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TMI Blog2014 (1) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... h the services were rendered and the bill was raised in the previous year relevant to the assessment year under consideration - Since the assessee is a company following mercantile system of account, the expenditure would call for deduction at the time when the liability is finally settled and not when the amount was paid in advance - The reason for deduction of tax at source at the time of payment is the applicability of provisions of section 194J which provide for deduction of tax at source either at the time of credit of the sum to the account of the payee or at the time of payment there of, whichever is earlier - Decided against Revenue. Deemed dividend u/s 2(22)(e) - Held that:- The assessee company is not a shareholder in the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said land was shown as fixed assets and resultantly the capital gain of Rs.6,24,390/- was shown in the previous year relevant to the AY 2001-02. A small portion of 0.18 Biswas left unsold out of the said land was now available with the company which was sold in the relevant year for a sum of Rs.20 lac. As the income from sale of land was charged to tax under the Capital gains for the AY 2001-02, the assessee contended that similar treatment should be given to the present income of Rs.20 lac also arising from the sale of the same land. The AO negatived this contention and taxed the amount under the head 'Income from other sources . The ld. CIT (A) concurred with the submissions advanced on behalf of the assessee and allowed the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deleted the addition. 6. Having heard both the sides on issue and perused the relevant material on record, it is observed that M/s Group Interior issued bill dated 14.4.2006 for a sum of Rs.1,04,590/- which was settled by the assessee for a sum of Rs.1 lac. The payment made to the party on 19.01.2006 was simply in the nature of advance for which the services were rendered and the bill was raised in the previous year relevant to the assessment year under consideration. Since the assessee is a company following mercantile system of account, the expenditure would call for deduction at the time when the liability is finally settled and not when the amount was paid in advance. The reason for deduction of tax at source at the time of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,02,00,000/- 35.71% shares M/s JJV Market Hotels Rs.65,00,000/-= Deepak Bhardwaj Holds 42.5% shares 8. The AO held the amount as per table A and table B above to be deemed dividend u/s 2(22)(e) of the Act, subject to the availability of accumulated profits. This resulted into addition of Rs.15,64,778/-. The ld. CIT (A) ordered for the deletion of addition. 9. We have heard the rival submissions and perused the relevant material on record. The Hon ble Delhi High Court in CIT vs. Navyug Promoters (P) Ltd. (2011) 203 Taxman 618 (Del) has held that : 'Borrower must hold shares in lending company An assessee who is not a shareholder of the company, from which he rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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