2018 (8) TMI 846

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....1961 arising out of ITA No.240/Hyd/2017 "B" Bench, AY:2009-10 - order pronounced on 31/05/2018- Rectification regarding. 1. The Appellant Srikant Marru filed an appeal for the Assessment Year 2009-2010 and the appeal was numbered as ITA No. 240/Hyd/2017 before the Income Tax Appellate Tribunal, "B" Bench, Hyderabad. 2. The Hon'ble Income Tax Appellate Tribunal "B" Bench vide its order dated 31/05/2018 allowed the appeal in part. This Miscellaneous Petition is fled to rectify the order passed on 31/05/2018 and in relation to confirmation of sum of Rs. 5,29,750/- as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961. 3. The Appellant is a substantial shareholder in M/s. Santoshi Chit Fund Pvt Ltd. The comp....

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....ding substantial interest and thus avoiding declaration of dividends and dividend distribution tax. On the contrary, if no part of the accumulated profits are utilised to advance loans to the Directors, the provisions of section 2(22)(e) of the IT Act, 1961 were inapplicable. On the facts of the Appellant's case, there is a clear finding that there is a substantial nexus between the loan taken by the company from Lie and the amount advanced to the Appellant, in which case, the transaction would not fall within the meaning of section 2(22)(e) of the Income Tax Act, 1961. 7. The Appellant further submits that but for the loan taken by the company from LIC, no amount of accumulated profits would have been lent by the company to th....

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....s. 4,15,830 and as it was not the sum advanced to the assessee for Keyman Insurance Policy, the same cannot be brought to tax u/s 2(22)e of the Act. Without prejudice to the above argument, he also submitted that if the addition is to be sustained, it can only be sustained to the extent of the accumulated profit available to the assessee and not the whole sum of Rs. 5,29,750. 3. The learned DR, however, submitted that there is no mistake in the order of the Tribunal which needs rectification. 4. Having regard to the rival contentions and the material on record, we find that the Tribunal has held that there is a nexus between the loan taken from the LIC and the premium paid for the Keyman Insurance Policy. Since the Keyman Insurance Po....