2022 (8) TMI 200

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....s. 2(22)(e) of the Act for a sum of Rs.3,30,00,000/- in the facts and circumstances of the case. 3. The brief facts relating to the issue on hand are that the assessee is an individual and derives income from salary, business & profession, long term and short term capital gains and income from other sources. The assessee is a Director in M/s. Maharashtra Erectors Pvt. Ltd. (in short "MEPL"). The assessee filed return of income declaring a total income of Rs.26,31,706/- and under scrutiny the AO determined the same at Rs.3,68,87,160/- inter alia making addition on account of deemed dividend u/s. 2(22)(e) of the Act vide its order dated 29-02-2016 passed u/s. 143(3) of the Act. The assessee challenged the said assessment order before the C....

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....IT(A) deleted the said addition without considering the fact that this amount was shown as loan to the assessee in the books of account of MEPL. Further, he argued that the said amount was repaid by the assessee to MEPL along with interest is justified to the stand taken by the AO that it was a loan. He prayed to set aside the order of CIT(A) and restore the order of AO. 5. The ld. AR, Shri Jayant G. Pendse placed on record the chronology of events and submits that the assessee to withdraw the said amount from MEPL only to protect the interest of company due to various litigation proceeding and deposited the same in Kotak Mahindra Bank. The ld. AR drew our attention to submissions as made before the CIT(A) and reiterated the same. The ld....

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.... made term deposit on 01-02-2013 for a period upto 31-07-2013 @ 8.50% interest. Further, the same has been renewed from time to time up to 22-08-2015. The assessee transferred the total realized amount of Rs.4,02,49,270/- to the account of MEPL. Therefore, which clearly shows the conduct of assessee in refunding the entire amount with interest to MEPL on its maturity with realized total value supports the arguments of ld. AR that the amount was withdrawn and kept in fixed deposit only to protect the interest of the MEPL. If that is the situation, we find the AO terming the same as loan out of accrued profits of MEPL attracting the provisions u/s. 2(22)(e) of the Act is not justified. The CIT(A) recorded is finding at Para No. 5.3.3 of the i....