2021 (2) TMI 1054

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....s of the I.T. Act and an income of Rs. 2,62,063/- under the MAT provisions. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee has received loans to the tune of Rs. 49,50,000/- during the financial year 2012-13 from M/s. Tejdeep Engg. Enterprises (P) Ltd wherein the assessee has shareholding of 15.13%. He also observed that M/s.Tejdeep Engg Enterprises (P) Ltd has accumulated profits of Rs. 1,50,30,047/- as on 31.3.2013 which included profit of Rs. 47,60,877/- during the year. Therefore, the assessee was asked to explain as to why the provisions of section 2(22)(e) should not be applied to the loan received from M/s. Tejdeep Engg. Enterprises (P) Ltd. The assessee filed a reply stating that the provis....

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....e addition of Rs. 49,50,000/- made under section 2(22)(e) of the Act. 2. The learned CIT (A) ought to have appreciated that the amount of Rs. 49,50,000 received by the assessee is towards sale of shares by the assessee to M/s. Tejdeep Engg.Enterprises (P) Ltd. 3. The learned CIT (A) erred disbelieving the documents produced such as share purchase agreement etc., merely because no shares were transferred by the appellant as on the date of his order. 4. The learned CIT (A) having observed that the amount received is towards advance for sale of shares, erred in treating the amount of Rs. 49,50,000 as an amount received towards loan advance as stipulated in section 2(22)(e). 5. The appellant may, add or alter....

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....22)(e) be deleted. 4. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the assessee, in its books of account, had shown a sum of Rs. 49,50,000/- as unsecured loans from M/s. Tejdeep Engg Enterprises (P) Ltd and therefore, the AO and the CIT (A) have rightly treated it as 'deemed dividend' since the company had accumulated profits as on 31.3.2013 and the assessee is a substantial shareholder i.e. 15.13% of M/s. Tejdeep Engg Enterprises (P) Ltd. 5. Having regard to the rival contentions and the material on record, we find that the assessee has entered into a 'share purchase agreement' with M/s. Tejdeep Engg. Enterprises (P) Ltd, and has received consideration as on the date of agreement....