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TMI Blog2016 (5) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... have advanced loans to the assessee company. Thus we hold that the amount is not taxable as deemed dividend in the hands of the assessee company u/s 2(22)(e) of the Act as the assessee company is not a shareholder of the payer companies - Decided against revenue - ITA No. 1675/Del/2013, ITA No. 1761/Del/2013 - - - Dated:- 10-2-2016 - Shri J. Sudhakar Reddy, Accountant Member And Sh. Sudhanshu Srivastava, Judicial Member For the Appellant : Smt. Jyoti Kumari, CIT D. R. For the Respondent : Shri V.S. Rastogi, CA ORDER Per Sudhanshu Srivastava, Accountant Member Both the appeals arise out of the order passed by the ld. CIT (A)-XXXIII, New Delhi dated 28.12.2012 for assessment year 2006-07. I.T.A. No. 1675/Del/2013 has been preferred by the Department whereas I.T.A. No. 1761/Del/2013 has been filed by the assessee. Both the appeals were heard together and are being disposed of by this common order. 2. The facts of the case, as borne from the records, are that the assessee is a company incorporated under the Indian Companies Act, 1956 and engaged in the business of Real Estate. Return of income declaring an income of ₹ 408,225/- was filed on 20.11.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following grounds of appeal:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 8,75,000/-, made by the Assessing Officer in view of the provisions of Section 37(1) of the Income tax Act, 1961 on account of additional payment in violation of Stamp Duty Act, 1899. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 7,96,743/-, made by the Assessing Officer in view of the provisions of Section 2(22)(e) of the Income tax Act, 1961 on account of deemed dividend. 5. On the issue of additional payments made for the purchase of land, the Ld. DR submitted that the assessee is not entitled to claim the deduction of this additional payment because there is no consideration received in lieu of these payments other than the land which had already been received by the assessee company at the first instance itself i.e. at the time of sale-deeds. The possession of these lands was taken in each and every case by the assessee company at the time of execution of sale-deeds as is expressly mentioned in the registered sale deeds. The additional payments were made m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny deduction in respect of cost of land in the computation of total income under the head business income and therefore section 40A(3) was not applicable. Since no deduction has been claimed, no disallowance can be made. He also placed reliance on the decision of the Coordinate Bench H of this Tribunal in I.T.A. No. 1752/Del/2013 on the issue. 9. Responding to the Department s arguments on deemed dividend, the ld. AR submitted that the assessee was not a registered shareholder of the payer company and, therefore, in view of the following case laws, the said amount could not be taxed in its hands: (i) CIT vs Universal Medicare Pvt. Ltd. 324 ITR 263 (Bom) (ii) International Technologies Pvt. Ld. In ITA No. 6182/Mum/2008 (iii) CIT vs Ankitech Pvt. Ltd. 11 Taxmann.com 100 (Del) (iv) CIT vs Navyug Promoters Pvt. Ltd. 16 Txmann.com 292 (Del) (v) CIT vs Marketing P. Ltd. 16 Taxmann.com 411 (Del) 10. On the issue of additional payment towards purchase of land, the Ld. AR submitted that the additional payment recorded has not been claimed as an expense, therefore, no disallowance was called for in assessee s case and in any case the cost has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd s case (supra) that such observations are not binding on the Courts. Once it is found that such loan or advance cannot be treated as deemed dividend at the hands of such concerns which is not a shareholder, and that affording to us is the correct legal position, such a circular would be of no avail. 13. Respectfully following the decision of the Hon'ble High Court, we hold that the amount of ₹ 796,743/- is not taxable as deemed dividend in the hands of the assessee company u/s 2(22)(e) of the Act as the assessee company is not a shareholder of the payer companies. Hence, this ground of appeal of the Department is rejected. 14. As far as the issue of deletion of disallowance of ₹ 875,000/- paid on account of additional payments is concerned, it is seen that no such claim was made by the assessee as these payments were not routed through the profit/loss account of the assessee. The Ld. AR has submitted that his arguments on the issue remain the same as raised on the issue of disallowance u/s 40A (3). On a consideration of the same we are of the view that since the material issue is that the said payment was never claimed by the assessee as business expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not attracted with respect to either of the transactions; obviously because it only prohibits allowing of deduction as expenditure. Expenditure obviously means expenditure admissible to be deducted from out of the income, which may include the expenditure on purchase and the like, and the sub-section provides that if any such expenditure is incurred after specified date, in a specified manner, then 20 per cent of such expenditure shall not be allowed as a deduction. In the present case the assessee has not claimed any deduction of any expenditure of ₹ 3,88,000 or ₹ 7,35,000 and therefore, there is no question of not allowing any part of that expenditure, as deduction. Thus, the finding arrived at in this regard, by the learned CIT (A), and the learned Tribunal cannot be said to be wrong. Question No.2 is accordingly answered in favour of the assessee and against the Revenue. 17. Similarly, it is seen that the judgement of the Hon ble Punjab Haryana High Court in the case of CIT vs Alpha Toyo Ltd. (2008) 174 Taxmann 427 (P H) also fully supports the view taken. For ready-reference, we reproduce paras 6 7 of the said judgement:- We have heard learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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