2023 (5) TMI 1053 - AT - Income Tax

Deemed dividend addition u/s 2(22)(e) - correctness of the CIT(A)'s action reversing the assessment findings making sec.2(22)(e) addition - assessee s stand throughout is that the impugned sum represents intercorporate deposits bearing interest than loans/advances covered under the deeming fiction of dividends u/s.2(22)(e) - HELD THAT - This tribunal s learned coordinate bench in 2020 (2) TMI 616 - ITAT PUNE has already reversed the CIT(A)'s identical action deleting the similar addition of deemed dividends representing intercorporate deposits. This tribunal s yet another coordinate bench s order in Revenue s appeal 2022 (8) TMI 1382 - ITAT PUNE has also adopted judicial consistency for accepting the Revenue s very stand as well. Faced with the situation, we hereby adopt the above detailed reasoning mutantis mutandis to restore the impugned deemed dividend addition made by the AO in his assessment - This Revenue s appeal succeeds.

Summary

Issues involved: Appeal against CIT(A)'s reversal of assessment findings on deemed dividend addition under sec.2(22)(e) of the Income Tax Act, 1961 for assessment year 2010-2011.

Summary:

Issue 1: The Revenue challenges the CIT(A)'s reversal of assessment findings on deemed dividend addition under sec.2(22)(e) of the Act.

- The impugned sum represents intercorporate deposits, not loans/advances covered under sec.2(22)(e) of the Act.
- Tribunal's coordinate bench in a previous case reversed a similar action by the CIT(A) regarding identical addition of deemed dividends.
- Judicial pronouncements distinguish between deposit and loan, emphasizing voluntariness and documentation.
- Lack of evidence and documentation regarding the nature of the transaction as an inter corporate deposit.
- Ledger account analysis indicates a running account more akin to loans/advances.
- Absence of voluntariness in fund transfers between related parties.
- Tribunal adopts consistent reasoning to restore the deemed dividend addition made by the Assessing Officer.
- Revenue's appeal succeeds, and the Assessing Officer is directed to verify the correct computation of the deemed dividend addition.

Issue 2: Cross objection filed by the assessee in assessment year 2011-12 seeking correct computation of deemed dividend addition.

- The Assessing Officer is directed to verify the correct amount of the impugned addition as per the cross objection filed by the assessee.
- Revenue's appeal allowed in the above terms.

The order was pronounced in the Open Court on 23.05.2023.