TaxTMI 
TaxTMI 
2022 (8) TMI 1276
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....eting the additions made u/s 2(22)(e) of the I T Act of Rs.1.5 cr. Without appreciating the fact the assessee took a loan from M/s AMP Motors Pvt. Ltd. and it was duly shown the same in the books of accounts of the company also. 2. That the Ld. CIT(A) has erred on facts and law by ignoring the fact the assessee is a major share holder in M/s AMP Motors Pvt. Ltd. holding 22.73% of total equity shares and also took a loan of Rs. 1.5 cr. Which was duly reflected in the books of accounts of the assessee company and transactions was duly covered u/s 2(22)(e) of the IT Act." 3. Briefly stated, during the course of assessment proceeding the Ld. Assessing Officer ("AO") required the assessee to show cause why an amount of Rs. 1,51,76,217/- be no....
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.... and therefore the transaction does not constitute deemed dividend within the meaning of section 2(22)(e) of the Act. In support, the assesee relied on decision of Hon'ble Delhi High Court in CIT vs. M/s. Creative Dyeing & Printing Pvt. Ltd. 2009 (9) TMI 43 (Del) and decision of Hon'ble P&H High Court; Alld. High Court and CBDT Circular No. 19/2017 dated 12.06.2017. 4. The explanation of the assessee was not acceptable to the Ld. AO. He held that the receipt of advance of Rs. 1.50 crore by the assessee from M/s. AMP is deemed dividend under section 2(22)(e) of the Act and added the same to the income of the assessee by observing, inter alia that the contention of the assessee that the purpose of advancing money to the assessee as per recor....
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....ating the transactions and held that it is not a fit case for invoking the provisions of deemed dividend by observing as under: "iii. It is seen that the appellant had entered into an agreement to sell a property to the company as per cancellation agreement as per judicial stamps purchased in the name of the appellant on 20/02/2015.the stamp paper for agreement to sell was purchased on 19/03/2014 and agreement executed on 05/10/2014 and the advances received on 7/10/2014 and 28/10/2014 totalling to Rs 1.50 crores. The amount was returned on 30/03/2015 by a payment of Rs 35666965/- and the appellant had then made excess payment to the company thereby resulting in a credit balance as on 31/03/2015 amounting to Rs 29618362/-. Therefore, in t....
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....rcial transaction as the assessee is not in the business of sale and purchase of property. Reliance was also placed on the decision of Hon'ble Delhi High Court in CIT vs. Sunil Chopra 242 CTR 498 (Del). 9. The Ld. AR refuted the above submissions of the Ld. CIT-DR and reiterated his submission made before the Ld. AO/CIT(A) that M/s. AMP is dealer in properties and the purpose for advancing the impugned sums to the assessee was for purchase of property. Since the sums were advanced to the assessee by M/s AMP for purchase of property, the transaction is in the nature of commercial transaction between the parties. The Ld. AO has not brought on record any evidence to prove the contrary. The Ld. AR also submitted that in ledger account, remark ....
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....the assessee appearing in the books of M/s. AMP which has been incorporated by the Ld. AO in his order (for the period from 1.4.2014 to 25.11.2014) and by the Ld. CIT(A) in his appellate order for the entire financial year 2014-15. In our considered opinion, neither the MOU nor the ledger entries in the books of the company M/s. AMP can be said to be self serving instrument/documents when the Ld. AO himself accepted the transaction as per MOU and the nature of transaction in the case of M/s. AMP for AY 2015-16 assessed by the same Ld. AO. 10.1 The assessee brought on record evidence to prove that the deal of purchase and sale of the property between the parties did not materialize. The Cancellation Agreement executed on 02.03.2015 on stamp....
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....he parties whereas the Ld. AO/CIT(A) have not disputed the agreement between the parties in the case under consideration before us. 10.2 The contention of the assessee before the Ld. AO/CIT(A) was that the company M/s. AMP is engaged in the business of construction and dealing in properties and the purpose of advancing the sums to the assessee as per the record of the company is for purchase of property. Therefore, it is a case of trade advance which is in the nature of commercial transaction. It is stated that the company M/s. AMP gave advance to the assessee against purchase of a property owned by the assessee which the assessee agreed to sell to the company M/s. AMP. Advance payment is made for commercial expediency as the payee also ne....