TaxTMI 
TaxTMI 
2024 (10) TMI 528
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....ion 143(3) of the Income-tax Act, 1961 (the Act) dated 26th December, 2017. 02. The grounds of appeal raised by the assessee read as under: "*1) For that the order passed U/s 250 is bad in law to the extent that the Ld. CIT(A) was unjustified and incorrect in upholding addition of deemed dividend u/s 2(22)(e) of the Income Tax Act. 1961 amounting to Rs. 2,99,87,804/-ignoring facts of the case and decided case laws. 2) For that additions confirmed by the Ld. CIT (A) are arbitrary and are not according to the provisions of the Income Tax Act 1961. Ld. AO has erroneously applied the provisions of section 2(22)(e) on the advance received by the assessee against the purchase of a property for the benefit of the company. Prov....
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....o flats from the promoter and apparent consideration are about Rs. 5.55 Cr. against which at the end of the F.Y. under consideration appellant has received Rs. 3.36 Cr. from his company which has been shown as loan in his accounts. 6.3 It is stated that even such transactions happened in F.Y. 2014-15 but till the date of the completion of the assessee i.e. after December, 2017 appellant has not got possession of the flat due to non-payment of the dues. Therefore, entire money remained with the appellant and used by the appellant for his own purpose. 6.4 If it has been a genuine business transaction there must have been certain condition while providing such loan to the appellant as so-called business advance with a time li....
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....g this section. The only exception is that making any advance or loan to a shareholder by a company given in ordinary course of business, where the lending of money is a substantial part of the business of the company. The company does not come within the exceptional clause. 6.10 In view of the above fact and circumstances it is quite clear that appellant being the majority shareholder of the company apparently influence the company to make such payment to the appellant by giving it a colour of business transaction which is not based on any material on record. The action and behaviour of both the company and appellant also indicates that this transaction is not at all a business transaction but apparently a way to make use the fund....
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....17. 06. On the other hand, the ld. Departmental Representative (DR) vehemently argued supporting the order of the lower authorities. 07. We have heard the rival contentions and perused the records available on record. The point in dispute before us is the addition for deemed dividend u/s 2(22)(e) of the Act and for necessary reference Sec 2(22)(e) of the Act read as under: - "Section 2(22) in The Income Tax Act, 1961 (22)"dividend" includes- (a) ........... (b) ............. (c) ................... (d)................... (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of ....
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.... Sometimes the balance of EIHCPL is debit and sometimes it is credit and there are, almost around 72 transactions each year. Neither any interest is charged by EIHCPL nor charged by the assessee. In short it is regular running account between the two for the year under consideration. The sum received by the assessee from the company was towards purchase of two flats in Urbana Complex, Kolkata, to be used as a guest house for the vising doctors of the hospital. The funds so received could not utilized for some unavoidable reason during the year but transferred back in succeeding period. It prima facie indicates that the transactions between the assessee and the EIHCPL are not in the nature of loans or advances but are regular business transa....
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....e co-ordinate bench of ITAT Amritsar in the case of G.G. Continental Trades Pvt. Ltd. (supra), held as under: - "Where assessee-company held a 17.20 per cent share in a group concern and funds were regularly exchanged between assessee and said concern to meet their respective business requirements, with interest charged on these transactions, since payments made were not for anybody's individual benefit but were provided due to business exigencies and funds so provided was for sole benefit of company and not to individual benefit of a shareholder, question of applicability of provisions of section 2(22)(e) did not arise." 012. On examining the facts of the instant case in the light of the above decision and CBDT Circular, we....