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TMI Blog2016 (3) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or more therein has substantial interest in such concern. We further note that the Hon'ble High Court has further held that if the intention of the legislature was to tax such loan or advance as deemed dividend at the hands of the deeming shareholder, it would have inserted deeming provision in respect of shareholder as well. It was held that deemed dividend u/s 2(22)(e) cannot be taxed in the hands of a nonITA shareholder. Respectfully following the judgment of the Jurisdictional High Court, as aforesaid, we are of the considered opinion that the assessee company (M/s AVA Merchandising (P) Ltd.) not being a shareholder of the creditor company (M/s AMPL), the amount of debit balance cannot be added in the hands of the assessee company as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handising Pvt. Ltd. (hereinafter referred as AMPL). The transactions included exchange of cash, journal entries with reference to payments on behalf of each other and / or transfer of assets and inventories. There were frequent debit balance by the appellant to the AMPL. The AO analyzed the shareholding pattern and observed that Sh. Amit Chopra was having 9500 out of 25000 shares of AMPL which comes to 38% of total shares. The AO also observed that AMPL was having accumulated profit of ₹ 2,37,95,261/- as opening balance and RS.1,34,53,618/- as closing balance. The AO further noticed that Sh. Amit Chopra was having 522800 out of 535250 shares of the appellant company which comes to 97.67%. Thus, Sh. Amit Chopra has substantial interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted by the learned DR that the AO has rightly assessed the income at ₹ 2,40,14,833/-. It was further submitted that AO has given cogent reasons for disallowing the addition of ₹ 2,31,91,194/- made u/s. 2(22)(e) of the I.T. Act, 1961. 6. On the contrary, Ld. Authorised Representative of the assessee has relied upon the order of the Ld. CIT(A) and stated that the order of the Ld. CIT(A) is a well reasoned order and therefore, the same may be upheld and Revenue s appeal may be dismissed accordingly. 7. We have heard both the parties and perused the relevant records, especially the orders of the authorities below and the case law cited by the Ld. Authorised Representative of the Assessee. We find that Ld. First Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits; but does not include- (ii) any advance or loan made to a shareholder or 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; Explanation 3. -For the purpose of this clause - (a) concern means a Hindu undivided family, or a firm or an association of persons or a body o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholder. Respectfully following the judgment of the Jurisdictional High Court, I hold that the appellant company (M/s AVA Merchandising (P) Ltd.) not being a shareholder of the creditor company (M/s AMPL), the amount of debit balance cannot be added in the hands of the appellant company as deemed dividend u/s 2(22)(e) of the Act. The same is, therefore, deleted. Grounds of appeal are allowed. 7.1 On going through the aforesaid finding of the Ld. CIT(A) on the issue in dispute and the case laws cited in the impugned order, we are of the view that the assessee during the year had regular transactions with the AMPL and there was peak debit balance of ₹ 2,31,58,498/-. The AO made the addition uls 2(22)(e) on the ground that Sh. Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Merchandising (P) Ltd.) not being a shareholder of the creditor company (M/s AMPL), the amount of debit balance cannot be added in the hands of the assessee company as deemed dividend u/s 2(22)(e) of the Act. Therefore, the Ld. CIT(A) was right in deleting the addition of ₹ 2,31,58,498. Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we uphold the same and the issue raised by the Revenue stands dismissed. As a result, the Revenue s Appeal is dismissed. ASSESSEE S CROSS OBJECTION 8. The Assessee has filed the Cross Objection. We find that the Cross Objection filed by the Assessee is time barred by 202 days. However, the Assessee has filed the Application for Condonation of Delay for 185 days. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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