TaxTMI 
TaxTMI 
2021 (5) TMI 652
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....re particularly when the submission of assessee dated 20.09.2018 was not considered. Soft copy of which was also provided on 28.09.2018 through email. 2. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-III, Indore erred in sustaining the addition of Rs. 7,00,000/- by applying the provisions of section 2(22)(e) in respect of the inter company loan transaction between M.L. Securities and Finance Private Limited and Vinay Securities Private Limited. 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-III, Indore erred in sustaining the addition of Rs. 7,00,000/- by applying the provisions of section 2(22)(e) without reference to any incriminating material found in this respect during the course of search proceedings conducted in the case of the assessee as well as in the case of M.L. Securities and Finance Private Limited and Vinay Securities Private Limited. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-III, Indore erred in not considering facts of the case in properperspective. 5. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-III, Indore e....
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....ational Travel Services (2018) 89 taxmann.com 332. 7. That, the appellant, carves leave to add, amend, alter or otherwise raise any other ground of appeal. 3. Brief facts of the case as culled out from the records are that the assessee is an individual deriving income from salary in Shakti Pumps (India) Ltd and other income of interest on his investments etc. Return of income u/s 139(1) of the Act for Assessment Year 2015-16 was filed on 04.04.2016 at Rs. 4,47,20/- and for Assessment Year 2016-17 return of income was filed on 27.08.2017 declaring income of Rs. 4,98,130/-. Search & seizure operations u/s 132 of the Act was carried out on the business as well as residential premises of the Shakti Pumps Groups including the assessee along with other concerns/business associates on 21.01.2016. The warrant of authorization u/s 132 of the Act was issued in the name of the assessee also. Notices u/s 153A were issued to the assessee for Assessment Year 2015-16 on 23.01.2017. Assessee filed its return of income for Assessment Year 2015-16 at Rs. 4,47,020/- as was disclosed u/s 139(1) of the Act. For Assessment Year 2016-17 notices u/s 143(2) and 142(1) of the Act were served upo....
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....s a NBFC license holder for which lending of money is substantial part of its business. Similarly, Vinay Securities Pvt Ltd has lent its money in the ordinary course of its business from which it has earned from dividend on its investments. The main object clause of the two companies in their respective Memorandum of Association evidently describes the nature of business of these companies. [PS 99- 100, 54, 102] MLSF utilized the borrowed funds for the purpose of its business and in no way assessee enjoyed any benefits out of it or received any part of it in his hands. [PS 120] More importantly, in AY 2015-16, the amount of loan was repaid by MLSF to VSPL. [PS 43] Further, in AY 2016-17, fresh loan of Rs. 7,00,000 was obtained by MLSF from VSPL. Interest was charged for Rs. 28,273 which was reported as income by VSPL in its regular return of income. This interest was claimed as an expense by MLSF in its audited Profit and Loss account. [PS 44] For both, VSPL and MLSF, interest amount has been accepted as income and expense, in their assessments, respectively, AO being common to all the three persons involved in the case under consideration, viz. ....
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....tions 104 to 109 there was a likelihood of closely held companies not distributing their profits to shareholders by way of dividends but by way of loans or advances so that these are not taxed in the hands of the shareholders. To forestall this manipulation, subclause (e) of clause (22) of section 2 has been suitably amended. Under the existing provisions, payments by way of loans or advances to shareholders having substantial interest in a company to the extent to which the company possesses accumulated profits is treated as dividend. The shareholders having substantial interest are those who have a shareholding carrying not less than 20 per cent voting power as per the provisions of clause (32) of section 2. The amendment of the definition extends its application to payment made (i) to a shareholder holding not less than 10 per cent of the voting power, or (ii) to a concern in which the shareholder has substantial interest. "Concern" as per the newly inserted Explanation 3(a) to section 2(22) means a HUF or a firm or an association of persons or a body of individuals or a company. A shareholder having a substantial interest in a concern as per part (b) of Explanation 3 i....
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....ncurrence to the views expressed above. This court observed: "As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words used, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature 13.Ld. CIT(A) relied on the decision of Hon'ble Supreme Court in the case of National Travel Services (supra) by stating that a 'sharehotder' has only to be a person who is beneficial owner of shares, he need not necessarily be a registered shareholder. [PB 148-149] Ld. CIT(A) stated that the Hon'ble Supreme Court took the view that the case of Ankitech (P.) Ltd. requires to be reconsidered and referred the matter to a larger Bench. [AY 2015-16, CIT(A) order page 8 para 4.2] In view of above, the appeal of the assessee was dismissed. Present controv....
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....d that in a search assessment, any undisclosed income, which can ultimately be added, is only to the extent of any unrecorded assets / material found or any incriminating documents found as representing undisclosed income earned in any year falling within section 153A of the Act. The correct figure of HRA in Form 16 is Rs. 68,360 and not Rs. 77,200. The figure of HRA for AY 2014-15 is Rs. 77,200. [PS 34] c.Ld. AD did not accept the submission made by the assessee and made the disallowance of Rs. 77,200 and added to the total income without reference to any incriminating material found during the course of search in this respect which in fact relates to AY 2014-15. [PS 34] Considering the above facts and circumstances of the case, submissions and documents on record, applicable law and judicial precedents, the assessee submits before your Honor to delete the additions made Ld. AD in the two years under consideration. 6. Per contra Ld. Departmental Representative vehemently argued supporting order of both the lower authorities. 7. We have heard rival contentions and perused the records placed before us. First common issue raised for Assessment Year 2015-16 and Assessme....
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....the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub- clause (e), to the extent to which it is so set off. 8. Both the lower authorities have confirmed the addition in view of the second limb of provision of Section 2(22)(e) which reads as follows:- (Second limb of the same section deals with loans or advances to any "concerns" - (i) where the company makes the payment by way of loans or advances to a concern; (ii) where a member or a partner of the concern holds 10 per cent of the voting power in the company; and (iii) where the member or partner of the concern is also beneficially entitled to 20 per cent of the income of such concern. [As defined in Explanation 3(b) to section 2(22)(e)] 9. On the other hand the contention of Ld. Counsel for the assessee is that the alleged transaction of Rs. 7 lakhs received by MLSF from VSPL is in the nature of an advance or loan received in the ordinary course of business wherein the lending of money is the substantial part of the company. To examine the facts of the case we observe that MLFS is a registered non banking finance company and i....
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....id during the year. No such evidence was filed. During the hearing before Ld. CIT(A) also no such evidence was filed. Even before us the submissions made by the assessee are general in nature contending that no incriminating material was found during the course of search which itself had no merits since the search was conducted on 21.1.2016 and the due date of filing of income for Assessment Year 2016-17 had still not expired and therefore it was open for the Ld. A.O to examine all the issues under appeal. 11. Provisions of Section 10(13A) of the Act reads as follows:- (l3A) any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred On payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations. Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where- (a) the residential accommodation occupied by the assessee is owned by him; or (b)....