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TMI Blog2014 (7) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... and possibly the money was routed through them although there was no genuine business transaction - In taking care of that argument, the status and financial position of all the entities, their annual income has been referred by the Tribunal - the transaction essentially carried out is not falling u/s 2(22)(e) - the Tribunal cannot be said to be perverse or vitiated by any error of law apparent on the face of the record. Decision of Apex Court in Smt.Tarulata Shyam and Others [1977 (4) TMI 3 - SUPREME Court] and L. Alagusundaram Chettiar [1996 (10) TMI 73 - SUPREME Court] distinguished wherein it was held that, The assesssee could not escape the rigour of the law merely because the transaction has been routed by the assessee in a diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhia was a sole proprietor and that Manish Dedhia is also an employee of M/s. Swati Energy and Projects Pvt. Ltd. It is in these circumstances, the money, later on went to M/s. Sujyoti Enterprises and it is M/s. Sujyoti Enterprises which returned the same to M/s. Swati Energy and Projects Pvt. Ltd. on the same day. That all this was to circumvent section 2(22)(e) of the Income Tax Act, 1961. Mr. Ahuja, therefore, submits that the present appeal raises a substantial question of law and as formulated at page 4 para4(a) of the present paper book. 3. In support of his submissions, Mr. Ahuja relies upon two judgments delivered by the Hon'ble Supreme Court of India. The first one is reported in 1977 (108) I.T.R. 345 in case of Smt. Tarulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has a substantial interest or is a member or partner in M/s. Power Service Corporation. Loan or advance was given to M/s. Power Services Corporation by M/s. Swati Energy and Projects Pvt. Ltd. on 24th October, 2005. On that day itself M/s. Power Service Corporation gave a loan of an amount of ₹ 1,40,00,000/- to M/s. Sujyoti Enterprises. M/s. Sujyoti Enterprises gave back the money to M/s. Swati Energy and Projects Pvt. Ltd. on 24th October, 2005 itself. The assessee as also Mr. Manish Dedhia claimed that the amount of ₹ 1,40,00,000/- was advanced against the purchase orders and it did ultimately take place. We need not go into further facts after the whole transaction is seen by us in this manner and its entirety. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquity shareholders after the 31st day of March, 1964, [and before the 1st day of April, 1965];] (ii) any advance or loan made to a shareholder [for 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) and dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of subclause( 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 shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d financial position of all the entities, their annual income has been referred by the Tribunal. Once, we are of the view that the transaction essentially carried out in this case is not falling under section 2(22)(e), then, the finding of fact rendered by the Tribunal cannot be said to be perverse or vitiated by any error of law apparent on the face of the record. 7. The reliance by Mr. Ahuja on the two decisions of the Supreme Court is totally misplaced. In the first decision, in the case of Smt.Tarulata Shyam and Others, the assessee is a shareholder and the Managing Director of M/s. Dolaguri Tea Co.(P) Ltd. That was a private limited company. At the relevant time, section 2(22)(e) of the Income Tax Act, 1961 may have been identical a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and treated the balance of ₹ 2,72,703/- as net dividend income in the hands of the assessee within the meaning of the relevant provision. That is how the assessee before the Hon'ble Supreme Court failed throughout. Though there was a contrary opinion rendered in the Income Tax Appellate Tribunal, ultimately the question was referred to the President of the Tribunal. The President agreed with the accountant member and the majority dismissed the assessee's appeal. However, a question was referred for opinion to the High Court. The High Court held that the tax was attracted at the point of time when the loan was borrowed by the shareholder and it was immaterial whether the loan was repaid before the end of the accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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