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TMI Blog2015 (9) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... he company, have to be treated as loans or advances under section 2(22)(e) of the Act. Therefore, we deem it fit and proper to remand the issue to the file of the Assessing Officer only for verification of the personal expenditure reimbursed by the company to the assessee and treat only such expenditure out of the accumulated profits of the assessee as deemed dividend under section 2(22)(e) of the Act. - Decided partly in favour of revenue for statistical purposes. - ITA No.916/Bang/2013 - - - Dated:- 17-4-2015 - SHRI PRAMOD KUMAR AND SMT. P. MADHAVI DEVI, JJ. For the Appellant : Shri P.Dhivahar, JCIT(DR). Respondent by: Shri S.Parthasarathi, Advocate ORDER Smt. P. Madhavi Devi (Judicial Member).- This appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses on the credit card which was utilised for both the company and the proprietorship concern. It was stated that the payments were apportioned to the respective accounts. It was submitted that during the relevant financial year, the transfer of funds has been done from and to both entities for short-term business requirements and therefore the transactions do not come under the purview of section 2(22)(e) of the Act. The Assessing Officer was, however, not convinced by the assessee's contention and held that in the account of the assessee in the books of the company always showed debit balance which would amount to loan or advance by the company to the assessee. Therefore, he brought it to tax under section 2(22)(e) of the Act. 3. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im and therefore the expenditure was clearly in the nature of business expenditure for the purpose of business of the company and the assessee has not gained any personal benefit out of the same. Further he placed reliance upon the judgment of the hon'ble Karnataka High Court in the case of Bagmane Constructions P. Ltd. v. CIT I. T. A. No. 473 of 2013, dated September 16, 2014 for the proposition that the provisions of section 2(22)(e) would apply only to gratuitous loan or advance given by a company to those classes of shareholders but not to cases where the loan or advance is given to such shareholder as a consequence of any further consideration which is beneficial to the company. The copy of the said order is filed before us. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of those words have to be understood in the context in which they are used. Each word takes its colour from the other. The meaning of the word 'advance' is to be understood by the meaning of the word 'loan' which is used immediately thereafter. Associated words take their meaning from one another under the doctrine of noscitur a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it. This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it is used. Principle of purposive interpretation should be taken recourse to. If a literal interpretation is given to the said words, it means all trade advances are to be taxed as deemed dividend. If such an interpretation is placed, it would lead to absurdity. That was not the intention of the Legislature in enacting the aforesaid provision. Even if the accumulated profit which ought to have been paid to the shareholders as the dividend paid to a sister concern for the purpose of acquisition of capital assets or as a consideration for the goods received which is required for carrying on the business, it would not fall within the definition of section 2(22)(e) of the Act as the object was not to pay the said amount to the share hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2010] 324 ITR 263 (Bom) reported in has categorically held that when any payment is made by a company to any concern, which falls under clause (e), the tax is leviable on the shareholder only and not on the concern. We respectfully agree with the aforesaid judgment and we do not see any justification to take another view of this matter. There fore, the finding recorded by the Tribunal that these advances made by the BDPL to the sister concern as well as to its shareholders do not constitute deemed dividend under section 2(22)(e) of the Act, is legal and valid and does not call for any interference. 6. Respectfully following the above judgment, we agree with the findings of the Commissioner of Income-tax (Appeals) that the payments made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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