TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 51
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....proceedings. 4. That the demand of Rs. 70,81,930/- created, pursuant to these assessment, which are disputed demand, be kindly stayed till the disposal of the appeal. 5. That the several observation as made and inference as drawn are untenable, incorrect, unwarranted and uncalled for. 6. That the interest charged u/s. 234B & 234C of the Income Tax Act, 1961 is illegal on various and legal grounds. 7. That the appellant may take any other ground or grounds at the time of hearing of appeal before the ITAT with the kind permission of the Ld. CIT(A), Meerut. 2. The brief facts of the case are that Assessee filed return of income on 29.9.2012 declaring Rs. 4,90,94,040/- income in it is an individual and Director/ Share holder in the Company in which Public are not substantially interested. The case of the assessee was selected for scrutiny through CASS and statutory notice u/s. 143(2) of the Income Tax Act, 1961 dated 23.9.2013, fixing the date of hearing for 03.10.2013 was issued, which was served upon the assessee. Another notice u/s. 142(1) alongwith questionnaire were issued on 22.11.2013. In response to the aforesaid notices, the AR of the assessee attended the procee....
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....rial land at Khasra NO. 84/1 & 100/1, Village Rethani, Meerut, measuring 4185 sq.mtrs. But the said agreement got terminated vide termination agreement dated 11.11.2011 and the nature of said payments are not simplicitor loan or advance but it is a trade advance for business purposes, which is outside the purview of sectio0n 2(22)(e) of the Act. To support his contention, he relied upon the CBDT Circular No. 19/2017 dated 12.6.2017 relating to settled view on Section 2(22)(e) of the Income Tax Act, trade advances - reg. and also relied upon the case law Sunil Sethi (2009) 26 SOT 95 (Del). 6. On the contrary, Ld. DR relied upon the orders of the authorities below and filed the written submissions citing therein the various case laws. The case laws cited by the Ld. DR in the written submissions are reproduced hereunder :- "Sub: Written Submission in the above case- reg. In the above case, assesse claim that the transaction are commercial in nature so covered by the board circular is not acceptable as CIT appeal has discussed the nature of transaction in detail and found it not commercial in nature .it is also humbly submitted that the following decisions may kindly be considere....
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....axmann.com 97 (Madras)/[2015] 235 Taxman 279 (Madras) where Hon'ble Madras High Court held that where assessee, holding 60 per cent shares of a company, took personal loan from accumulated surplus of said company, said amount would be treated as deemed dividend under section 2(22)(e), after reducing therefrom amount repaid by assessee during year 7. Shashi Pal Agarwal Vs CIT [2015] 54 taxmann.com 289 (Allahabad)/[2015] 229 Taxman 307 (Allahabad)/[2015] 370 ITR 720 (Allahabad) where Hon'ble Allahabad High Court held that where lending of money was not part of business of lending companies, loan/advance given to assessee-shareholder would be treated as deemed dividend under section 2(22)(e) 8. Star Chemicals (P.) Ltd Vs CIT [72 Taxman 279, 203 ITR 11,114 CTR 185] where Hon'ble Bombay High Court held that provisions of section 2(22)(e) would apply to a company which had taken loan from its subsidiary 9. CIT v Sunil Chopra [2011] 12 taxmann.com 496 (Delhi)/[2011] 201 Taxman 316 (Delhi)/[2011] 242 CTR 498 (Delhi) Tribunal deleted addition accepting assessee's contention that said advances were received against sale of property under terms of agreement da....
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....loan or advance but it is a trade advance for business purposes, which is outside the purview of section 2(22)(e) of the Act. We further note that in this case, the position was rather reverse i.e. the assessee being a Director and share holder of the company, was providing frequent advances to the company for its business requirements and the company was having credit balance of the assessee in its books, the op. cr. bal. in this year was Rs. 7,82,149/- & the cl. cr. bal. was Rs. 2,37,47,149/- (Page No. 1 of PB). The assessee never charged any interest from the company. The Co. in its books, opened the consolidate ledger a/c. of assessee for loan taken and for advance given against purchase of property, however during proceedings, bifurcated loan a/c and advance against property alc was furnished (Page no. 2 PB). Thus it is a case of advance given for purchase of property. It is also noted that the purchase agreement not being registered cannot be a reason for not accepting the contents of the agreement when it is witnessed by two persons also (page no. 7-9 of PB). In our opinion, the effect of non registration, at the most, can be only to the extent that it may effect its enforce....