9911796707
TMI Blog2013 (9) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law. In the light of the facts, the same is to be decided in accordance with law. In the case under consideration as stated above, the assessee has demonstrated that the amount was received for the purpose of commercial transaction. As regards, the second objection, which is agreement and MOU as after thought, in this regard, we are of the view that these documents are already on record and the Revenue did not point out any contrary material to these documents. Therefore, merely by stating that this is after thought, such argument of the revenue without supporting material/evidence is not sustainable, therefore, the same is rejected - amount of Rs.1,00,00,000/- received to the assessee is on account of commercial transaction, therefore, the Section 2(22)(e) is not applicable - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.3%. 13,884 4. The A.O. noticed that the assessee has shareholder of more than 10%. The company has sufficient reserves and surplus. The company is one where public is not substantially interested. The A.O. after considering assessee submission found that the amount of Rs.1,01,20,910/- is hit by the Section 2(22)(e) of the Act. The A.O. after examining the accumulate profit and other condition for Section 2(22)(e) of the Act made addition of Rs.1,01,20,910/-. 5. The CIT(A) confirmed the order of the A.O. observing that the assessee has miserably failed to prove that the money was advanced by M/s. Bhole Baba Buildcon Pvt. Ltd. for any business consideration. The plea taken by the assessee that the advance was given by M/s Bhole Baba Buildcon Pvt. Ltd. for purchase of cold storage building remains totally unsubstantiated. The CIT(A) agreed with the view of the AO that provisions of sec. 2(22)(e) are squarely applicable in the assessee's case and his case is not covered by the exceptions as provided in sec.2(22)(e). Also, as on the date of giving the loan the company had sufficient accumulated profits. The order passed by the AO does not call for any interference, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and M/s Bhole Baba Buildcon Pvt. Ltd., through its Director Shri Hari Shankar Agarwal that the advance money of Rs.1 crore given by M/s Bhole Baba Buildcon Pvt. Ltd., to the assessee shall be refunded by the assessee to M/s Bhole Baba Buildcon Pvt. Ltd., till March, 2009 including interest @ 6% per annum. It was further stipulated in the said settlement deed that if said repayment of Rs.1 crore is not paid till 31st March, 2009 by the assessee then the rate of interest shall be increased to 18% per annum. In the said settlement deed, it was specifically mentioned that the Ikrarnama dated 07.01.2008 be treated as cancelled. 8. The ld. D.R. on the other hand, relied upon the order of CIT(A) and submitted that it is a case of advance or loan in accordance with Section 2(22)(e) of the Act. The ld. D.R. submitted that this fact supported by audited balance sheet wherein the auditor has shown this amount as unsecured loan. Therefore, the said loan cannot said to be a loan for business purposes. As regards the agreement and MOU, the ld. D.R. submitted that it is after thought. 9. We have heard ld. Representatives of the parties and records perused. The issue under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any). Explanation 1.-- The expression "accumulated profits", wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948, and before the 1st day of April, 1956. Explanation 2.-The expression "accumulated profits" in sub-clauses (a), (b), (d) and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause (c) shall include all profits of the company up to the date of liquidation, but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place. Explanation 3.-- For the purposes of this clause,-- (a) "concern" means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company ; (b) a person shall be deemed to have a substantial interest in a concern, other than a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction of loan involves lending and delivery by one party and receipt by another party of sum money upon express or implied agreement to repay it with or without interest. The phrase "by way of advance or loan" appearing in Section 2(22)(e) of the Act be construed to mean those advances or loans which a share holder enjoys for simply on account of being a person who is the beneficial owner of shares, but if such loan or advance is given to such shareholder as a consequence of any further consideration which is beneficial to the company received from a shareholder, in such case, such advance or loan cannot be said to a deemed dividend within the meaning of the Act. Thus, gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of Section 2(22) of the Act but not the cases where the loan or advance is given in return to an advantage confirmed upon the company by such shareholder. 13. Hon'ble Delhi High Court in the case of CIT Vs. Creative Dyeing & Printing (P) Ltd. (2009) 318 ITR 476 (Del.) wherein it has been held that the amount advanced to the assessee company by another company having common Directors not being a loan to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cold Storage Property situated at Khasra No. 91, Mauza Baroli Aheer, Shamsabad Road, Agra from Shri Kirshna Murari Lal Agarwal for the purpose of business activities of the company up to maximum amount of Rs.2.00 crore. "FURTHER RESOLVED THAT, SHRI HARI SHANKAR AGARWAL, DIRECTOR, be and is hereby authorized by and on behalf of the board to give effect to the above resolution and also to do all such acts, deeds and things as may be deemed necessary in relation to the purchase above property." 18. However, the matter could not be materialized and MOU was executed on 28.03.2008 cancelling the said transaction, a copy of MOU has been placed at Page Nos. 4 & 5 of the assessee's paper book. 19. Considering the facts of the case and material on record, we notice that the assessee has prima facie discharged the burden in establishing that the amount received was a commercial transaction, therefore, the transaction is not covered by Section 222(e) of the Act. 20. As regards, the contention of the ld. D.R. that the assessee has shown this amount as unsecured loan in the books of account, in this regard, it is relevant to state that for the purpose of Income-tax matter the entries in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT, Agra Bench has adopted a formula following certain orders of other Benches of ITAT that to the extent of the own fund if the assessee diverted the interest-free fund, to that extent no disallowance of interest can be made under Section 36(1)(iii) of the Act. In the case under consideration, the assessee has demonstrated that the assessee was having sufficient own capital Rs.1,78,85,290/- as against interest-free loan given Rs.1,73,38,986/-. To maintain consistency we follow the said order of the ITAT (Supra). In view of that, we set aside the order of the Revenue Authorities and deleted the addition of Rs.1,34,794/- 25. The fourth ground is in respect of addition of Rs.10,00,000/-. The A.O. made addition of Rs.10,00,000/- on the ground that assessee has shown Rs.10,00,000/- as liability forgone. The said amount has been credited to capital account. The addition made by the A.O. has been confirmed by the CIT(A) observing that the A.O. has rightly made addition invoking Section 28(iv) of the Act. 26. We have heard ld. Representatives of the parties and records perused. The admitted facts of the case are that there is forfeited liability and the assessee has credited the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
