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2020 (6) TMI 290
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....ll the shares of the above said company which needed to be considered whereas the amount of advances which was received by the assessee from its subsidiaries was rightly treated by the Assessing Officer as deemed dividend. 2. The ld. CIT(A) has erred in deleting the addition of Rs. 24,25,168/- being transaction with EDP Software Ltd. ignoring the fact that the assessee is holding all the shares of the above said company which needed to be considered, whereas the amount of advance which was received by the assessee from its subsidiaries was rightly treated by Assessing Officer as deemed dividend. 3. That the appellant craves leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. Ground No. 1 raised by the Revenue relates to addition of Rs. 2,88,30,842/- being the transaction with E-edit Infotech Pvt. Ltd; treated by assessing officer as deemed dividend u/s 2(22) (e) of the Act. 4. Facts of the case which can be stated quite shortly are as follows:The assessee company filed its return of income for the assessment year under consideration declaring total income of Rs. 79,51,000/-. Subsequently, assessment order u/s 143(....
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....ndent on several facts which arenot identical in all the cases.In respect of addition of Rs. 2,88,30,842./- with respect to amount received from E- Edit Infotech Pvt. Ltd., 1 find that the appellant was maintaining two ledgers for E-Edit Infotech Pvt. Ltd., one with respect to sale of immovable property and second one, being in the nature of current account. This is even evident from the assessment order wherein at Page 6, the Ld. Assessing Officer has reproduced ledger copy of first nature of transactions and at Page 7 to 9, wherein he has reproduced ledger copy of second nature of transactions. The Assessing Officer has separately calculated peak credit for both the types of transactions and applied the provisions of section 2(22)(e) of the Act. Ld AR emphasized that the money advanced to the assessee co. by EIPL is either an advance for property and current account transaction or a loan. If it is an advance for property then it is a business advance and therefore section 2(22) (e) would not apply. The AR argued that alternatively if it is a loan then since substantial part of the business of the lending company is granting of loan and hence section 2 (22) (e) would not ....
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....mitted before us that in the instant case, the ld. Assessing Officer failed to appreciate the fact that there was no accumulated profit in the books of EDP Software Ltd as on 31.03.2011. At this juncture it is relevant to mention here the written submissions furnished by the assessee before the ld CIT(A) in respect of accumulated profit in the books of EDP Software Ltd as on 31.03.2012: "Debit Balance of profit & loss account of EDP Software Ltd. was Rs. 10,60,332/-. Break up of Reserves & Surplus as on 31.03.2011 of EDP Software Ltd. is given below: Sl. No. Particulars Amount (Rs.) Amount (Rs. ) 1. Securities Premium Account 34,85,000 2. Debit Balance in Profit & Loss Account (33,55,749) 3. Add: Surplus / (Deficit) during the year 2011-12 22,95,417 (10,60,332) Total 24,25,168 It is further submitted that securities / share premium appearing under the head Reserves & Surplus cannot be construed as accumulated profits of the company as held by the Hon'ble Calcutta High Court in the matter of CIT, Kol-III vs. Shree Balaji Glass Manufacturing Pvt. Ltd. [2016] 386 ITR 128 (Calcutta....
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....peal of the Revenue are dismissed. 12. Now we shall take assessee's cross objection in C.O. No. 86/Kol/2018 for A.Y. 2012-13 wherein the grounds of appeal raised by the assessee are as follows: G. No. 1 That in the facts and circumstances of the case, the Learned Assessing Officer has erred in treating the entire accumulated profit as on 01.04.2011 for the purpose of section 2(22)(e) of Income Tax Act. The Learned Assessing Officer should have reduced the opening balance of advance received while making addition of Rs. 2,88,30,842/- under section 2(22)(e) of the Act. The Learned CIT (A) has erred in not discussing this issue while passing appellate order. G. No. 2 That in the facts and circumstances of the case, the learned assessing Officer has erred in treating the entire accumulated profit as on 01.04.2011 for the purpose of section 2(22)(e) of Income Tax Act. The Learned Assessing Officer should have reduced the opening balance of advance received while making addition of Rs. 24,25,168/- under section 2(22)(e) of the Act. The Learned CIT (A) has erred in not discussing this issue while passing appellate order. G. No. 3 ....
