2024 (9) TMI 205

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....made u/s. 2(22)(e) and also Rs. 21.25 lakhs made u/s. 14A of the Income Tax Act, 1961 ("the Act"). 2. The assessee is engaged in the business of retail trading in garments. Besides the above, the assessee is also a partner in a few partnership firms and also Director in few private limited companies. 3. The first issue relates to the addition of deemed dividend made by the AO u/s. 2(22)(e)of the Act. The AO noticed that the assessee is one of the Directors in the following private limited companies:- a) M/s. Tansha Comfort Residency Pvt. Ltd. (TCRPL) b) M/s. Tansha Hospitality Pvt. Ltd. (THPL) c) M/s. Tansha Projects Pvt. Ltd. (TPPL) The AO noticed that the assessee is holding more than 10% of the voting rights in all the above sai....

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....remises on lease from M/s. Kalpataru Enterprises. In connection thereto, the above said company had paid a rent deposit of Rs. 35 lakhs to M/s. Kalpataru Enterprises. However, the AO took the same as payment of loan by TCRPL to the above said partnership firm. The AO considered an amount was Rs. 34,94,249/- (out of Rs. 35.00 lakhs referred above) and assessed the same as deemed dividend u/s. 2(22)(e) of the Act. 7. Before the Ld.CIT(A), the assessee explained the nature of transactions and accordingly contended that these transactions are business transactions carried out in the normal course of carrying on business and they cannot be characterized as loans or advances within the meaning of 2(22)(e) of the Act. Accordingly, it was submitte....

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....udicating the same afresh, by duly considering the evidences that may be furnished by the assessee. 10. The next issue relates to the addition made u/s 14A of the Act. The AO noticed that the assessee has earned dividend income of Rs. 3,85,365/- and share of profit from partnership firm of Rs. 27,98,046/-. Both the above said incomes were claimed as exempt. However, the assessee did not make any disallowance as required u/s 14A of the Act. When questioned about the same, the assessee submitted that it did not incur any expenses in earning the exempt income. The AO did not accept the same. Accordingly, he computed the disallowance as per Rule 8D at Rs. 21,25,070/- and added the same to the total income of the assessee. The Ld CIT(A) also co....