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2014 (3) TMI 19 - ITAT AHMEDABADDeemed dividend u/s 2(22)(e) of the Act Held that:- The assessee had debit balance as on 01.04.2008 which was continued up to 07.02.2009 - Thereafter, the company was advancing loan to the firm through cheques - CIT(A) has tabulated these advances in his order as annexure in totaling Rs.60,70,000/- which was received by the firm when the balances in the account of M/s Shree Vallabhlaxmi Cotton Pvt. Ltd. was showing credit balance - The payments have not been received against the sale and accordingly, the payments cannot be said to have been received in regular course of business and accordingly these are in the nature of loan and advances and the same are covered by the provisions of section 2 (22) (e) of the Act - The decision in CIT vs. Bharti Overseas Trading Co. [2012 (4) TMI 473 - DELHI HIGH COURT] followed - shares in the name of the partners, but advances made by the company to the firm has to be treated as deemed dividend u/s 2(22)(e) of the Act - As per section 2 (22) (e), any payment even to any concern in which such shareholder is a member or a partner in which he has substantial interest 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 is deemed dividend - The Assessee firm is not shareholder of M/s Shree Vallabhlaxmi Cotton Pvt. Ltd. but partner of the assessee firm who has substantial share in firm, is shareholder in M/s Shree Vallabhlaxmi Cotton Pvt. Ltd. thus, the order of the CIT(A) upheld - Decided against Assessee. Deletion made on account of interest chargeable on loans given to sister concern Held that:- The assessee has debit opening balance at Rs.1.04 crore which pertained to purchase made by the company from the assessee - the company also sold goods to assessee - All the transactions with company are mixed transactions thus, there is no reason to charge interest notionally on debit balance - The income is to be assessed on the basis of real income not notionally the order of the CIT(A) upheld. Deletion made on account of bogus purchase Held that:- The AO worked out creditors erroneously by reducing the cheque payment for credit balance of entry as to be constructed which has been certified by the counsel of the assessee that there is no difference on account of creditor of M/s. Shree Vallabhalaxmi Cotton Pvt. Ltd thus, there is no reason to interfere in the order of the CIT(A) Decided against Revenue.
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