TaxTMI 
TaxTMI 
2017 (11) TMI 506
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.... are connected with each other, these were heard together and are being disposed of by this consolidated order for the sake of convenience. ITA No.316/Ahd/2016 - ShriDilip G. Shah 2. The grounds raised by the assessee in this appeal read as under:- "1. The learned Commissioner of Income-tax has erred in confirming the addition on account of deemed dividend u/s 2(22)(e) of the Act of Rs. 21,77,500/-. 2. The Learned CIT(A) has erred in confirmed the addition on account of deemed dividend u/s 2(22)(e) of the Income Tax Act in spite the fact that all details and clinching evidences were filed showing that there is no loan received by the Director but it is a current running account of a Director with company in normal co....
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....,77,500/- from M/s Monachem Additives P. Ltd. during the last 3 days of F.Y. 2009-10. The assessee asserted that it had not received any substantial benefits from M/s. Monachem Additives P. Ltd. The assessee also asserted that it had received interest from M/s Monachem Additives P. Ltd. on the sum advanced to it and had also paid interest to it on sum received from, therefore, the same could not be classified as deemed dividend u/s 2(22)(e) of the Act. However, the Assessing Officer rejected assessee's contentions and held that since the assessee had(i) received a sum of Rs. 21,77,500/- from M/s Monachem Additives P. Ltd., (ii) the assessee had substantial shareholding in the creditor company, (iii) public was not substantially interest....
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....BPL. We find that the appeal of SDBPL travelled up to the Hon'ble Jurisdictional High Court of Gujarat wherein the Hon'ble High Court wasseized with the following question of law for consideration;- "Whether on facts and in law the ITATwas right in cancelling the order passed u/s 201(1) and 201(A) of the Act, without appreciating that the amount advanced was in the nature of deemed dividend u/s 2(22)(e) of the Act?" 9.And the relevant findings of the Hon'ble High Courtreads as under:- 4. It can thus be seen that the Commissioner as amatter of fact found that the payments were not in the nature of current adjustment. There was movement of fund both ways on need basis. The transactions in the nature of loans and adv....
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.... shareholder of M/s. Monachem Additives Pvt Ltd. Certain facts which have not been discussed by the lower authorities, even though brought on record by the assessee, are that the assessee was carrying on the business under the sole proprietary concern M/s. Monachem Corporation for last 25 years. He intended to expand the business of trading in chemicals. He accordingly established a private company namely M/s. Monachem Additives Pvt Ltd on 25.10.2007. In the initial years, company incurred losses on account of devaluation of rupee and was in an urgent financial need. 9. The assessee was enjoying a cash credit facility from HDFC bank of Rs. 3.77 crores. During the year under appeal, assessee almost stopped continuing business in his sole ....
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....n transferred to the second account in the name of Monachem Corporation. 11. Now turning on to the second ledger account in the name of Monachem Corporation, we find that the assessee was having an opening credit balance of Rs. 4.28 crores in the books of M/s. Monachem Additives Pvt Ltd. There are regular transactions for movement of funds to and from between the two parties. The company is regularly providing for interest on the unsecured loans taken from the assessee. As discussed above, that the company was in urgent need of finance/credit facilities and on the insistence of the HDFC Bank, the credit facility was transferred from individual account to the company account. From perusal of all these transactions of movements of fund, we....
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....t account with appellant company, wherein the transactions of debit/credit occurred throughout the year. Thus, the debit balance of Rs. 21,77,500/- as reflected in the name of director in the books of appellant company is nothing but the routine commercial transactions involving trade received from the customer on behalf of the company. Thus the action of the ld. AO invoking the provisions of Section 2(22)(e) of the Act in case of director and correspondingly treating the appellant company as assessee in default u/s 201(1)/201(1A) of the Act is incorrect and erroneous. It is submitted that impugned demand raised of Rs. 3,46,223/- is totally incorrect, illegal & the same be deleted" 13. We have heard the rival contentions, perused the mat....