9911796707
TMI Blog2011 (3) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... shown the amount as unsecured loans. 2. The undisputed facts are that the assessee holds 90% beneficial interest in share capital of Gururakha Plastics Pvt. Ltd., a company in which public are not substantially interested. He is also the registered shareholder in the books of the assessee-company for his 90% stake in the share capital. This company has paid a sum of Rs. 1,43,96,908/- to the assessee on various dates between 01.04.2005 and 31.03.2006, being the relevant previous year. The assessee had accumulated profits in the form of free reserves and surplus amounting to Rs. 1,43,96,908/-. The company has been carrying on the business of manufacture, importers, exporters and dealers in all kinds of plastic and rubber goods, both natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and construct on the said plots industrial buildings, offices, godowns as per plans sanctioned by the Delhi Development Authority. As per paragraph no. 11 of the collaboration agreement, the company was to provide an advance of Rs. 4.00 crore to the assessee whereupon the assessee shall give vacant possession of the land and structures thereon to establish the site office and commence necessary works on the said land. This agreement has been placed in the paper book on page nos. 65 to 71. The main objects of the company did not provide for carrying on the business of real estate developers. Therefore, a resolution was passed on 31.1.2005 to pursue object no. 13(a) in respect of purchase, sale, develop etc. of land, shops, depots etc. A copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not substantially interested. The monies were received in pursuance of collaboration agreement dated 01.04.2005, under which the assessee and the company agreed for development of plots of land for construction of commercial buildings. The company was to pay a total sum of Rs. 4.00 crore to the assessee in lieu of which the vacant possession of plots of land and construction thereon was to be handed over to the company. This agreement was acted upon. The company passed a resolution to carry on the business of real estate developer, with the result that it became one of the main objects of the company. The question is-whether, the amounts so received are liable to be taxed as dividend under the provision contained in section 2(22)(e)? 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar [2009] 318 ITR 462/181 Taxman 155 (Delhi), the facts are that the assessee showed liability of a sum of Rs. 14,59,770/- to CEI under the head "advances received from customers". It was submitted that nearly 90% of the sales of the assessee were to CEI. The advances were received against future supplies which were backed by sales made immediately upon manufacture of goods. The advances were not returned by cheque or otherwise. The Hon'ble Court held that the advances could not be deemed to be dividend u/s 2(22)(e) of the Act. While doing so, four conditions were laid down, on satisfaction of which the payment would acquire the attributes of a dividend. These are as under:- (i) The company making the payment is one in which pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm "advance". The rule of construction to our minds which answers this conumdrum is noscitur a sociis. Therefore, the word has to be construed with reference to word found in its proximity. Accordingly, it was held that the advance could not be deemed as dividend because the same was received for supply of goods. As we have the benefit of three decisions of the jurisdictional High Court, it may not be necessary for us to go into other cases discussed by the lower authorities. 5.4 Coming to the facts, the monies were advanced in pursuance of the memorandum of agreement for developing plots of land into commercial buildings, one of the objects of the company. The plots belonged to the assessee which were to be handed over to the company for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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