TaxTMI 
TaxTMI 
2022 (8) TMI 1276
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....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 not disallowed on account of deemed dividend under section 2(22)(e) of the Income Tax Act, 1961 ("Act"). In reply the assessee submitted copy of ledger account of the assessee in the books of M/s. AMP Motors Pvt. Ltd. ("M/s. AMP") which revealed that there is debit balance of Rs. 1,49,09,217/- and not Rs. 1,51,76,217/- during the year. It was further submitted that the assessee has taken a sum of Rs. 1.50 crore (Rs.50 lacs on 07.10.2014 and Rs. 1.00 crore on 28.10.2014) as advance towards sale of property No. 2094 Block E, Essencia, Sector 67, Gurgaon to M/s. AMP, vide Memorandum of Understanding ("MOU") dated 05.10.2014 executed between the assessee and M/s. AMP, which should have been debited to separate accounting head but inadvertently debited to regular 'G.S. Anand Loan Account'. And if we exclude Rs. 1.50 crore from this ac....
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....Sale, placed on record. The proposed buyer M/s. AMP was under legal obligation to pay an advance towards purchase of property to the assessee seller. Therefore, the transaction cannot be treated as 'loan or advance' within the meaning of section 2(22)(e) read with legal judicial decision of jurisdictional appellate courts and CBDT circular. 6. The submissions made by the assessee before the Ld. AO as also before him were found to be acceptable by the Ld. CIT(A). He extracted the relevant accounting ledger indicating 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....
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.... submitted that the genuineness of Agreement to Sale and Cancellation Agreement have never been doubted by the Ld. AO. Dealing in property is also one of the business of the assessee. Therefore, the transaction was commercial in nature and the circular of the CBDT squarely applied to the case of the assessee. 10. We have given our careful thought to the rival submissions of the parties and perused the material available in the records. It is not in dispute that the very basis of the impugned transaction involving advance given by the company M/s. AMP to the assessee is MOU executed on 05.10.2014 between the assessee and M/s. AMP on stamp paper purchased by the assessee on 19.03.2014. Copy is in the records. The Ld. AO has not doubted the authenticity or veracity of this MOU. The opening recital therein says that the assessee is owner of a property which he agreed to sell to M/s. AMP for a total consideration of Rs. 2 crore. Thereafter the MOU specifies the manner of payment of sale consideration, namely Rs. 50 lakhs paid to the assessee seller vide cheque No. 001912 dated 7.10.2014 drawn on HDFC Bank and Rs. 1 crore vide cheque No. 001920 dated 28.10.2014 drawn on HDFC Bank. The....
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....inguishable on facts. In that case the Revenue had disbelieved the agreement between the 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 needed to have some assurance of commitment and also money which he required in execution of contract. We are of the view that an advance against agreement to sale of the property is trade advance which is in the nature of commercial transaction. Trade or commerce connotes the idea of buying and selling and there are judicial precedents which hold that even a si....