2020 (12) TMI 11 - AT - Income Tax

Deemed dividend u/s 2(22)(e) - outstanding as on 31.03.2014 was a loan and the assessee got direct benefit from the company, hence taxed the same as deemed dividend - CIT(A) deleted the addition - HELD THAT - CIT(A) correctly deleted the addition following the order of this Tribunal in the assessee s own case for the earlier assessment year 2014-15 2018 (8) TMI 2004 - ITAT VISAKHAPATNAM on identical facts wherein held the transactions between them are business transactions as brought out by the Assessing Officer at para 7.3 of the order. The non-business transactions are few and mostly are through journal entries and not receipts/payments. As facts being the same, respectfully following the order of CIT(A) for A.Y.2014- 15 and that of ITAT for A.Y2014-15, it is held that no direct or indirect benefit is derived by the appellant warranting addition u/s 2(22)(e). - Decided in favour of assessee.

Summary

Issues:
Deletion of addition made under section 2(22)(e) of the Income Tax Act, 1961 for Assessment Year 2015-16.

Analysis:
The appeal was filed by the revenue against the deletion of addition made under section 2(22)(e) of the Income Tax Act, 1961 by the Assessing Officer. The Assessing Officer found that the assessee, holding 75% shareholding in a company, had advanced a substantial sum to the company. The revenue contended that the transaction was suspicious as there were no goods supplied by the assessee to the company, leading to the addition being made under section 2(22)(e). Similar addition was made in the previous assessment year. The assessee explained that the transactions were trade-related, involving gold purchase schemes, and no personal benefit was derived directly or indirectly. The CIT(A) deleted the addition based on the Tribunal's decision in the assessee's own case for the previous year, stating that no direct or indirect benefit was derived by the assessee.

The CIT(A) referred to the Tribunal's order for the earlier assessment year, where it was held that the transactions were business-related and no direct or indirect benefit was derived by the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the revenue did not provide any evidence to challenge the finding. As the facts were identical to the previous year and no new evidence was presented by the revenue, the CIT(A)'s decision to delete the addition was upheld, and the appeal of the revenue was dismissed.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the addition made under section 2(22)(e) of the Income Tax Act, 1961 for the Assessment Year 2015-16, based on the findings from the earlier assessment year and the lack of new evidence provided by the revenue to challenge the decision.