AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 265
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntial apartments and villas, having not filed any return of income for the year u/s. 139, admitted an income of Rs. 48,48,717 on account of remuneration received from the said company vide return filed on 25.01.2016 on being issued notice under section 148(1) of the Act on 06.08.2014. The sum of Rs. 62.44 lakhs owed by him to SHPL as at the year-end, i.e., 31.03.2011, was inferred by the Revenue as deemed dividend u/s. 2(22)(e) of the Act as his shareholding in SHPL was in excess of 10%, while it had reserves in excess of that sum, which had thus escaped assessment. The assessee explained the same to be principally due to the purchase of a Villa from the company during the year, besides monies received by him from the company's customers for and on behalf of the company which, accordingly, were debited by it to his account. The explanation was found not tenable, both by the assessing and first appellate authority. The sale of flat to the assessee-director had been on credit, not extended to other customers. Similarly, retention of money received from it's customers could again not be regarded as a transaction in the normal course of business. Both the amounts thus assume the charac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31^st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits ; but "dividend" does not include- (i) .... (iv) Explanation 2.-The expression "accumulated profits" in sub-clauses (a), (b), (d) and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause (c) shall include all profits of the company up to the date of liquidation, but shall not, where the liquidation is consequen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to Rs. 15,347/- between the ledger account and its summary, which may be due to some minor sums debited, and would require been shown, as this would alter the amount in respect of another group, i.e., the balance appearing against row (e) in Table-2. Further, why one wonders the sale of land, if it pertains to the same transaction, as we infer, is also not credited to the revenue recognised account, i.e., as is other sum of Rs. 44.04 lakhs, raising doubts as to if it pertains to Villa A/c? Also, the latter being by way of journal entry (on 31.03.2011), indicates it being a transfer from another account/s, representing date-wise transactions during the year. Continuing further, as afore-stated, all the debits in the account, to be maintained/tabulated separately, would stand to be adjusted first, i.e., where there is no debit balance in the current account; the balance, both in the current account as well as Flat account being reckoned date-wise and, in any case, month-wise, as the credit for the remuneration is on a monthly basis. As shown to us during the course of hearing, the amount due on sale of villa stands paid in full in the following year, i.e., f.y. 2011-12. That being....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts respect as qualifying to be deemed as dividend u/s. 2(22)(e). As queried by the Bench during hearing, to no answer, if the assessee had any authorization to accept trade debts. This is as, unless so - it shall require a Board resolution authorising him (and which may further also prescribe the manner, viz. account payee cheque, etc.) or a monetary limit up to which the amount could be received by him, etc. In the absence thereof, no receipt, for and on behalf of the company, can be issued by the assessee. And the customer paying money to the director does so at his own risk and cost, implying him to continue to be liable to the company for the same. Further, even assuming that he being a Director had the implied authority, the same is to be deposited forthwith with the company, and there is no question of it debiting him for the same, which implies it allowing him to retain the same. It is this retention which translates into a debit balance that assumes the form of loan or advance, attracting section 2(22)(e) of the Act. It would though be a different matter where the assessee has a credit balance on the relevant date, in which case there is no question of any loan or advance b....