TaxTMI 
TaxTMI 
2022 (2) TMI 35
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....in ITA No. 152/PUN/2018 against the common order dated 08-06-2017 passed by the Commissioner of Income Tax (Appeals)-4, Pune ["CIT(A)"] for assessment year 2013-14. 2. Since, the issues raised in all the four appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear all the four appeals together and to pass a consolidated order for the sake of convenience. 3. First, we shall take up appeal in ITA No. 135/PUN/2018 for A.Y. 2013-14 filed by the Revenue as it is constitutes the root of the matter. 4. The Revenue raised five grounds of appeal amongst which the only issue emanates for our consideration is challenging the action of CIT(A) in deleting the addition of Rs. 7,86,03,706/- ignoring payment of full amount of interest paid by the "company" in the facts and circumstances of the case. 5. We note from the record that the assessee is an individual and filed its return of income declaring a total income of Rs. 47,09,400/- which was processed u/s. 143(1) of the Act. The AO observed that the assessee is a Director in M/s. Subu Chem Pvt. Ltd. in which protective addition was made on account of deemed dividend ....
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.... decided to purchase a commercial premises located at Viman Nagar, and M/s. Bajaj Finance Ltd. offered to provide required finance, M/s. Bajaj Finance Ltd. advanced loan of Rs. 20,30,,00,000/- and out of which it was decided of Rs. 6,00,00,000/- will be used by M/s. Subu Chem Pvt. Ltd. and the balance loan amount Rs. 14,30,00,000/- allocated to the assessee and drew our attention to the Page Nos. 73 to 164 of the paper book. He submits that since the amount of Rs. 14,30,00,000/- is allocated to the assessee and he will reimburse to M/s. Subu Chem Pvt. Ltd. proportionate amount of interest payable to M/s. Bajaj Finance Ltd. He submits that M/s. Bajaj Finance Ltd. advanced loan of Rs. 20,30,00,000/- vide four separate loan agreements and drew our attention to Page No. 180 of the paper book. He submits that the addition made by the AO and as confirmed by the CIT(A) to the extent therein is not maintainable as the lower authorities below both failed to see the true nature of payment entry which is essential before applying the provisions contained in Section 2(22)(e) of the Act. The nomenclature used to describe any entry in the books of accounts does not determine the true nature of t....
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.... Finance Ltd. Accordingly, M/s. Bajaj Finance Ltd. sanctioned a loan of Rs. 20,30,00,000/- as per loan agreements as under : Particulars of Loan Agreement Nos. Amount (Rs.) Bajaj Finance 204051 2,76,729.00 Bajaj Finance 257271 15,63,193.00 Bajaj Finance 271532 3,96,31,721.00 Bajaj Finance 279135 10,25,25,911.00 Bajaj Finance 308517 99,63,771.00 Bajaj Finance 308592 4,98,18,854.00 10. Shri Jitendra K Gupta, the assessee, the main Director of the "company" holding 90% of shares and also holds 90 % shares in the other group company M/s Krish Auto (I) Pvt. Ltd., thereby, M/s. Krish Auto (I) Pvt. Ltd, Smt. Prem Sheela Gupta (wife of Mr. Jitendra K. Gupta) and Shri Kapil Deo Prasad Gupta (father of Mr. Jitendra K Gupta) become coborrowers along with the "company". It was decided that the assessee will buy the upper floors of the property and the "company" will buy the basement and the ground floor. Further, that out of the borrowings from M/s. Bajaj Finance Limited, the company will use the amount of Rs. 6,00,00,000/- for the purchase of the basement and the ground floor and the assessee will use the amount of Rs. 14,30,00,000/-for the p....
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...., the assessee was the co-borrower along with the "company" M/s. Krish Auto (I) Pvt. Ltd, Smt. Prem Sheela Gupta (wife of the assessee) and Shri Kapil Deo Prasad Gupta (father of the assessee) and the loan facility was collectively, but, independently availed by the coborrowers. Therefore, it is clear, the co-borrowers along with assessee have collectively availed the financial facilities and the loans were disbursed to the vendors which is evident from the loan agreements at Page Nos. 73 to 164 in the paper book. 15. We find, the issue in the present appeal relates to the application of provision of section 2(22)(e) of the Act. Admittedly, the assessee herein i.e. Mr. Jitendra K. Gupta is a shareholder in the company M/s. Subu Chem Pvt. Ltd. holding 90% shares of the said company. The assessee along with the company M/s. Subu Chem Pvt. Ltd. had purchased a property situated at Viman Nagar. The property was purchased out of loan availed from M/s. Bajaj Finance Ltd., who had agreed to lend the money for the purpose of purchase of property only on the condition that the assessee along with another company namely M/s. Krish Auto (I) Pvt. Ltd. also join as a coborrowers of the loan.....
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....without a right to participate in profits) holding not less than ten per cent of the voting power; but if such loan or advance is given to such share holder as a consequence of any further consideration which is beneficial to the company received from such a shareholder, in such case, such advance or loan cannot be said to a deemed dividend within the meaning of the Act. Thus, for gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of Section 2(22) but not to the cases where the loan or advance is given in return to an advantage conferred upon the company by such share holder." 16. The ratio of the above decision of Hon"ble High Court of Calcutta is squarely applicable to the present case and therefore, the CIT(A) is justified in holding that the AO is not right in bring to tax sum of Rs. 7,86,03,760/- as a deemed dividend in the hands of the assessee. Since, We held that the provision of section 2(22)(e) of the Act have no application to the facts of the case, there is no necessity to deal with the other contentions raised on behalf of the assessee. Thus, grounds by the Revenue fails and are dismissed. 17. In the resul....
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....llenging the action of CIT(A) in allowing proportionate interest paid to NBFC for non-deduction of TDS. We note that the CIT(A) discussed this issue from Page Nos. 3 to 10 of the impugned order, wherein we note that the AO disallowed interest of Rs. 1,23,13,245/- for non-deduction of TDS. The CIT(A) observed that the interest paid to M/s. Standard Chartered Bank and HDFC Bank where TDS is not required to deduct as per sub-clause (ia) of clause (iii) of subsection (3) of section 194(A) of the Act and the ld. DR did not dispute the same, we do not find any infirmity in the order of CIT(A). 29. Further, in Para No. 6.3.4 of impugned order he observed since the assessee claimed the proportionate interest on loan granted to Director, Shri Jitendra K. Gupta in its books of account. On such submission the CIT(A) confirmed the addition in the hands of the assessee. Therefore, we find no infirmity in the order of CIT(A). 30. Further, an amount of Rs. 30,12,910/- was allowed by the CIT(A) where no direction was given to the AO regarding non-deduction of TDS. The ld. DR has rightly pointed that the CIT(A) without making any detailed discussion on such amount simply allowed the said amou....