TaxTMI 
TaxTMI 
2019 (9) TMI 1646
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....raised several grounds in its appeal however the cruxes of the issues are as follows:- (i) The Ld.CIT(A) has erred in sustaining the order of the Ld.AO who had disallowed expenditure of Rs.4,60,482/- by invoking Section 14A and Rule 8D of the Rules. (ii) The Ld.CIT(A) has erred in sustaining the order of the Ld.AO who had made addition of Rs.2,90,09,110/- by invoking the provisions of Section 2(22)(e) of the Act. 3. The brief facts of the case are that the assessee is a authorized dealer of Mahindra & Mahindra Ltd, Tractors, filed its return of income for the assessment year 2013-14 electronically on 25.09.2013, declaring total income of Rs.2,00,67,550/-. The case was selected for scrutiny under CASS and finally assessm....
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....hat the investments were made out of non-interest bearing fund. Accordingly the issue was decided against the assessee by the Ld.CIT(A). 4.1 Before us the Ld.AR submitted that the assessee had not incurred any expenditure towards making the investment or managing the investments. Hence it was pleaded that the addition made by invoking the provision of Section 14A of the Act, may be deleted, while as the Ld.DR argued in support of the orders of the Revenue authorities. 4.2 We have heard the rival submissions and carefully perused the materials on record. From the Income Tax return filed by the assessee, it is apparent that the assessee has its own fund as detailed herein below:- 1. Fully paid up equity share capital Rs. 2,63,19,3....
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.... that the assessee company and M/s. Rajshree Automotive Pvt. Ltd., were having the same individual as the Managing Director viz., M.S. Jaishree Varadaraj. It was further revealed that the assessee company was holding 18.39% shares of M/s. Rajshree Automotive Pvt. Ltd. Therefore, the Ld.AO came to the conclusion that the provisions of Section 2(22)(e) of the Act will be squarely applicable in the case of the assessee. On query, the Ld.AR submitted the following explanation before the Ld.AO:- (i) Both the companies were maintaining current account and there were interconnected commercial transactions between the companies. (ii) The entire transactions were business transactions between the companies. (iii) Certain e....
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....any on behalf of M/s.Rajshree Automotive Private Ltd which is repaid by M/s.Rajshree Automotive Private Ltd. However, the amounts received by the assessee company from over and above the repayment amount is loans which has been reported by M/s.CAI Industries P. Ltd. in its Annual Report. * These advances were not trade advances as claimed by the assessee since both the companies are in to different line of businesses. * The receipt of money from M/s. Rajshree Automotive Private Limited clearly show a definite pattern. * As could be seen from the investments shown in the balance sheet, instead of declaring dividend income, M/s. Rajshree Automotive Private Limited had chosen to advance moneys to the assessee company....
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....ious year in which it was taken." and in the case Miss. P. Saradha vs. CIT reported in 222 ITR 444 (SC) wherein it was held ""From the facts, as stated hereinabove, it appears that the withdrawals made by the appellant from the company amounted to grant of loan or advance by the company to the shareholder. The legal fiction came into play as soon as the monies were paid by the company to the appellant. The assessee must be deemed to have received dividends on the dates on which she withdrew the aforesaid amounts of money from the company. The loan or advance taken from the company may have been ultimately repaid or adjusted but that will not alter the fact that the assessee, in the eye of law, had received dividend from the comp....
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.... results in close commercial ties between the assessee company and its sister company. As a result both the companies were maintaining current accounts in order to achieve their respective business targets. Therefore it cannot be said that, the interdependence for meeting several business commitments of the assessee and its sister concerns does not result in commercial nexus between the assessee company and its sister concerns. As pointed out by the Ld.AR some expenses were met by both the companies which were reimbursed by either company. These facts are not disputed. Moreover at the close of the financial year the current account maintained by the assessee with its sister concern showed nil balance. In this situation, we are of the view t....