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TMI Blog2015 (11) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai Special Bench decision in the case of ACIT Vs. Bhaumik Colour Pvt.Ltd (2008 (11) TMI 273 - ITAT BOMBAY-E ). In the circumstances, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue. - Decided in favour of assessee. - I.T.A.No.1624/Mds/2015 - - - Dated:- 30-9-2015 - SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For The Appellant : Mr. A.V.Sreekanth, JCIT For The Respondent : Mr. S.Sridhar, Advocate ORDER Per Challa Nagendra Prasad, JM: This appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-3, Madurai dated 30.04.2015 for the assessment year 2009-10. 2. The appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the nature of transactions between the assessee firm and M/s. Rajasekar Spintex P.Ltd. are that the company was selling yarn to assessee firm on credit by raising invoices, against these invoices payments were made by the assessee firm, therefore transactions between the assessee and the company are only trading transactions in the course of business and thus advance received by the assessee firm are not loan or deposit within the meaning of provisions of section 2(22)(e) of the Act. However, Assessing Officer rejected the contentions of the assessee and brought to tax advances received by the assessee firm to the extent of ₹ 85,78,000/- as deemed dividend under section 2(22)(e) of the Act. 5. The assessee preferred an appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eating the receipts from the company by the assessee as deemed dividend under section 2(22)(e) of the Act. 8. Counsel for the assessee supports the order of the Commissioner of Income Tax (Appeals) in concluding that transactions between the company and assessee firm are trade transactions and advances received by the assessee firm are only in the course of business of the assessee and thus the receipts represent only trade advances not loan or deposit within the meaning of deemed dividend under section 2(22)(e) of the Act. Counsel for the assessee further submits that the assessee is not a shareholder of the lender company and in which case provisions of section 2(22)(e) have no application for the advances received by the assessee in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. Appellant also received amount of ₹ 85,78,000/- for business needs which was explained as discussed. The reasoning given by the AO (reproduced earlier) for making the addition is cryptic and is only on the ground that there was no need to receive amount from when there is already a credit balance. In my view this alone cannot be the reason for invoking provisions of section 2(22)(e). The details filed by the appellant establish that the amount received is a commercial transaction. 6.10. On going through the large number of decisions relied by the Appellant I find that the argument raised by the Appellant has merit All these decisions relied by the Appellant, many of which are recent ones including a jurisdictional High court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholder of the lender company. While holding so, the Commissioner of Income Tax (Appeals) observed as under: - 7.1. On going through the large number of decisions relied by the Appellant, I find that the argument raised by the Appellant has merit. All these decisions relied by the Appellant, including a special Bench Decision of ITAT Mumbai, have held that deemed dividend can be assessed only in hands of a person who is a shareholder of a lender company and not in hands of a person other than a shareholder and that meaning of section 2(22)(e) cannot be extended to include others on the ground of common shareholding. The facts in the instant case are identical as assessee firm M/s. Rajasekar Textile, is not shareholder of lending co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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