TaxTMI 
TaxTMI 
2021 (10) TMI 1107
X X X X Extracts X X X X
X X X X Extracts X X X X
....all the 3 years and the substantive addition was made in the hands of M/s Cauvery Aqua P Ltd. The relevant details are tabulated below: Assessment year Deemed divided (Rs.) Protective addition (Rs.) 2011-12 81,76,829 1,74,00,000 2012-13 1,30,44,602 2,51,00,000 2013-14 50,31,297 1,91,00,000 The revenue has raised identical grounds in all the 3 years. For the sake of convenience, we extract below the grounds urged by the revenue in assessment year 2011-12: 1) Whether on the facts and the circumstances of the case, the Ld. CIT(A) is justified in deleting the undisclosed income of the assessee amounting to Rs. 81,76,829/- and Rs. 1,74,00,000/-? 2) Whether on the facts and the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 81,76,829/- without appreciating the provision of section 2(22)(e) of the I.T. Act.? 3) Whether on the facts and the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 81,76,829/- without appreciating that the assessee holds more than 25% of shares in the company M/s Cauvery Acqua Pvt. Ltd. and M/s Brindavan Beverage Pvt. Ltd. ?....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith M/s. BBPL, as per which, both the companies have agreed to make investments jointly in property development projects of M/s. Embassy Group. It was submitted that the payments were made by CAPL to BBPL in connection with the above said business activities. The A.O. did not accept the above said explanations of the assessee. He took the view that M/s. CAPL should have given money directly to M/s. Embassy Group and not to its sister concern. He also expressed the view that the above arrangement does not have acknowledgement of Embassy group. Accordingly, the AO held that the amount received by M/s. BBPL from CAPL is deemed dividend assessable u/s 2(22)(e) of the Act. Under the provisions of sec.2(22)(e) of the Act, the loan amount is assessable to the extent of accumulated profits available with lender company, i.e., lower of loan amount or accumulated profits is assessable as deemed dividend u/s 2(22)(e) of the Act. Accordingly, the AO assessed lower of accumulated profits or the loan amount as deemed dividend in the hands of the assessee in all the 3 years as per details given in the table above. 7. The Ld. CIT(A), however, accepted the explanations of the assessee that these....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act should be upheld. 11. The Ld. A.R., however, submitted that there were trading transactions between CAPL & BBPL in the past. The trading operations were suspended and from the year 2002 onwards BBPL owed a sum of Rs. 1.97 crores to M/s. CAPL. At that point of time, an agreement dated 14.11.2005 was entered between both the companies with the objective of making investment in property development activities. As per the agreement, CAPL shall give further money to BBPL for business purposes of making investments in real estate activities. Accordingly, CAPL has given money to BBPL in connection with the above said business activities over the years. Both the companies have kept the account of other company as running account only in connection with the business activities. From assessment years 2007-08 to 2013-14, CAPL has given an aggregate sum of Rs. 13.85 crores. The assignment agreements were entered on 28-03-2015 by BBPL in favour of M/s. CAPL which was also endorsed by Embassy group (the developers). As per the above said agreement, BBPL has assigned property value of Rs. 13.64 crores to CAPL. Hence, M/s. CAPL has obtained properties almost equal to the amount advanced by....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... properties. 14. It is an undisputed fact that the amounts invested by CAPL has been adjusted against the properties assigned to CAPL by BBPL, vide assignment agreements dated 28.03.2015. Thus the original agreement dated 14.11.2005 stands corroborated by the assignment agreements dated 28-03-2015. These uncontroverted documents supports the submissions of the assessee that the amounts given by CAPL to BBPL are not loans or advances contemplated in sec.2(22)(e) of the Act. 15. The Ld DR contended that the assignment agreements do not mention about adjustment of loan and advances given earlier by CAPL to BBPL. She also stated that the agreements mention about further payments, which was actually not necessary, when the amounts already given by CAPL to BBPL were in excess of the assigned value of properties. However, we are of the view that what is required to be seen is whether CAPL has advanced moneys as pure loan amounts or for business purposes. The agreements produced by the assessee before Ld CIT(A), which were also confronted with the AO, would prove that the transactions entered between the parties are business transactions. The Ld A.R also submitted that both the compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s also mentioned that there was no acknowledgment from Embassy Group showing payments from Mi.s. Cauvery Aqua Pvt. Ltd., for any project and A.O. regarded the explanation of the appellant as giving a colour of business transactions to loans that were advanced. 7.6 I find the above basis stated by the A.O. to disbelieve the explanation of the appellant in the assessment order is not correct. The fact that M/s. Brindavan Beverages had already made substantial investments with Embassy Group and that M/s. Cauvery Aqua Pvt. Ltd., had expressed its desire to join is very clear from the agreement dated 14.11.2005, the veracity of which has not been impeached in the assessment proceedings. Merely because the A.O. is of the view that the investments could have been made directly and not through M/s. Brindavan Beverages Pvt. Ltd., cannot be a reason to discard the business arrangement between the parties. Hence, I do not find the reasons mentioned by the A.O. in the assessment order that the appellant has tried to give a colour of business transaction to a loan advanced very convincing. 7.7The appellant has produced before me two assignment agreements dated 28.03.2015 by wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with which the said provision is introduced Though the legislature has introduced `advance' as well as 'loan' which are two different works, the meaning of each of those works have to be understood in the context in which they are used Each work takes its colour from the other. The meaning of the word 'advance ' is to be understood by the meaning of the word loan which is used immediately thereafter. Associated words taken their meaning from one another under the doctrine of noscitur a socits, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it. This rule, according to Maxwell means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. In the case of a loan, money is advanced generally on payment of interest. In other words the loan advanced generally on payment of interest. In other words the loan advance has to be repaid with interest. In the case of an a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the same are that the AO noticed a ledger account titled as "Prakash Ladhani Imprest Account". It showed that money was given to Prakash Ladhani. However, it was not shown in the Balance Sheet. The AO took the view that the money was given to Prakash Ladhani by CAPL out of undisclosed sources and accordingly assessed the amounts so given as income of CAPL in all the three years on substantive basis. The AO also assessed the very same amounts on protective basis in the hands of the assessee herein. 19. The Ld CIT(A) had deleted the addition in all the three years in the hands of CAPL on the reasoning that the amounts showed in the seized ledgers stand explained as cash withdrawal from United Bank of India and the same amount was deposited in Bank of India. The Imprest account was created in between in order to have control over these transactions. Since these transactions stood explained, the Ld CIT(A) deleted the protective additions made in the hands of the assessee in all the three years. The revenue is aggrieved. 20. We heard the parties on this issue and perused the record. We notice that this bench of Tribunal has confirmed the order of Ld CIT(A) in deleting the addi....