellant in the remand report. AO has also mentioned that even in the case of M/s. Martial which was under scrutiny, no adverse inference was drawn by the then AO in regard to these payments. 8.9 Moreover, the similar issue has also been discussed in case of appeal of assessee's brother Sri Basant Bansal, wherein half of the amount was added in the income as deemed dividend. Considering the facts, remand report and legal position, 1 have decided the issue in favour of Sh. Basant Bansal in appeal No. 914/10-11 A.Y. 2008-09 vide order dated 30.03.2012 (at ground no. 5). 8.10 Considering the material available on record, remand report of the AO, wherein the prese....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny adverse comments, after considering the additional evidence in the form of agreement, on the argument of the A.R. that M/s Mangaiam made initial payment of Rs. 8.4 crore for purchase of 100 kanais of land for total consideration of Rs. 42 crores as per the agreement filed (wherein as Rs. 33.42 lakhs was the accumulated profit of M/s Mangalam, Rs. 16.71 lakhs was added in the hands of both the assessees. 4.11 Similarly after examination of additional evidence being an MOU between M/s B.B. and M/s Martial by the the A.O. has not made any adverse comments on the argument of A. R. regarding payment being furtherance . of business transaction as per the MOU between the two A.O. has also mentioned that the case Martial was under scrutiny and no adverse inference was drawn by the then A.O. in regard to these payments. 4.12 Considering the facts and in the circumstances of the case as discussed hereinabove, material available on record including the additional evidence and also the remand report of the A.O., it is held that none of these three payments namely (i)payment made by M/s Misty to M/s Martial (leading to addition of Rs. 13,76,629/-), (ii) payment made by M/s Mangalam to M/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e was drawn by the then AO in regard to these payments. 8.13 Since the present AO has not given any adverse comment on the claim of the appellant in his remand report and has effectively accepted the claim/ argument of the appellant on merits (only objecting to admission of additional evidence, which has been suitably dealt by me in the present order), it leads to straight away deletion of the addition made by the then AO without further discussion on the issue. It is just to add that MOU between M/s. Nova and M/s. Marigold shows that M/s. Nova had applied for a licence for development of an IT Park before the Director, Town and Country Planning, Government of Haryana. For this purpose, M/s. Nova approached M/s. Marigold with a proposal seeking initial funding to meet its immediate liabilities in relation to filing of the application and offered M/s. Marigold to join as a partner. In the audited accounts of M/s. Marigold an amount of Rs. 11 Crores stands disclosed under the Schedule 5: "Loans and Advances" as advance against property and the same is disclosed under the heading, 'Related Party Transactions'. It is not in dispute that this balance sheet has been filed in the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and 5 of the appeal are dismissed. 11. As regarding the ground No. 2, challenging the admission of additional evidences under Rule 46A of the Income Tax Rules, 1962 is concerned, we find that the Ld. CIT(A) forwarded all the additional evidences for comments of the Assessing Officer, who objected admission of the additional evidences and given comments on the merit also. As far as admission of additional evidences is concerned the Ld. CIT-A after having noted legal position in view of the decision cited in the impugned order, decided the issue as under: "11. Coming back to the objection of the Assessing Officer to the admission of additional evidence, it is submitted that the objection is technical, inasmuch as, it is not in dispute that 70 cases of the group were simultaneously going on and the accounts / tax personnel's were working overtime to meet the deadline of placing all the documents on record. It is not uncommon that in such circumstances, the Assessing Officer gives priority to certain cases and other cases are left to be completed just before the limitation. The Appellant was under the bonafide belief that all the requisite informations/details called for have submitt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich those evidences could not be filed before the Assessing Officer. The Ld. CIT-A has recorded the reasons in writing for admission of those evidences and allowed a reasonable opportunity to the Assessing Officer to examine those evidences, and thus Ld. CIT-A has complied the procedure laid down in Rule 46A of Income Tax Rules. We do not find any violation of Rule 46A of the Income Tax Rules in admitting those evidences and accordingly we dismiss ground No. 2 of the appeal . 12. Ground No. 6 of the appeal being general in nature we are not required to adjudicate upon. 13. In the result, appeal of the Revenue is dismissed. ITA No. 5672 /Del/2012 for AY 2009-10 14. In the year under consideration, also the issue of three amounts of deemed dividend is involved. (a) Deemed dividend amounting to Rs. 20,25,00,000/- (i) In the course of scrutiny proceedings in the case of M/s Marigold Merchandise Private Limited (in short 'Marigold'), the ld. AO observed payment of Rs. 20.25 crores to M/s Zenith Realtech Private Limited. (in short 'Zenith') on 7/03/2009. (ii) The ld. AO noted that the assessee was holding 99% shares of M/s 'Marigold' and 50% shares of M/s 'Zenith' during the fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es and M/s 'Marigold' was having accumulated profit more than the amount advanced to M/s 'Mikado'. (iii) According to the ld. AO the amount advanced to the assessee M/s. 'Mikado' satisfied all the condition of deemed dividend is in the hands of the assessee. (iv) Before the ld. AO Assessing Officer, the assessee contended that Ms. 'Marigold' and M/s. 'Mikado' were having a business relationship and money in question was received under normal business transactions. It was also contended that the accumulated profit of M/s 'Marigold' included share premium amount and exempted income, which was not available for distribution of dividend. (v) The ld. AO was not satisfied with the submission of the assessee and added the amount of Rs. 1.10 crores as deemed dividend. (vi) Before the Ld. CIT(A), the assessee submitted a copy of an agreement to sale between M/s 'Mikado' and M/s 'Marigold' dated 03/04/2008, which was forwarded to the Assessing Officer calling for his comments. The Assessing Officer forwarded his comments on the said additional evidence that that total sale consideration was of Rs. 5.50 crores and against which M/s 'Marigold' has paid an amount of Rs. 1.10 crores to M/s '....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation also. 15.2 The Ld. counsel of the assessee, on the other hand, relied on the finding of the Ld. CIT-A and accordingly prayed for upholding the same. 15.3 We have heard the rival submissions and perused the relevant material on record. As far as addition of deemed dividend of Rs. 20.25 crores is concerned, the Ld. CIT-A has allowed the relief on the ground that the assessee was not holding substantial shareholding in M/s. 'Zenith' as on the date of loan transaction and, therefore, one of the conditions of section 2(22)(e) of the Act was not met. The finding of the Ld. CIT(A) is reproduced as under: "12.5 I have considered the submission of learned A.R., remand report of the AO, counter comments of AR and have perused the material on record. The addition of Rs. 20,25,00,000/- was made in the case of Sh. Roop Bansal u/s 2(22)(e) considering that he is having more than 20% shareholding in the company M/s. Zenith Realtech P. Ltd. who received the amount. However, material on record shows that Sh. Roop Bansal became the shareholder of M/s. Zenith Realtech only on 8th September, 2009 i.e. in F.Y. 2009-10 relevant to A.Y. 2010-11. This is further proved by the external evidence fi....