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TaxTMI 
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TaxTMI 
2020 (9) TMI 977
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.... passed by the Income Tax Appellate Tribunal Madras 'A' Bench, Chennai [hereinafter referred to as 'Tribunal'] for the assessment years [for brevity 'AY'] 2012-2013 and 2014-2015. 2. Appeals were admitted on 11.09.2018 to decide the following substantial question of law: "Whether the Tribunal was right in holding that the deemed dividend under Section 2(22) (e) is to be assessed in the hands of the share holder and not in the hands of the firm, which is contrary to the ruling of the Apex Court in the case of National Travel Services passed in Civil Appeal No.2086 to 2071 of 2012 dated 18.01.2018" Since the facts are identical for both the assessment years, it would suffice to refer to the facts for the assessment year 2012-2013. 3. The....
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.... before the Tribunal, which was allowed by the Tribunal, challenging the same, the Revenue is before us by way of these Tax Case Appeals. 5. Mr. T. Ravikumar, learned senior standing counsel for the appellant referred to Section 2(22)(e) and explained the concept of deemed dividend. Referring to the facts recorded by the assessing officer in the assessment order dated 29.12.2016, it is submitted that the assessee firm had shown a sum of Rs. 2 Crores as unsecured loan obtained from the company during the year and one of the partner of the assessee firm was having 35% stake in the assessee firm and he was also a major share holder in the company holding 26.25% shares and therefore, the partner is substantially interested in the firm. Further....
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....balance sheet under the head of ''unsecured loan'', since the amount was payable after one year, otherwise, the assessee firm should have declared the same under 'current liability' payable within a day. 7. It is also submitted that this reasoning was rightly not accepted by the CIT[A]. However, without considering the factual and the legal position, the Tribunal erroneously reversed the orders passed by the assessing authority as confirmed by the CIT(A). In support of his contention, the learned counsel referred to the decisions in the case of Gopal and Sons (HUF) Vs. Commissioner of Income Tax reported in (2017) 145 DR 0289 (SC); Miss. P.Sarada Vs. Commissioner of Income Tax reported in [1998] 229 ITR 444 (SC); Commissioner of Income Tax....
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.... the assessee. The learned counsel referred to the circular issued by the Central Board of Direct Taxes dated 12.06.2017, wherein it has been stated that trade advances, which are in the nature of commercial transactions would not fall within the ambit of word "advance" in Section 2(22)(e) of the Act. Reference was made to the decision of Division Bench of this Court in the case of Commissioner of Income Tax Vs. C.Subba Reddy in T.C.A.No.1465 of 2007 dated 19.12.2016. The Ledger accounts were referred to show that the transaction was a business transaction. Further, the learned counsel submitted that the decision in the National Travel Services is clearly distinguishable on facts and in that regard referred to the facts noted in Paragraph ....
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....f advance or loan, to a share holder, being a person, who is the beneficial owner of shares holding not less than 10% of the voting power, or to any concern in which such share holder is a member or a partner and in which he has a substantial interest or any payment by any such company on behalf, or for the individual benefit, of any such share holder, to the extent to which the company in either case possesses accumulated profits. 12. The said provision would stand attracted when a payment is made by a company, in which public are not substantial interested by way of advance or loan to a share holder, being a person who is the beneficial owner of the shares. On facts, it is clear that the payment has been made to the assessee, a partnersh....