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TMI Blog2013 (4) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Ekta Flavours (P) Ltd., it appears from the order of the First appellate Authority that there was a liability of Rs. 3,44,57,866/- on account of excise duty payable, which is not contingent because the said liability cannot be denied. So, loan taken by the assessee from M/s. Ekta Flavours (P) Ltd., cannot be treated as "deemed dividend" within the meaning of Section 22(2)(e). When it is so then the said addition was rightly deleted by the First Appellate Authority as well as the ITAT and the same appears reasonable. Regarding M/s. Kothari Products Ltd., it appears that there was also a sales-tax liability to the tune of Rs. 8,42,26,335/-, as mentioned by the Tribunal in its impugned order. Needless to mention that the Tribunal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual capacity. At the relevant time, he was the Director in the two companies, namely, M/s. Kothari Products Ltd.; and M/s. Ekta Flavours (P) Ltd. The AO in his assessment order observed that the provisions of Section 2(22)(e) were sufficient not only to cover the loans and advances but also the payments made by the companies on behalf or for the individual benefits of the share-holders. The AO, therefore, made an addition of Rs. 6,01,783/- on account of "deemed dividend" from M/s. Ekta Flavours (P) Ltd.; and a sum of Rs. 11,10,797/- on account of "deemed dividend" from M/s. Kothari Products Ltd. Thus, the AO made total addition of Rs. 17,12,580/- on account of "deemed dividend", within the meaning of Section 2(22)(e) of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 07.01.2002 has given a partial relief to the assessee by observing that the addition of Rs. 6,01,783/- pertaining to M/s. Ekta Flavours (P) Ltd., is not sustainable for the reason that there was no accumulative profit in the said company. However, the "deemed dividend" received by the assessee from M/s. Kothari Products Ltd., was confirmed for Rs. 11,10,797/-. Being aggrieved, both the parties filed appeals before the Tribunal, who vide its impugned order has given the entire relief to the assessee for Rs. 17,12,580/- by allowing the appeal of the assessee and dismissed the appeal of the Department. Not being satisfied, the Department has knocked the door of this Court by presenting the present appeal. On 27.04.2005, a Coor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not accepted by the department and the Appeal of the department under Sec. 260A is already sub-judice before the Hon'ble High Court against the earlier appellate orders." With this background, heard Sri Prashant Chandra, learned counsel for the appellant, who has relied on the order of the AO. On the other hand, Sri K.R. Rastogi holding brief of Sri S.K.Garg, learned counsel for the assessee has justified the order passed by the Tribunal. After hearing both the parties and on perusal of the record, it appears that at the relevant time, the assessee was the Director in both the companies, namely, M/s. Kothari Products Ltd.; and M/s. Ekta Flavours (P) Ltd. The additions were made under Section 2(22)(e), which on reproduction reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholder [or the said concern] by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company; (iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by its and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is so set off; (iv) any payment made by a company on purchase of its own shares from a shareholder in accordance with the provisions of section 77A of the Companies Act, 1956 (1 of 1956); (v) any distribution of shares pursuant to a demerger by the resulting company to the shareholder of the demerged company (whether or not there is a reduction of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. When it is so then the said addition was rightly deleted by the First Appellate Authority as well as the ITAT and the same appears reasonable. Regarding M/s. Kothari Products Ltd., it appears that there was also a sales-tax liability to the tune of Rs. 8,42,26,335/-, as mentioned by the Tribunal in its impugned order. Needless to mention that the Tribunal is the final fact finding authority as per the ratio laid down by the Hon'ble Apex Court in the case of Kamla Ganpati vs. Controller of State Duty, 253 ITR 692 (SC). In the instant case, it is clear that both the companies in question were having tax or excise liability during the assessment year under consideration. It may also be mentioned that the Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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