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TMI Blog2005 (5) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... unt payee cheque. The identity can not be said to be in doubt either. The means of the lender have been proved inasmuch as he was clearly in possession of this fund received from the shareholders. The CIT(A) was, therefore, clearly in error in confirming the addition under section 68 on account of money received from Cyberspace Films Private Limited. In any event, the purpose of section 2(22)( e ) is to tax the receipts from the company which are out of the accumulated profits available for distribution of dividends. The share forfeiture amount is not available for distribution of dividend, and, therefore, a borrowing from the company, when such a company has no amount available for distribution of dividend, cannot be treated as deemed divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) erred in confirming the addition of Rs. 9,75,000 from Cyberspace Films Private Limited as unexplained. The learned CIT(A) further travelled beyond his jurisdiction and treated the loan of Rs. 9,75,000 from Cyberspace Films Private Limited to be deemed dividend under section 2(22)( e ) of the Income-tax Act, 1961 even when the same was treated as unexplained cash credit by the Assessing Officer and the same is confirmed by the CIT(A). The learned CIT(A) erred in confirming loan of Mrs. Prity Dadlani for Rs. 1,20,000 as unexplained and further erred in directing the Assessing Officer to assess the same in current year under section 68. The other grounds of appeal raised in the memorandum of appeal were not pressed before us. 3. To adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions remained unanswered. He, therefore, confirmed the addition of Rs. 9,75,000 i.e. sum received from Cyberspace Films Private Limited. As for loan from Mrs. Dadlani, mother of the assessee, it was observed that on one hand the assessee is claiming deduction under section 80DDB in respect of this dependent person, and she is also director in the company, and, on the other hand, he claims to have received loan from him. It was also noted that no interest is paid to Mrs. Dadlani. With these observations, the unexplained cash credit in respect of Rs. 1,20,000 received from Mrs. Dadlani was also confirmed. The CIT(A) went on to add that so far as receipt of Rs. 9,75,000 from Cyberspace Films Private Limited is concerned, it is also taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dispute that Cyberspace Films had this money is also not in dispute.What is doubted is the rationale of invest- ments by persons who invested in the share capital of Cyberspace Films Private Limited and that those persons were mere name lenders. It is difficult to understand as to how is this relevant for examining explanation of a credit in the case of this assessee. The law is very well settled that while examining applicability of section 68, source of source cannot be investigated, but then this is precisely what the CIT(A) ended up doing.The factum of borrowing can also not be in dispute as the assessee has borrowed the money by way of an account payee cheque. The identity can not be said to be in doubt either. The means of the lende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,20,000, we have noticed that not only the source of this amount is free from doubt, even the source of source is clearly established. As evident from the paper book filed before us, the source of money was withdrawal from the saving bank account and maturity of fixed deposit. The copies of bank accounts and copies of accounts have also been filed before, and perused by us. The income-tax return and the certification regarding her earnings is also placed in paperbook before us.The identity of lender and the means of lender are, in our humble understanding, beyond any doubt. The factum is not in dispute either. In these circumstances, CIT(A) was also in error in confirming the addition of Rs. 1,20,000 under section 68 in respect of money re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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