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TMI Blog2013 (1) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ip Kumar Malhotra (2011 (8) TMI 16 - CALCUTTA HIGH COURT) before the Hon'ble Calcutta High Court. In the absence of conclusive evidence to prove the fact of mortgage and also the fact that the assessee has not requested the bank for release of the mortgage, the ratio of the decision in the case of Pradip Kumar Malhotra (supra) will not apply to the facts of the present case. As the payments made by the company towards advances to the assessee fulfils all the characteristics of 'dividend' as envisaged in S. 2(22)(e),there cannot be any other conclusion excepting to consider the advances given by the company to the assessees as deemed dividend at the hands of the assessee - against assessee. - IT APPEAL NOS. 443 TO 446 (HYD.) OF 2012, Co. Nos. 98 to 101 (hyd.) of 2012 - - - Dated:- 14-12-2012 - CHANDRA POOJARI AND SAKTIJIT DEY, JJ. G. Srinivasa Rao for the Appellant. P.V. Ramachandra Rao for the Respondent. ORDER Saktijit Dey, Judicial Member - These appeals by the Revenue and Cross-Objections by the assessees therein are directed against similar but separate orders of the Commissioner of Income-tax(Appeals)-II, Hyderabad. Since factual background as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.12.2008 passed under S. 143(3) read with S. 147 of the Act. 4. Aggrieved, assessee preferred appeal before the CIT(A), contesting the validity of issue of notice under S.148 and also the action of the assessing officer in treating the amounts withdrawn towards construction of house property by the Director of the company as deemed dividend under S. 2(22)(e). The CIT(A), while upholding the legality and validity of the reopening of the assessment under S.147, deleted the addition made on account of deemed dividend by following inter alia the decision of the Calcutta High Court in the case of Pradip Kumar Malhotra v. CIT [2011] 338 ITR 538. 5. Aggrieved by the relief granted by the CIT(A), assessee is in second appeal before us. 6. Facts of the case are similar in the remaining three appeals, excepting for the differences in the amounts of deemed dividend brought to tax in each of these mattes, and the fact that the issue of reopening of assessment is not there in the appeal for assessment year 2006-07 concerning Shri B. Dhanunjaya Rao, all other appeals. The amounts of deemed dividend brought to tax in the case of Smt. B. Seetaratnam for the assessment year 2006-07 is Rs. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it has not taken into account, the decision of the Hon'ble Supreme Court in the case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345. The learned Departmental Representative submitted that in the aforesaid case, the Hon'ble Supreme Court has laid down the law that even in a case the loan or advance to the share-holders cease to be outstanding at the end of the previous year, it can still be deemed as dividend, if the other conditions factually exist to the extent of the accumulated profits possessed by the company. Learned Departmental Representative also relied on the following decisions in support of his above contentions. (1) CIT v. P.K. Abubucker [2003] 259 ITR 507 (2) M.D. Jindal v. CIT [1987] 164 ITR 28 (3) Miss P. Sarada v. CIT [1998] 229 ITR 444 (4) Ravindra D. Amin v. CIT [1994] 208 ITR 815 (Guj.) (5) Walchand Co. Ltd. v. CIT [1975] 100 ITR 598 (Bom.) 8. The learned Authorised Representative for the assessee, on the other hand, strongly supporting the impugned orders of the CIT(A), submitted that Directors' personal properties were in fact mortgaged as security with the bank to enable the company to avail the loans. When the assessees were in need o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted below- "(2)** ** ** (22) 'Dividend' includes .. (a) and (d)** ** ** (e) Any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the asset of the company or otherwise), made after the 31st day of May 1987, by way of advance or loan to a share-holder, being a person, who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, whether with or without right to participate in profit), holding not less than 10% of the voting power or to any concern in which that 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 of, or for the individual benefit, of any such share-holder to the extent to which the company in either case possesses accumulated profits.". but "dividend" does not include- (i)** ** ** (ii) Any advance or loan made to a share-holder or the said concern by a company in the ordinary course of its business, where the lendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed by the company. However, in the absence of any petition by the assessee seeking acceptance of the additional evidence, no cognizance can be taken by us, while adjudicating upon the issue in dispute. Even accepting that letter also does not lead us to any conclusion so far as assessee's claim of mortgaging the property is concerned, as the said letter does not establish the fact that the property in question was actually mortgaged with the bank. That apart, the language of S. 2(22)(e) is clear and unambiguous and does not leave any scope for interpreting it in a different manner. The said provision being a deeming provision, it has to be interpreted strictly in accordance with the spirit of the language contained therein. As we have already reiterated hereinabove, the payments made by the company towards advances to the assessee fulfils all the characteristics of 'dividend' as envisaged in S. 2(22)(e) of the Act. In the aforesaid circumstances, there cannot be any other conclusion excepting to consider the advances given by the company to the assessees as deemed dividend at the hands of the assessee. The case-law relied upon by the learned Departmental Representative also supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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