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TMI Blog2016 (3) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... a distinction between "accumulated profits" and "current profits". If the Assessee did not had any accumulated profits brought forward from the earlier years, then, the provision of deemed dividend cannot be invoked on the current year's profit. This is a settled position of law. Here, in this case, once there is no accumulated profits brought forward from the earlier years, then, the provision of deemed dividend u/s 2(22)(e) of the Act cannot be invoked for taxing the reserves and surplus or the profits of the current year. Accordingly, the addition made by the AO cannot be sustained at the threshold. - Decided in favour of assessee. - ITA No. 7379/Mum/2012 - - - Dated:- 15-1-2016 - Rajendra, AM And Amit Shukla, JM For the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er - 3(1)(1) ('AO') by considering the loan given by M/s. Pantaloon Retail Technologies Ltd. ('PRTL') to the Appellant as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 ('the Act') by considering the accumulated profits as on 31st March 2006. 2. The facts in brief are that, the Assessee-company is engaged in the business of providing financial services. For the assessment year under appeal, the return of income was filed declaring total income of ₹ 68,177/- on 27.11.2006. The said return was selected for scrutiny and assessment order was passed u/s 143(3), vide order dt. 24.11.2008 assessing the total income at ₹ 3,99,944/- after making certain disallowances. Thereafter, notice u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent of reserve and surplus which in this case is ₹ 65,36,884/-. In view of the same, the deemed dividend to the tune of ₹ 65,36,884/- should be taxable in the hands of the assessee company i.e. M/s. Advantage Moti (I) Pvt. Ltd. On perusal of the records, it is found that you have not offered any such income to tax. Therefore, I have reason to believe that the income aggregating to ₹ 65,36,884/- has escaped assessment resulting into short levy of tax. In view of the above, you are requested to explain why the amount of ₹ 65,36,884/- should not be added to your total income and assessed accordingly. Your reply along with supporting documents and details should be submitted to the undersigned within 15 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the reopening u/s 147 and also the additions on merits. 3. Before us, the ld. Counsel of the Assessee submitted that during the course of the original assessment proceedings, the AO had raised the question regarding loan taken by the Assessee and in response, the Assessee had specifically provided the details of the loan borrowed from M/s. PRTL Enterprises. The reply filed before the AO vide letter dt. 3.10.2008 in this regard reads as under : 3. In respect of loan of ₹ 5,50,00,000/- borrowed from Pantaloon Retail Technologies Ltd. (now known as PRTL Enterprises Ltd.), we are enclosing (a) acknowledgement for filing return of income for A.Y 2006-07; (b) statement of total income and (c) accounts for the year ended on 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable as income chargeable to tax has escaped assessment. On merits, he submitted that the Assessee had not challenged it in the original grounds of appeal and same has been raised vide additional grounds. Therefore, such additional grounds should not be admitted now. 5. We have heard the rival contentions and perused the relevant material placed on record. So far as admissibility of additional ground is concerned, we find that the same is arising out of the material already on record which does not require any investigation of facts but rather goes to the very root of the issue, whether the deemed dividend in terms of section 2(22)(e) is at all applicable in the case of the Assessee or not. Therefore, the additional ground which is ari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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