TaxTMI 
TaxTMI 
2015 (11) TMI 1764
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.... 30.10.2014 declaring a loss of Rs. 2,84,595/-. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has received a sum of Rs. 2,00,00,000/- from its sister concern M/s. Maa Bhuasuni Industries Pvt. Ltd. to which the provisions of section 2(22)(e) are applicable. Accordingly, invoking the said provision, he made an addition of Rs. 13,33,656/- to the extent of accumulated profit of M/s. Maa Bhuasuni Industries Pvt. Ltd. as deemed dividend. On appeal, the ld. CIT(Appeals) confirmed the said addition made by the Assessing Officer. 4. We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the ld. Counsel for the assessee, a search action was conducted in the case of the assessee- Company as well as other group Companies and in the assessment completed for the year under consideration under section 153A in pursuance of the said action, the amount of Rs. 13,33,656/- was added by the Assessing Officer to the total income of the assessee for the year under consideration. He submitted that the said addition made by the Assessing Officer was deleted by the ld. CIT(Appeals) vi....
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....interest charged on the loan granted. The analysis of the balance sheets for the corresponding period also showed that more than 50% of the gross assets appearing in balance sheet were interest bearing loans. These lead the ld. CIT(A) to conclude that granting of loans formed substantial part of MBIPL's business. As per sec. 2(22)(iii) the loan granted by MBIPL did not fall within the definition of dividend as substantial part of its business was granting of loans. 8.2. Keeping in view of the above facts and the decision of the Tribunal in the case of R.D. Fan Ltd., wherein this Tribunal has come to the conclusion that when once the business of the lender company covered by exception (ii) to section 2(22)(e) of the Income Tax Act, then the provisions of section 2(22)(e) will not be applicable. Since in this case, it is clearly established that MBIPL was considered to be engaged in the business of granting of loan, the analysis of the P&L A/c of the MBIPL for the period 2000-01 to 2005-06 showed that granting of loan formed substantial part of its business which is more than 50% of the revenue. We are of the considered view that as per section 2(22)(iii), the loans granted by ....
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....le on record, the ld. CIT(Appeals) deleted the addition made by the Assessing Officer under section 68 for the following reasons given in paragraph no. 5.3 of his impugned order:- "5.3. I have carefully looked into the facts of the case and the submissions made before me. It is very much clear from the perusal of material available on record that all the 8 companies who had applied for allotment of shares and had issued cheques to the appellant company, and in whose cases, the addition has been made u/s.68 of the Act, were framed in existence in the last 8 'to 10 years. These companies are on, the records of the Income Tax Department as sis evident from the PANs and the confirmations filed during the Assessment - proceedings and the affirmation made confirming the transaction, even as on date. The Identity of the companies in question is well established. The addresses are available on records of the Appellant company in their members register. The amount paid by way of share application money through cheque has come through the banking channels and it is not a case where the share application money has been paid In cash. The AO h ad issued notice u/s.133(6) of the Act to all....
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....nvenient by the Appellant . There is nothing wrong when the money along with share application has come In Sept ember 2004. Because there was no flow of funds, the said amount aggregating in all to Rs. 3 0 lakhs in any case does not represent a credit of a sum in the, real sense of the term in the Books of the Appellant. In reality, there was no credit in accounts of any sum of motley. The entire receipts were shown 'as "towards share application money" and the cheques in this regard were shown as cheques in hand on the asset side, which were realized and collected only in Sept ember 2004. Thus, on all the 4 counts it is noticed that the observation of the AO were o n a weak wicket . Thus, even where the share applications were received on 31.03.2004, the amount represented by the share application money was credit ed in the Bank of the Appellant company in September 2004, a fact which is verifiable from records. This clearly means that the Appellant was privy to those funds only in A.Y. 2005-06 and not in A.Y.2004-05. Under, the circumstances, in my view the addition made u/s.68 of the Act Is not at all justified. 5.3.1. In the case of CIT Vs. Stellar Investment L td 192 ITR....
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.... the shareholder before him".' In case of CIT Vs Antartica Investment (P) Ltd 262 ITR 493 (Del), the facts were that the assessee had received Rs. 1.345 crores as advance against share application money from 2 Private Limited Companies on 31.0 3.1992. The assessee had produced the confirmation letters, the copies of Accounts In their Books, the copies of memorandum and Articles of Association of both the companies, copies of Bank Account of the Companies from where the cheques were Issued and also the certified copy of the Accounts and the Auditors Report. The AO being not satisfied was of the view that the assessee has failed to prove the genuineness of the share subscription recorded In the Books and he added it u/s.68 of the Act. This was deleted in by the CITCA) and the findings of the C IT(A) were upheld by the Hon'ble ITAT. On further Appeal, the Hon'ble High Court upheld the deletion and observed that It was not the case of the AO that any amount found credit ed In the Account of the 2 companies had direct or Indirect nexus with the assessee company. It is further noticed that in CIT Vs. Orissa Corporatio n Lt d 159 ITR 78 (SC), it has been held that; "Where th....