2024 (1) TMI 1071

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....ar 2012-13. 2. The grounds of appeal raised by assessee reads as under: "1. On the facts and in the circumstances of the case, the order of Ld. Commissioner of Income Tax (Appeals) was bad in law, contrary to facts and provisions of law as such deserves to be quashed. 2. That Ld. Commissioner of Income Tax (Appeals) is not justified in holding that provisions under section 2(22)(e) of the Income Tax Act, 1961 are attracted to the transaction between appellant and M/s Hanuman Agro Industries Pvt. Ltd. which is based on surmises and conjectures, contrary to facts borne on record and provisions of law. As such action of Ld CIT(A) needs to be undone and addition confirmed by him needs to be deleted. 3. That Ld. Commissioner of Income Tax....

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....ted as beneficial owner of 40.58% shares. 6. That Ld Commissioner of Income Tax (Appeals) is not justified in confirming addition of Rs. 1,11,02,416/- as deemed dividend U/s 2(22)(e) of the Income Tax Act, 1961 made by Ld. AO which is based on surmises and conjectures, contrary to facts borne on record and provisions of law. As such addition of Rs. 1,11,02,416/- made by Ld. AO liable to be deleted. 7. That Ld. Commissioner of Income Tax (Appeals) is not justified in stating that the appellant is required to inform the Registrar of Companies regarding the fact of holding the shares in the capacity of nominee of beneficial owner Smt. Vandana Devi which is based on surmises and conjectures, contrary to facts borne on record and provisions ....

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....of the Act are not applicable for multiple reasons; (i) the amount received from the lender company are offshoot of business/commercial transaction in the ordinary course of trade and such transactions are not covered within the ambit of section 2(22)(e) of the Act. (ii) the assessee has paid interest on such loans/advances and therefore, the transactions are characterized by commercial spirits and (iii) the case of the assessee was reopened for A.Y. 2011-12 on the same facts in issue. However, while framing the reassessment order, the Assessing Officer found that the impugned transactions giving rise to loans and advances receipts by way of in the hands of assessee fall outside the ambit of section 2(22)(e) of the Act. The reassessment ord....

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....er account and the confirmation thereof by the corresponding party. Hence, the advances made by the lender company to the assessee is not a loan/advance simplicitor but is beset with the character of quid pro quo owing the charge of interest for the benefit of lender company. In the circumstances, the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (2011) 338 ITR 538 (Calcutta) has observed that advances given by lender firm was not for the individual benefit of the share holder but for business purposes and therefore, such transaction could not fall within the sweep of deeming fiction created under section 2(22)(e) of the Act. This reason, on a standalone basis, is sufficient to exclude the applicability of section 2(22)(e....