TaxTMI 
TaxTMI 
2018 (2) TMI 1981
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....ssment order dated 27.03.2014 passed u/s. 143(3) of the Act for Assessment Year 2012-13 with a direction to re-do the assessment in respect of issue mentioned therein. Shri Ravi Tulsiyan, Ld Authorized Representative appeared on behalf of assessee and Shri G. Hangshing, Ld. Departmental Representative appeared on behalf of Revenue. 2. Though assessee has raised as many as 7 grounds of appeal, however as per our considered view the sole and substantial ground of appeal is that Ld. Pr. CIT erred in holding the order of Assessing Officer erroneous in so far as prejudicial to the interest of Revenue. 3. Briefly stated facts are that assessee in the present case is a private limited company and engaged in the business of basmati rice pr....
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....advance shown by the assessee represents the current account transactions. However, Ld. Pr. CIT disregarded the contention of assessee and held the order passed by AO erroneous in so far as prejudicial to the interest of Revenue by observing as under:- "... I have considered these arguments above arguments. I do not agree with the A/R's argument that if there are frequent transactions resulting in shifting balances, the money received by the assessee would not be a loan. Section 2(22)(e) does not make any such distinction. I am of the opinion that the provision of deemed dividend as per section 2(22)(e) were applicable in the case. In light of the above facts, I am of the considered opinion that the assessment has been ....
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....R vehemently relied on the order of Ld. Pr. CIT. 5. We have heard the rival contentions and perused the material available on record. In the instant case, Ld. Pr. CIT u/s 263 of the Act held that the order of AO is erroneous in so far as prejudicial to the interest of revenue on the ground that AO has not treated the amount of loan received by the assessee from SVPL as deemed dividend income in pursuance to Sec. 2(22)(e) of the Act. As per the assessee, the loan taken by assessee is representing the current account transaction, therefore the provision of Section 2(22)(e) of the Act cannot be attracted to such loan. We find important to refer the ledger of transactions between assessee and the SVPL in the books of assessee which is rep....
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.... 1,08,82,25,000 1,08,82,25,000 On perusal of the above ledger, it is revealed that there are several transactions between assessee and SVPL and on some occasions, assessee has taken loan from SVPL and similarly on some occasions, assessee has given loan / advance to SVPL. The purpose of Section 2(22)(e) of the Act is to tax the benefit extended by private limited company to its shareholders holding shares not less than 10% as beneficial owner of shares (not being shares entitled to a fixed rate of dividend income). There is no dispute with regard to shareholding of the assessee. Now coming to the amount of advance taken by assessee, we note that assessee has not only taken loan / advance from SVPL, ....
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....e High Court held as under:- "The phrase "by way of advance or loan" appearing in sub-clause (e) of section 2(22) of the Income-tax Act, 1961, must be construed to mean those advances or loans which a shareholder enjoys simply on account of being a person who is the beneficial owner of share (not being share 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 shareholder 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 be deemed dividend within the meaning of the Act. thu....