TaxTMI 
TaxTMI 
2018 (1) TMI 1234
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....wherein the assessee is a shareholder. Further, he observed that as the assessee is shareholder holding not less than 10% of voting power, the transaction mentioned above falls under the category of deemed dividend as enumerated under the provisions of section 2(22)(e) of the Act. When the AO asked the assessee as to why the provisions of section 2(22)(e) should not be invoked for the year under consideration, the assessee vide his letter stated that the amount receivable in the hands of the company from the assessee is neither a loan nor an advance, it is a routine transaction which the company generally carries on and in the normal sense the assessee is a debtor to the company. In this connection, he relied on the following cases: 1. ACIT Vs. G. Sreevidhya [2012] 138 ITD 427 2. Pradip Kumar Malhotra Vs. CIT, [2011] 203 Taxman 110/15 2.2 After considering the submissions of the assessee, the AO observed that the facts of the cases quoted by the assessee are totally different from the facts of the assessee's case, as in the present case, the assessee received loans from the company frequently and the transaction involved was only loan transaction and not regular business t....
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....ply to the remand report furnished by the appellant have been duly considered. The judicial decisions relied upon by the appellant which have been brought out supra merit consideration and have been considered. Normal business activity on the grounds of commercial expediency as held in the ratio of the case in the case of S.A.Builders (288 ITR 00l)(SC) is kept in view. The ratio of the decisions that were relied upon by the appellant which were remanded to the AO were not examined critically from the angle of commercial/ business expediency nor an opportunity was given to the appellant as can been seen from the record made available. The ratio of the decisions could have been examined keeping in view the landmark judgment of Hon'ble Supreme Court in the case of S.A. Builders referred to supra. Para-31 of the judgement in the case of S.A. Builders, states that Income Tax authorities must put themselves in the shoes of the assesse and see how a prudent businessman would act. It was also held that the authorities must not look at the matter from their own view point but that of a prudent businessman. Keeping in view the fact that commercial expediency is a vital consideration for ....
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....ssessee furnished a constructed profit and loss account." The details are available on the assessment record and were again submitted in the appeal proceedings. In the remand proceedings before the AO, these aspects were not critically analysed. The submission of the appellant in the reply to the remand report, with regard to the addition of Rs. 1,07,00,000/- as unexplained cash deposits with details of cash deposits, the agricultural crops grown, bank details etc. establish that the addition made on this account is not warranted as the requisite details about the cash deposits were already available on the assessment folder at the time of assessment itself (as can be seen from the assessment folder) and again resubmitted during the course of appeal proceedings. The Assessing Officer has noted the same in the Para-2.2 supra. However, as brought out in the trading and profit & loss account which is available in the assessment record (also mentioned on page-4 of the assessment order) and furnished in the appeal proceedings, the gross receipts of the appellant for the year ended 31.03.2011 is treated as business receipts of Rs. 1,04,50,000/- (which is part of the addition of ....
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....closes the collateral properties belonging to the assessee (Refer page 173 of paper book II). He further submitted that as per Circular No. 19/2017 of CBDT, trade advances which are in the nature of commercial transactions would not fall within the ambit of 'advances' u/s 2(22)(e) of the Act. The company has given advance to the assessee by passing proper resolution dtd. 10/05/2010 to purchase a building for Registered Office, which is placed on record at page 108 of paper book I. Further, he submitted that assessee has given his personal property as collateral security in order to get the loan, in quid-pro-quo, the company has given advance, which is in the nature of compensation, it cannot be treated as advance for the purpose of section 2(22)(e), for that proposition, he relied on the decision in the case of Pradeep Kumar Malhotra Vs. CIT (Calcutta) in ITA No. 219 of 2003 and Shital Kumar Vij Vs. ACIT, ITA No. 406/2009. 8.1 With regard to cash deposit, he submitted that assessee has cultivated the land for growing cotton in the lands belong to his family and relatives. The family holds 69.82 acres of land. The family members have submitted confirmation letters by way of an af....
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.... 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 the voting power; but if such loan or advance is given to such share holder as a consequence of any further consideration which is beneficial to the company received from such a share holder, in such case, such advance or loan cannot be said to a deemed dividend within the meaning of the Act. Thus, for gratuitous loan or advance given by a company to those classes of share holders would come within the purview of Section 2(22) but not to the cases where the loan or advance is given in return to an advantage conferred upon the company by such share holder. In the case before us, the assessee permitted his property to be mortgaged to the bank for enabling the company to take the benefit of loan and in spite of request of the assessee, the company is unable to release the property from the mortgage. In such a situation, for retaining the benefit of loan availed from Vijaya Bank if decis....