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TMI Blog2014 (4) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the appellant-Revenue has submitted that the shares were issued belatedly after thirty months and intimation was sent to the Registrar of Companies on November 23, 2010, and the assessment order was passed on November 5, 2010. In other words, he has questioned the claim of the respondent-assessee that Rs. 1,00,00,000 was received as share application money. The assessment order records as under : "In the books of account of M/s. Karishma Machines Tools Pvt. Ltd. it is seen that at annexure D to the balance-sheet that 'investments' of Rs. 1,00,00,000 is shown as share application money to M/s. Alpex Exports Pvt. Ltd. Further, Rs. 63,58,573 is shown as sundry debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer earlier in point of time and before issue of notices by the Assessing Officer in the present case. The relevant forms, i.e., balance-sheets of Karishma Machines and Tools Pvt. Ltd. have been referred to show and prove that the entry towards share application money were not made belatedly and only after queries had been raised by the Assessing Officer in the present case. Thus, in the audited accounts, ledger books, etc., of Karishma Machines and Tools Pvt. Ltd., payment of Rs. 1,00,00,000 was always treated and recorded as share application money. In support of the said factual position, the respondent-assessee had filed a copy of incometax return of Karishma Machines and Tools Pvt. Ltd. The said findings have been affirmed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer nor the Additional Commissioner of Income-tax has taken the trouble to examine this aspect while imposing the penalty. They have merely relied on the judgment of the Jharkhand High Court (supra). The reliance on this judgment appears to us to be misplaced. In Baidya Nath Plastic Industries (P.) Ltd. v. K. L. Anand, ITO [1998] 230 ITR 522 (Delhi), a learned single judge of this court pointed out that the distinction between a loan and a deposit is that in the case of the former it is ordinarily the duty of the debtor to seek out the creditor and to repay the money, according to the agreement, while in the case of a deposit it is generally the duty of the depositor to go to the banker or to the depositee, as the case ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. had paid share application money of Rs. 1,00,00,000, then it cannot be held that the same would be loan or deposit. Similarly, in CIT v. Creative Dyeing and Printing (P.) Ltd. [2009] 318 ITR 476 (Delhi), it has been held that the amount advance/paid for business transactions to a person, who also happened to be a shareholder, would not fall within the ambit of deemed dividend under section 2(22)(e). The said decision takes into consideration the object and purpose behind section 2(22)(e). Another decision of the Delhi High Court in CIT v. Raj Kumar [2009] 318 ITR 462 (Delhi) takes a similar view. In the said case, the expression "any payment" used in section 2(22)(e) was also considered and it was observed as under (page 473) : &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to our minds which answers this conundrum is noscitur a sociis. The said rule has been explained both by the Privy Council in the case of Angus Robertson v. George Day [1879] 5 AC 63 by observing 'it is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them' and our Supreme Court in the case of Rohit Pulp and Paper Mills Ltd. v. CCE, AIR 1991 SC 754 and State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610. It is important to note that Rohit Pulp, AIR 1991 SC 754, was the case dealing with taxation. In brief in the said case the assessee was seeking to take benefit of an exemption notification. The Department denied the benefit of the 'no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 'accumulated profits' of the company ; (iii) and last but not the least the purpose behind the insertion of the term 'advance' was to bring within the tax net payments made in the guise of loan to shareholders by companies in which they have a substantial interest so as to avoid payment of tax by the shareholders ; Keeping the aforesaid rule in mind we are of the opinion that the word 'advance' which appears in the company of the word 'loan' could only mean such advance which carries with it an obligation of repayment. Trade advance which are in the nature of money transacted to give effect to commercial transactions would not, in our view, fall within the ambit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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