2024 (10) TMI 659

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.... "1. On the facts and circumstances of the case and in law, the Ld. CIT(A)-9 is not justified in deleting the addition of Rs. 1,66,97,147/- made by the AO on account of investment made in various subsidiaries located both in India and abroad u/s. 14A read with Rule 8 D of the Act. 2. On the facts and circumstances of the case Ld. CIT(A)-9 is not justified in deleting the addition of Rs. 6,43,40,824/- made as deemed dividend u/s. 2(22)(e) of the I.T. Act on account of various amounts received from wholly owned subsidiary" 2. With regard to ground no.1 which relates to section 14A of the Income-tax Act, 1961 (for short 'the Act'), at the time of hearing, ld. DR for the Revenue submitted that ld. CIT (A) deleted the above disallowance based....

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....ned subsidiary of the assessee. A query was raised to the assessee why the abovesaid loan taken from GFPL should not be treated as deemed dividend. In response, assessee submitted as under :- "Provisions of Section-2(22)(e) of the Act are applicable to all the corporate entities in which the public is not substantially interest i.e. closely held companies only. The Section-2(18) of the Income Tax Act, 1961 provides the definition of "Companies in which the public is substantially interested" and as per Subclause (c) in Section- 2(18)(b)(B), it is provided that the provisions would apply to any company to which clause (b) applies, which will also include _any company which may be subsidiary of a holding company. In other words, the require....

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....sh to mention that as per Section-2(22)(e) of the Act, . the amount of deemed dividend shall not exceed the accumulated profit of the company which had advanced loan to other company. In the present case, the accumulated profits of M/s Gripwel Fasteners Pvt. Ltd., the company which had advanced loans to the assessee company as on 01.04.2013 was Rs. 2,25,17,222/-. Copy of the Audited balance sheet as at 31.03.2013 and necessary schedule of "Reserves and Surplus" is enclosed herewith for your kind reference. Accordingly, the amount of deemed dividend shall not exceed the amount of Rs. 2,25,17,222/-. It is further submitted that the assessee company had mentioned in its audit report total amount of all the transactions and not the maximum am....

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....of the first appellate order and submitted that ld. CIT (A) has deleted the addition with the finding that no loan was given by the assessee company to GFPL and the transactions between two companies are in the nature of current account transactions and there was no credit balance of GFPL in the books of the recipient i.e. assessee company, as evident from the ledger account filed before him. In this regard, he brought to our notice pages 69 to 71 of the paper book wherein the details of transactions are given in ledger account. He submitted that all the transactions are nature of reimbursement transactions wherein travelling, food and conveyance expenses are incurred on behalf of GFPL and basically in the nature of current account wherein ....