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TMI Blog2012 (8) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... f accounts of the company the Assessee is shown as the debtor. Even though the loan was repaid within a short period the factum of the loan being granted cannot be denied. Therefore, amout of loan given to the Assessee is taxable as deemed dividends in the hands of the Assessee – Decided against assessee. On issue of granting of additional depreciation from accumulated profits in the hands of the company the CIT(A) has held that the issue does not arise for consideration as the company had not claimed additional depreciation - ITA No. 294/Hyd/2011 - - - Dated:- 8-6-2012 - SHRI CHANDRA POOJARI, AND SMT. ASHA VIJAYARAGHAVAN, JJ. Appellant by : Shri S. Rama Rao Respondent by : Shri B.V. Prasad Reddy O R D E R PER ASHA VI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 523/-, the accumulated profit u/s 2(22)(e) of the Act was quantified at Rs. 44,63,119/-. After reducing the deemed dividend already considered in the hands of Mr. Ravindra Modi and Mr. Rajiv Modi, the AO determined Rs. 26,84,125/- as the accumulated profit up to which the deemed dividend was restricted to Rs. 26,84,125/- in the assessment order. 3. On appeal, before the CIT(A) the Assessee submitted that the amounts were withdrawn from the CC account of the company. The amount was not for the individual benefit of the shareholder. There are loans received from shareholder and hence the amount should be considered as having been paid from the loan received from the shareholder. The CIT(A) after considering the arguments of the assessee dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed in favour of his niece. The fact that the amount was repaid in a period of three days is of no consequence as no time limit is prescribed u/s 2(22)(e) as rightly observed by the AO. As regards the claim that no accumulated profits were available, in response to a specific query, the learned AR fairly observed from the accompanying documents filed along with the written submissions that the surplus in P L a/c as on 31/03/2006 was Rs. 79,26,642/-. What is contemplated in the section is the accumulated profits and not the profit earned during the year. Further, for the claim of the difference in depreciation as per the Company Law and Income Tax Law, it is seen that the AO had allowed the claim and reduced the accumulated profit by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed dividend u/s 2(22)(e) of the Act. As I do not find any case for interfering with the finding of the AO, the appeal is dismissed. Aggrieved the Assessee is in appeal before us raising the following grounds of appeal: 1. The order of the CIT(A) is erroneous both on facts and in law. 2. The learned CIT(A) erred in confirming an addition of Rs. 26,84,215/- made by the AO treating the said amount as deemed dividend within the meaning of section 2(22)(e) of the IT Act. 3. The learned CIT(A) ought to have considered the fact that the said amount was not paid for the benefit of the shareholder and was not paid from out of the accumulated profits available with the company. 4. The learned CIT(A) ought to have considered the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a shareholder95, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the 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. 6. All the requirements of sec 2(22)(e) have been satisfied in the present case. The Assessee holds more than 10% of equity shares in by M/s Hyderab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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