TaxTMI 
TaxTMI 
2018 (1) TMI 993
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....for the assessment year 2008-09. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience. ITA No.620/Vizag/2014 (A.Y. 2008-09): 2. All the grounds of appeal are related to the deletion of addition of Rs. 35 lakhs assessed as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). A search u/s 132 of the Act was conducted in the group cases of Bhavanasi Anjaneyulu, Pidiguralla, Guntur District on 22.1.2011. During the course of search, a promissory note executed in favour of the assessee by Mr. Ch. Madan Mohan dated 28.11.2007 representing Vijetha Foundation and Constructions Pvt. Ltd.(M/s ....
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....ction 2(22)(e) of the Act and made the addition of Rs. 35 lakhs in the hands of the assessee. 3. Aggrieved by the order of the A.O., the assessee went on appeal before the CIT(A) and the Ld. CIT(A) deleted the addition holding that these transactions were purely sale and purchase transactions but not the finance transactions or any loan to hold the payment as a deemed dividend u/s 2(22)(e) of the Act. Hence, the revenue preferred appeal before this Tribunal. 4. During the appeal hearing, the Ld. D.R. submitted that in the search u/s 132 of the Act, a promissory note was found in favour of the assessee and it was observed that the company M/s. First Tek Pvt. Ltd. had advanced a sum of Rs. 35 lakhs to M/s. Vijetha Constructions which in....
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....um of Rs. 35 lakhs to M/s. Vijetha Foundation and Constructions Pvt. Ltd. for purchase of assets and as a precautionary measure, a pro note was executed in favour of the assessee as a security for the amounts advanced by First Tek Pvt. Ltd. and no amount has been received by the assessee either from M/s. Vijetha Constructions or M/s. First Tek Pvt. Ltd so as to treat the said amount as deemed dividend u/s 2(22)(e) of the Act. The Ld. A.R. submitted the paper book enclosing sale deeds for purchase of flats from M/s. Vijetha Constructions, in Page Nos.22 to 36 and Page Nos.37 to 49. As per the sale deed in page No.22, the company M/s. First Tek Pvt. Ltd. has purchased flat Nos.303 & 503 and page No.29, the company has paid the consideration o....
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....seized material and observed that the promissory note for an amount of Rs. 35 lakhs dated 28.11.2007 in favour of the assessee was a security for the payment made by M/s. First Tek Pvt. Ltd. to M/s. Vijetha Constructions. The deemed dividend is applicable in circumstances of payment made by the company to the shareholder, having beneficial ownership of 10% or more than 10% of the shares, the amount should have been provided by way of loan or advance to shareholder and such amount should be for the benefit of the shareholder and the company should have sufficient reserves. In the instant case, it is established that the payment of Rs. 35 lakhs by cheque No.685243 was towards the consideration for purchase of flat from M/s. Vijetha Constructi....