TaxTMI 
TaxTMI 
2021 (5) TMI 721
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....dari) was having 32.29%; and assessee (Neena Khandari) was having 18.95% shareholding in M/s. Enrich Agro Foods Products Pvt. Ltd. In response to show cause notice, the assessee submitted that it was a business advance for the purpose of acquisition of property and a detail reply was submitted which has been incorporated in the assessment order from pages 3 to 5. Ld. Assessing Officer has treated the loans and advances given to the assessee for sums aggregating to Rs. 1,97,99,254/- as deemed dividend u/s.2(22)(e). 3. Ld. CIT (A) after detailed discussion and on perusal of the material placed on record has deleted the said addition after observing and holding as under: "The AO mentioned on page 5 of the asstt. order that M/s Enrich Agro Food Products Pvt. Ltd. had given the money to the appellant for purchase of property. Under the circumstances, I agree with the arguments of the Ld. AR that there is no question of the amount being unexplained. Further, the Ld. AO has also not given any reasoned finding to establish that the impugned amount is unexplained. The Ld. AO has made the addition u/s 2(22)(e) on the ground that advance for property is covered u/s 2(22)(....
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....ery few in number whereas in the current account, there will be comparatively many more entries. It was also held that looking to large number of entries in the accounts between two entities, the amounts were not in the nature of loan or deposit and hence section 2(22)(e) is not to be invoked? It was further held that section 2(22)(e) of the Act covers only such situations, where the shareholder alone benefits from the loan but if the company benefits from the said transaction, it will take the character of a commercial transaction and hence will not qualify to be dividend. It has also been emphasized that the loan account is different from a current account and the provisions of Sec. 2(22)(e) will not be applicable to the current account. Therefore, these case laws are squarely applicable to the case of the appellant. Therefore, no addition can be made under section 2(22)(e). Further, it is observed that the company had decided to invest in a residential property at Gurgaon. It is evident from the board resolution passed on 12/03/2014 by M/s Enrich Agro Food Products Pvt. Ltd. that consent of the board was accorded for making payment upto Rs. 5 crore to Smt. Neena Kandhar....
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....essee submitted that on the perusal of the ledger account of the assessee with the company, namely, M/s. Enrich Agro Foods Products Pvt. Ltd., it is seen that it is a current account and not a loan/advance which is evident from page 63 of the paper book, wherein there was opening credit balance amounting to Rs. 1,05,10,980/-, which clearly shows that it is an assessee who has given money to the company and not the company has given the money to the assessee. There are more than 56 entries in the ledger account which clearly indicates that it is a running/current account and not an account for loans or advances where entries are just a few. For a large period, there was a credit balance as compared to the debit balance, and therefore, it was the company which is benefitted more. In support, he relied upon the following case laws. • Shri Satish Kumar Gupta vs. ACIT, TS-631-ITAT-2016 (Del) "Conclusion Delhi ITAT allows assessee's appeal AY 2006-07, deletes addition made u/s 2(22)(e) towards deemed dividend; Observes that for the applicability of Sec. 2(22)(e), apart from other conditions, the amount received by the shareholder should be in the n....
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....hich benefit the shareholder alone and results in no benefit to the company. On the other hand, if the transaction is mutual bv which both sides are benefited, it is undoubtedly outside the purview of provisions of sec. 2(22)(e) of the Act. From the above, it is clear that the loan account differs from current account and the provisions of section 2(22)(e) of the Act, being a deeming section, cannot be applied to current account. In such circumstances, the order of the CIT u/s 263 of the Act is not sustainable in law;" • ITO vs. GayatriChakraborty, 2015-TIOL-2115-ITAT-KOL "++ neither the Assessee owes BAPL nor BAPL owes Assessee any sum. The Assessee was beneficiary of the sums given by BAPL at some point of time during the previous year and BAPL was the beneficiary of the sums given by the Assessee at another point of time during the previous year. It was therefore a case of mutual running or current account which created independent obligations on the other. There were reciprocal demands between the parties and the account was mutual. The transactions in question does not benefit the shareholder i.e., the Assessee alone. The loan account is differen....
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....Now the department is in appeal. After considering the submissions of both the parties and the material available on the record, it appears that the assessee had shown the impugned amount in its balance sheet as current liability which was received as an advance against the purchase of suitable land. The AO although invoked the provisions of Section 2(22)(e) of the Act but could not bring any material on record to substantiate that the amount in question was a loan or deposit and not the advance received from associates concern M/s Countrywide Promoters Pvt. Ltd.. We, therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to case of CIT Vs. Ankitek Pvt. Ltd. (supra), do not see any valid ground to interfere with the findings of the Id. CIT(A). In that view of the matter, we do not see any merit in this ground of the departmental appeal." • ITO vs. ABP Entertainment Pvt. Ltd., 2016-TIOL-311-ITAT-KOL "++ The advance has been given by one Group Company to another so that company is able to carry out and pursue its business activities with another party. This has not been doubted by the AO. It therefore....
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....nvested by the assessee through her own sources, then also it does not lead to inference that property is of the assessee only. The property was meant to be used for the residence of the Directors provided by the company. To justify the name of assessee in the said property, the contention of the assessee has been that, under the RBI guidelines, housing loan can be granted only to the individual and not to the company, and therefore, instead of buying the property in company's name, it was decided to buy the property in the individual name of the Directors on behalf of the company. In support of this contention, it has been shown before us that the Builder of the flat where the assessee company intended to purchase the flat had written a letter dated 04.02.2015 to register the property in the joint name of the company as well as the Directors. Even the housing loan sanctioned by the HDFC Bank shows the company as a co-borrower. Thus, as culled out from the records placed, the property was jointly purchased by the assessee and M/s. Enrich Agro Foods Products Pvt. Ltd. 11. Now before us it has brought to our notice that, later on, the builder vide letter dated 26.11.2019 has made ....