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2014 (10) TMI 897 - AT - Income TaxDeemed Dividend addition u/s. 2(22)(e) - Held that - Sec. 2(22)(e) of the Act covers only those transactions which benefit the shareholder alone and results in no benefit to the company. On the other hand, if the transaction is mutual by which both sides are benefited, it is undoubtedly outside the purview of provisions of sec. 2(22)(e) of the Act. From the above, it is clear that the loan account differs from current account and the provisions of section 2(22)(e) of the Act, being a deeming section, cannot be applied to current account. In such circumstances, we delete the addition. See Mr. Purushottam Das Mimani Versus Dy. Commissioner of Income Tax, Central Circle-V Kolkata 2014 (12) TMI 801 - ITAT KOLKATA Disallowance on account of expenditure under miscellaneous receipts - Held that - We find that the lower authorities have made addition on the basis that no supporting evidence for claim of this expenditure was filed even though enough opportunity was provided to the assessee. Even now before us the assessee failed to provide any evidence or made no argument. Hence, this issue of assessee s appeal is dismissed. Assessment under Section 153A - Held that - It is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made.
Issues Involved:
1. Addition on account of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. 2. Disallowance of expenditure claimed under miscellaneous receipts. 3. Deletion of addition made by Assessing Officer on account of deemed dividend by CIT(A). Detailed Analysis: 1. Addition on Account of Deemed Dividend under Section 2(22)(e) of the Income Tax Act, 1961: The first common issue in the assessee's appeals (IT(SS)A Nos. 57 & 58/Kol/2011) concerns the addition made by the Assessing Officer (AO) on account of deemed dividend. The AO made additions of Rs. 2,06,214 and Rs. 5,21,010 for AY 2006-07 and Rs. 15,36,377 for AY 2007-08, which were confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) held that the AO issued a show-cause notice to the assessee to explain why the loan amount should not be treated as deemed dividend under Section 2(22)(e) of the Act, but no explanation was provided by the assessee. Therefore, the addition was confirmed based on the facts and provisions of the Act. The Tribunal found that the facts of the case were identical to a similar case (Mr. Purushottam Das Mimani), where it was determined that the transactions were mutual and commercial in nature, thus not qualifying as deemed dividend. The Tribunal referred to the legal proposition decided by the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra v. CIT, which held that if the loan or advance is given in return for an advantage conferred upon the company, it cannot be deemed a dividend. Based on this precedent, the Tribunal concluded that the loan account differs from a current account, and the provisions of Section 2(22)(e) cannot be applied to current accounts. Consequently, the addition was deleted, and the common issue in the assessee's appeals was allowed. 2. Disallowance of Expenditure Claimed Under Miscellaneous Receipts: The next issue in IT(SS)A No. 58/K/2011 concerns the disallowance of expenditure claimed at Rs. 50,000 under miscellaneous receipts. The AO made the addition due to the lack of supporting evidence for the claimed expenditure, which was confirmed by the CIT(A). The Tribunal noted that the assessee failed to provide any evidence or arguments even before the Tribunal. Therefore, the issue of the assessee's appeal was dismissed. 3. Deletion of Addition Made by Assessing Officer on Account of Deemed Dividend by CIT(A): The common issue in the Revenue's appeals (IT(SS)A Nos. 70 to 72/Kol/2011) concerns the deletion of the addition made by the AO on account of deemed dividend by the CIT(A). The CIT(A) relied on the case law of M/s. LMJ International 119 TTJ(Kol) 214. The Tribunal found that this issue is covered in favor of the assessee by the decision of the Hon'ble Rajasthan High Court in the case of Jai Steel (India) Vs. ACIT, which held that for completed assessments, the AO can only make additions based on incriminating material found during the course of search. Since no incriminating material was found in this case, the Tribunal upheld the CIT(A)'s deletion of the addition. Consequently, the issue in the Revenue's appeals was dismissed. Conclusion: - The appeal of the assessee in IT(SS)A No. 57/K/2011 was allowed. - The appeal of the assessee in IT(SS)A No. 58/K/2011 was partly allowed. - The appeals of the Revenue were dismissed. Order Pronouncement: The order was pronounced in open court on 17/10/2014.
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