9911796707
TMI Blog2015 (9) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2009-10. 2. The brief facts of the case are that the assessee, an individual, filed his return of income on September 29, 2009 which was subsequently revised on December 9, 2009 declaring an income of Rs. 61,18,311. During the assessment proceedings under section 143(3) of the Act, the Assessing Officer observed that the assessee has drawn a loan/advance of Rs. 1,53,42,534 from M/s. Synergia Consultant Pvt. Ltd., wherein he is a director holding 50 per cent. shares. He also observed that the assessee- company has accumulated profit of Rs. 22,66,96,403 during the year. Therefore, he observed that the provisions of section 2(22)(e) of the Act are attracted and the advances received from the company have to be treated as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of a running account for business purposes and therefore the provisions of section 2(22)(e) are not applicable to the assessee's case. Against the relief given by the Commissioner of Income-tax (Appeals), the Revenue is in appeal before us. 4. The learned Departmental representative, while supporting the order of the Assessing Officer submitted that the account of the assessee in the books of account also showed that the loans or advances were towards personal expenses of the assessee. Therefore, according to him, the Commissioner of Income-tax (Appeals) has failed to appreciate that all the payments made by the assessee through his credit card were not towards the business expenses of the company. Thus, according to him, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edger account of the assessee in the books of account of the company. The assessee's contention that the assessee has made payments on behalf of the company using his credit card which have been reimbursed by the company by credit entries in his ledger account has not been rebutted by the Revenue. We find that the Commissioner of Income-tax (Appeals) has properly appreciated the facts to hold that the payments made by the assessee were for the business purposes of the company which has been reimbursed to the assessee and therefore such payments cannot be considered as loans or advances under section 2(22)(e) of the Act. This is so held in the judgment of the hon'ble Karnataka High Court in the case of Bagmane Constructions Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest or without interest. Therefore, when the said two words are used in the aforesaid pro vision with the purpose of levying tax, if the intention of such advance or loan is to avoid payment of dividend distribution of tax under section 115-O of the Act, such a payment by a company certainly constitutes a deemed dividend. But if such a payment is made firstly, not out of accumulated profits and secondly, even if it is out of accumulated profits, but as trade advance as a consideration ; for the goods received or for purchase of a capital asset which indirectly would benefit the company advancing the loan, such advance cannot be brought within the word 'advance' used in the aforesaid provision. The trade advance which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides that any payment by a company by way of any advance or loan made to a shareholder or the concern in the ordinary course of business where the lending of money is a substantial part of the business of the company and if the case of the assessee does not fall under the said provision, the said advance constitutes dividend. The question of looking into the afore said provision would arise only when all the conditions prescribed in clause (e) of sub-section (2) of section 22 are complied with. If a pay ment is made by way of trade or business, advance or loan, clause (e) of sub-section (2) of section 22 of the Act is not at all attracted and the question of applying the aforesaid clause (ii) would not arise and therefore, we do not see a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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