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TMI Blog2012 (7) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... account of Business Promotion expenses. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.59,11,246/- on account of deemed dividend u/s 2(22)(e) of the I.T.Act.. 3. Briefly stated the facts of the case are that the AO selected the case of the assessee for scrutiny and a notice u/s 143(2) of the I.T.Act, 1961 (hereinafter referred to as the Act) was issued to the assessee. The AO noted that the details of business promotion expenses reveals that there was a payment of Rs.2,62,500 to M/s C.R. Richard Ellis South Asia (P) Ltd. for which no details or purpose was offered by the assessee and the same was disallowed being of non-business views by the AO. The AO also noted that during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany has taken loan from A.P. Projects Ltd. in which one of the Directors Shri Pankaj Bajaj was also a Director in the assessee appellant company. Therefore, the AO held that the amount is covered u/s 2(22)(e) of the Act as Shri Pankaj Bajaj was director in the assessee company and also holding the post of Director in the lending company i.e. A.P. Projects private Limited. The ld. CIT(A) considered the arguments and citation submitted before him and deleted the addition with the finding being reproduced as under:- "6.2 I have carefully considered the assessment order as well as the written submission of the appellant. The submission that the provisions of section 2(22)(e) is not applicable to the facts of the assessee's case as lending of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. The AO's contention that this being a deeming provision, it is not necessary that the said concern should also be a shareholder of the company does not hold good in light of the various cases cited. Respectfully following the decision of the Delhi Tribunal in the case of A.R. Chaddha and Co. India (P) Ltd., the addition is directed to be deleted. The appellant succeeds on this ground." 7. We have carefully heard and considered the rival arguments of both parties in the light of orders of authorities below and perused the entire record before us. Ground No. 1 8. We have observed that the AO disallowed the payment of Rs.2,62,500 to M/s CB Richard Ellis South Asia (P) Ltd. and claimed the same amount as business promotion expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itech P. Ltd. reported as (2012) 340 ITR 14 (Delhi), it has been held that as per Section 2(22)(e) of the Act, following conditions are to be satisfied (i) the payer company must be a closely held company; (ii) it applies to any sum paid by way of loan or advance during the year to the following persons: (a) a shareholder holding at least 10 of the voting power in the payer company; (b) a shareholder in which such shareholder has at least 20 per cent of the voting power; (c) a concern (other than company) in which such shareholder has at least 20 per cent interest; (iii) the payer company has accumulated profits; (iv) the payment of loan or advance is not in the course of ordinary business activities. By a deeming provision it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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