TaxTMI 
TaxTMI 
2021 (4) TMI 95
X X X X Extracts X X X X
X X X X Extracts X X X X
....61 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-2012. 2. The Revenue has raised the following grounds of appeal: 1. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,28,02,530/- made u/s.2(22)e of the Act not considering the findings of the Assessing Officer especially in view of the amendment made by the Finance Act, 1987. 2. On the facts and in the circumstances of the case, the Ld. Commissioner of Income tax(A) ought to have upheld the order of the Assessing Officer. 3. It is therefore, prayed that the order of the Ld. Commissioner of the Income tax(A) may be set aside and that of the Assessing Officer be restored. 3. The only issue raised by the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns fall under the preview of section 2(22)(e) of the Act as both, the assessee and Planet Automotive Pvt. ltd., are having common shareholder holding more than 20% shares in each company. Accordingly the AO made the addition of Rs. 2,28,02,530/-, equivalent to available accumulated reserve and surplus in the books of M/s Planet Automotive Pvt Ltd., to the total income of the assessee. 4.3 The assessee carried the matter before the learned CIT (A) and claimed that the appellant is not holding shares in M/s Planet Automotive Pvt Ltd. Thus in such a case, the provisions of section 2(22)(e) of the Act do not apply to it. 4.4 The assessee further claimed that transactions with above mentioned party is in the nature of Current Accommodation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hareholders the both the companies and therefore the advances received by the assessee falls within the definition of deemed dividend as provided under section 2(22)(e) of the Act. The learned DR vehemently supported the order of the AO. 8. On the other hand the learned AR before us contended as under: Since the "assessee " herein is not at all a "registered share-holder" of the "payer company", no addition can be made as deemed dividend: Since the assessee-company is not at all a "registered share-holder" in PAPL (an undisputed fact), no addition can be made as deemed dividend in the hands of the assessee merely because there are common shareholders in the payer and payee company. Reliance is placed on followings: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f "current accommodation adjustment entries" showing movement of funds both ways on need basis: • Ledger of the "prayer-company" is placed at page 26 of P/B from which it is apparent that there are large numbers of transactions (both, debit and credit) showing movement of funds both ways on need basis. • Transactions in the nature of loans and advances are usually very few in number whereas in the present case, transactions between assessee and payercompany are large in numbers indicating that such transactions are in the form of "current accommodation adjustment entries". • It is a settled law that when there are large number of adjustment entries in accounts between two entities, amounts reflected th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s whether the assessee company, which is not a registered shareholder of the company providing loan to it, may be brought under the scanner of deemed dividend. In this regard we find pertinent to refer the provisions of section 2(22)(e) of the Act which reads as under: (22) "dividend" includes- (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d and held as under: "4.Shri Bhatt, learned Counsel appearing on behalf of the revenue has as such tried to justify the decision of the Delhi Court in the case of Ankitech Pvt. Ltd. (Supra) and has vehemently submitted that the Delhi High Court has not considered the third category i.e. shareholder in the assessee Company holding not less than 10% of the voting power in the Company from whom the loan or advance is taken. However, on considering Section 2(22)(e) of the Act, we are not at all impressed with the aforesaid. If the contention on behalf of the revenue is accepted, in that case, it will be creating the third category / class, which is not permissible. What is provided under Section 2(22)(e) of the Act seems to be....