2019 (7) TMI 1596

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....on behalf of the Revenue and Mr.R.Kumar, Adv., represented on behalf of the assessee. 3. It was submitted by the Ld.AR that the only issue in the assessee's appeal was against the action of the Ld.CIT(A) in confirming the addition on account of the deemed dividend made by the AO by invoking the provisions of Sec.2(22)(e) of the Act. It was a submission that the assessee is a Managing Director of M/s.Chroma Print India Pvt. Ltd. The assessee was receiving remuneration of Rs. 1.50 lakhs p.m. and rent of Rs. 1,87,500/- p.m. It was a submission that the assessee had also earned profit commission of Rs. 21,22,347/- during the year. It was a submission that the AO in the course of the assessment noticed that the assessee had received amounts f....

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....mmercial expediency for mortgaging the assessee's property to bank for enabling the company, M/s.Chroma Print India Pvt Ltd., to avail loan from State Bank of India(SBI). However, the lower authorities clearly brought on record that there was no authority by way of Board Resolution from M/s.Chroma Print India Pvt Ltd. to give the said amount of Rs. 52,64,846/- . When there is no resolution or authority from the Board of Directors of the said company, to give the said amount to the assessee, it cannot be said that there exist in commercial expedience to grant such a huge amount to the assessee. In such circumstances, in our opinion, the provisions section 2(22)(e) of the Act is applicable to the amount received by the assessee from the said ....

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....e company, M/s.Chroma Print India Pvt Ltd. in the name of assessee and he has already excluded the other amount payable to the assessee. Being so, we do not find any merit in this argument. Hence, this ground raised by the assessee stands dismissed". 4. It was a submission that the co-ordinate Bench of this Tribunal had not considered the decision of the Hon'ble Kolkatta High Court in the case of Shri Pradip Kumar Malhotra reported in [2011] 15 taxmann.com 66 (Cal.), wherein, in Para No.10, it has been held as follows: "......10. After hearing the learned Counsel for the parties and after going through the aforesaid provisions of the Act, we are of the opinion that the phrase "by way of advance or loan" appearing in sub....

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....ta High Court in the case of Shri Pradip Kumar Malhotra shows that in the said decision, it was held that if the advance given by the company to the assessee shareholder by way of compensation, was for keeping his property on mortgage on behalf of the company to reap the benefit of a loan, it could not be treated as deemed dividend within the meaning of Sec.2(22)(e) of the Act. In the present case, nothing has been brought on record to show that the amounts received by the assessee was compensation for keeping his property on mortgage on behalf of the company to reap the benefit of a loan. In fact, the facts in the present case clearly show that the assessee has been drawing funds in the form of loans for earlier years also. This being so, ....