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....1.04.2011 to the tune of Rs. 40,72,292/-. However, the closing balance as on 31.03.2012 was credited to the tune of Rs. 1,65,97,383/-. The assessee has taken amount from Nathvar Tracon Pvt. Ltd. and paid the amount during the year for the purpose of business therefore it is a current account and as per the ld. Counsel the addition u/s 2(22)(e) should not be made. As per the ld. Counsel for the assessee mere perusal of the ledger account placed on page no. 10 to 12 of the Assessment order, it is clear that the said account was for the purpose of doing business which was in the nature of current account wherein one can find debit entry and credit entry on several occasions which needs to be examined by the ld. CIT(A). Therefore, we are of the view that this matter should be remitted back to the file of ld. CIT(A) for fresh examination. We also make it clear that if the ld. CIT(A) having examined the ledger account finds that it is a current account, no addition is warranted as held by the Co-ordinate Bench of this Tribunal in ITA No. 1010/Kol/2016 for A.Y. 2012-13 in the case of M/s Snehapusph Barter Pvt. Ltd. wherein it was held as under: "2. We have heard rival submissi....
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.... Rs. 1.35 cr. On 03.09.2011 the assessee owed Rs. 85,000/- to M/s. Subhchintak VancomPvt. Ltd.. Whereas on 14.10.2011, the assessee gave Rs. 1.09 cr. to M/s. Subhchintak VancomPvt. Ltd.; and on 25.12.2011 gave M/s. Subhchintak VancomPvt. Ltd. Rs. 5 lacs; and Rs. 70 lacs; and on 15.03.2012 the assessee had given Rs. 60 lacs to M/s. Subhchintak VancomPvt. Ltd. In the assessment year under consideration, the assessee had given to M/s. Subhchintak Vancom Pvt. Ltd. Rs. 2,44,25,000/- whereas it owed to M/s. Subhchintak Vancom Pvt. Ltd. Rs. 1,35,85,000/-. From the ledger, the assessee had only debited Rs. 1,35,85,000/- whereas M/s. Subhchintak VancomPvt. Ltd. has drawn Rs. 1,08,40,000/- in excess from the assessee. From the aforesaid facts stated above, according to ld counsel it is a clear case wherein there is a shifting of balance is apparent. On such factual matrix the assessee's argument is that such kind of transaction cannot be termed as loan/advance to attract the provisions of section 2(22)(e) of the Act. The Hon'ble Supreme Court in the case of Kesari Chand Jaisukh Lal Vs. Shillong Banking Corporation Ltd. 1965 AIR 1711 has held as under: "To be mutual there mus....
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....nt case also the transactions in question does not benefit the shareholder i.e. the Assessee alone and the results in no benefit to the company BAPL. The loan account is different from a current account with a shareholder and the transactions between the Assessee and BAPL are in the nature of current account and provisions of Sec.2(22)(e) of the Act will not be applicable to the case of the Assessee. We, therefore, concur with the decision of the CIT(A) and dismiss the appeal of the Revenue." 5. Similarly, the Coordinate Bench of this Tribunal in Mr. Purushottam Das Vs. DCIT and vice versa in IT(SS)A Nos. 60 to 62 & 73-76/Kol/2011 dated 17.10.2014 has held as under: "5. ........ It is pertinent to note here that when dividends are declared by a company, it is solely the shareholders who benefit from the transaction. No benefits accrue to the company by way of dividend distribution. Thus, section 2(22)(e) of the Act covers only such situations, where the shareholder alone benefits from the loan transaction, because if the company also benefits from the said transaction, it will take the character of a commercial transaction and hence will not qualify to be dividend....
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.... and this current account is different from a loan account for the sole reason that the feature of mutuality is not present in a loan transaction. From the facts narrated above, it is clear that both the parties are beneficiary of the transaction being current account transaction i.e. shifting of balances, therefore, as held by the Hon'ble Supreme Court in Keshri Chand Jaisukh Lal, supra and Hon'ble Calcutta High Court in Pradip Kumar Malhotra, supra, we note that sec. 2(22)(e) of the Act is not attracted in the transaction with M/s. Subhchintak VancomPvt. Ltd. It should be remembered that for exercising revisional jurisdictional the Pr. CIT should find that the order of the AO is not only erroneous but also it should be prejudicial to the interest of revenue. It should be kept in mind that the assessee cannot dictate the AO how to pass the order or to ask how to investigate or what question to ask or what should be enquired into. We also note that a search warrant was executed in the case of the assessee on 15.06.2011 and search happened in the assessment year under consideration and, therefore, scrutiny u/s. 143(3) of the Act was framed. All the records including....