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TMI Blog2011 (3) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. In a way, the assessee became a partner with the company to carry on real estate business, during the course of which the advances were received, advances cannot be deemed to be dividend, appeal is dismissed - IT APPEAL NO. 3943 (DELHI) OF 2009 - - - Dated:- 31-3-2011 - I.P. BANSAL, K.G. BANSAL, JJ. H.K. Lal for the Appellant. K. Sampath for the Respondent. ORDER K.G. Bansal, Accountant Member The only ground taken in this appeal by the revenue is to the effect that the learned CIT (Appeals) erred in deleting the addition of Rs. 1,43,96,908/-, made by the AO on account of dividend u/s 2(22)(e) of the Act. It is mentioned that the assessee was not able to prove the bona-fides of his claim regarding carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the normal course of its business; and (iii) the assessee company had sufficient free reserve and surplus to cover the amounts. 3.1 Accordingly, it is argued that the AO rightly brought this amount to tax as dividend u/s 2(22)(e) of the Act. 4. In reply, the ld. counsel has submitted that the background facts regarding the payment of various amounts had been submitted before the AO. Briefly speaking, these are that the company was in the process of closing down its business of plastics. The assessee was the owner of two plots of land situated Shri Satguru Ram Das Marg, Mansarover Garden, New Delhi-110015 with the combined area of 410 sq. yds. The assessee and the company entered into an agreement on 01.04.2005, under which the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok on page nos. 37 to 68. 4.1 It is submitted that the amounts were given to the assessee as per the collaboration agreement for the purpose of carrying on the business of real estate development. It has been stated before us by the ld. counsel by way of statement at bar that the collaboration agreement has been acted upon by both the parties. In the light of these facts, it is argued that the monies were advanced in the course of business of the company and, therefore, the provision contained in section 2(22)(e) are not applicable. 5. We have considered the facts of the case and submissions made before us. The facts are that the assessee received an aggregate sum of Rs. 1,43,96,908/- from Gururakha Plastics Pvt. Ltd., in which he has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits;" 5.2 In the case of CIT v. Ambassador Travels (P.) Ltd. [2009] 318 ITR 376/173 Taxman 407 (Delhi), it is mentioned that the assessee was a travel agency and the two concerns that it had dealings with were also in the tourism business. The assessee was involved in booking of resorts for the customers of these companies and entered into normal business transactions as a part of its day-to-day business activity. It was held that he financial transactions cannot in any circumstances be treated as loans or advances received by the assessee from thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company." 5.3 In the case of CIT v. Creative Dyeing Printing (P.) Ltd. [2009] 318 ITR 476/184 Taxman 483 (Delhi), the Hon'ble Court mentions that the word "advance" has to be read in conjunction with the word "loan". Usually attributes of a loan are that it involves positive act of lending coupled with acceptance by the other side of the money as loan. It generally carries an interest and there is an obligation of repayment. On the other hand, in its widest meaning the term "advance" may or may not include lending. The word "advance" if not found in company of or in conjunction with a word "loan" may or may not include the obligation of repayment. If it does, then it would be a loan. Thus, arises the conundrum as to what meaning one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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