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TMI Blog2013 (5) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... me (for Money Laundering measures) and also did not have a PAN card which were mandatory for the purpose of applying of units of mutual funds. AO reasoning for not accepting these submissions on the ground that Company could have waited to complete the formalities before the making the investment is not sustainable as it was on account of commercial expediency as to avail the business opportunity, the Company invested in the Reliance Equity Funds through the assessee. The amount investment was duly reflected in the books of accounts of the Company as an investment. Assessee did not derive any benefit for the said investment in his personal name. It has further been submitted that the said investment was redeemed on 10.12.2010 at a profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law the Ld. Commissioner of Income Tax (A) has erred in ignoring the fact that section 2(22)(e) is a deeming provision and creates a fiction bringing in amounts paid otherwise than as dividends, into the net of dividends. Section 2(22)(e) must, therefore, be given a strict interpretation. 3. The appellant craves to be allowed to add, any fresh grounds of appeal and / or deleted or amend any other grounds of appeal." 3. In this case Assessing Officer noted that the Assessee is a Director in M/s Nevco Engineers Pvt. Ltd. and was holding 99% share of the total paid up capital. Assessing Officer further noted that it has been claimed that the assessee has made investment to the tune of Rs. 12,00,000/- in Reliance Equity Funds on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany only. - Only Company has the exclusive rights on the investments. Only company can sell or otherwise deal with the investments. The above stated transactions are not for the benefit of the concerned shareholder/ director and as stated above the money has been invested by the company in mutual fund by making the said shareholder nominee on behalf of the Company which is the real investor in the transaction. The concerned shareholder / director holds the investments in fiduciary capacity and has no rights on the said investments. Thus, these transactions are not of the nature of Advances or Loans and since the deeming provisions of Section 2(22)(e) of Income Tax specifically cover the loans and advances only, not the above transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se formalities. Assessing Officer invoked the provisions of section 2(22)(e) of the I.T. Act and added the same of Rs. 12,85,000/- to the income of the assessee. 5. Upon assessee's appeal Ld. Commissioner of Income Tax (A) noted that assessee was not pressing for adjudication the matter regarding treatment of Rs. 85,000/- as deemed dividend by the Assessing Officer. However, Ld. Commissioner of Income Tax (A) noted that both at the assessment and at the appellate stage, the stand of the assessee has been that a sum of Rs. 12,00,000/- was given to the assessee company, consequent upon the Resolution passed by the Board of Directors of the said Company authorizing the assessee to invest on behalf of the company in units of M/s Reliance Equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion stands established. iv) The resolution of the Board of Directors of the company, authorizing the appellant to make investment in units of the mutual fund on its behalf, clearly stipulates that this investment is on behalf of the Company. The investment in mutual funds is reflected in the balance sheet of the company and not the balance sheet or statement of affairs of the appellant. Thus, there has been no benefit to the appellant by investing on behalf of the company. v) The investment in the mutual funds was made by the company M/s Nevco Engineers Pvt. Ltd. using the appellant as a tool or facilitator because the company at that point of time was not complaint of the KYC norms, mandatory for making such investment. Thus the sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer's has given the reasoning for not accepting these submissions on the ground that Company could have waited to complete the formalities before the making the investment. We find that this view of the Assessing Officer is not sustainable. It was on account of commercial expediency as to avail the business opportunity, the Company invested in the Reliance Equity Funds through the assessee. The amount investment was duly reflected in the books of accounts of the Company as an investment. Assessee did not derive any benefit for the said investment in his personal name. It has further been submitted that the said investment was redeemed on 10.12.2010 at a profit of Rs. 1,35,838.21. On 10.12.2010 on the same date there was a transfer of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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