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TMI Blog2016 (5) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), the transactions is required to be held in the nature of mutual current accommodation entries and therefore outside the purview of provisions of Section 2(22)(e) of the Act. - Decided against revenue - IT(SS)A Nos. 407 to 409/Ahd/2011, ITA Nos. 1648 & 1649/Ahd/2011, ITA No. 1692/Ahd/2011, IT(SS)A Nos. 410 to 412/Ahd/2011, ITA Nos. 1650/Ahd/2011, ITA Nos. 1690 & 1691/Ahd/2011 - - - Dated:- 5-4-2016 - SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee : Shri Tushar Hemani, AR For The Revenue : Smt. Sonia Kumar, Sr DR ORDER PER BENCH : IT(SS)A Nos. 407 to 412/Ahd/2011 ITA Nos. 1648 to 1650/Ahd/2011 are the appeals filed by two different assessees against a consolidated order of the Commissioner of Income Tax (Appeals)-III, Ahmedabad, dated 15.04.2011, passed for Assessment Years 2005-06 to 2009-10 in the case of Dinesh Jain and for Assessment Years 2005-06 to 2008-09 in the case of Kavita Jain; whereas ITA Nos. 1690 to 1692/Ahd/2011 are the cross-appeals filed by the Revenue for Assessment Years 2005-06 in the case of Dinesh Jain and Assessment Years 2005-06 2006-07 in the case of Kavita Jain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as allegedly flown from the partnership firms into the hands of the appellant without establishing any nexus between the amount paid by the Company to the firm and the amount lent by the firms to the individual Appellant while confirming the addition. 8 Both the lower authorities have erred in law and on facts in passing the orders without properly appreciating the fact and that he further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of both the authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 9. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s 234B/C of the Act. 10. The learned CIT(A) has erred in law and on facts of the case in confirming the initiation of penalty proceedings u/s 271(1)(c) of the Act. 3. The brief facts of the case are that the original assessment up to Assessment Year 2007-2008 was completed by the Assessing Officer under section 153A read with section 143(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GROSS TOTAL 101,987,618 3.1 Matter was carried before the First Appellate Authority, wherein various submissions were made on behalf of the assessee and having considered the same, the CIT(A) granted partial relief to the assessee for Assessment Year 2005-06 and 2007-08 and allowed the appeal of the assessee for Assessment Year 2009-10; whereas income has been enhanced by the CIT(A) for Assessment Years 2006-07 and 2008-09, for the reasons stated by the CIT(A) in the appellate order. 3.2 Similarly, in the case of Mrs. Kavita Jain, the CIT(A) granted partial relief for Assessment Years 2005-06 to 2007- 08, whereas the income has been enhanced by the CIT(A) for Assessment Year 2008-09. 3.3 Against the aforesaid order of the CIT(A), the assessee is in appeal before us for all assessment years as indicated above, i.e. AYs 2005-06 to 2009-10 in case of Dinesh Jain and AYs 2005-06 to 2008-09 in case of Kavita Jain; while the Revenue is in cross appeal against the deletion of addition made by the Assessing Officer u/s 2(22)(e) for AYs 2005-06 and 2006-07 in the case of Kavita Jain and for Assessment Year 2005-06 in the case of Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and current account has been defined in the Limitation Act, 1963, which is different in the case of loan advance as compared to the mutual, open and current account. There was never any interest charged on the outstanding balances itself was testimony to the fact that such account was not in the nature of loans and advances . Moreover, current account entries were many, whereas loans and advances entries were few. In current account, funds move both ways whereas in the loans and advances, it usually moves from lender to borrower. 5.3 As per the mutual arrangement OIL, OC and OBA would park their surplus funds with each other for their mutual benefit on need basis. With this understanding there were large numbers of transactions between these entities. This was explained by the assessee before the First Appellate Authority. Therefore, there was no intention of advancing any loan to the said partnership concerns out of accumulated profits by the said company-OIL. The said amount was in the nature of open, current accommodation account and not as a loan or advance by the company-OIL. As per ledger accounts, the transactions between OIL and OC reveals that for the period under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant. I am of the view that the provisions of S.2(22)(e) of the Act are not applicable at all and therefore the question of deduction of tax at source does not arise and therefore, the liability u/s.201(l) and 201(A) of the Act also does not arise. For both the years under consideration, I have perused the copies of the ledger accounts placed on record. It can be seen that there are large number of debit and credit transactions. Meaning thereby, the appellant has given and received funds as and when required to and from its associate concern. It is not an account whereby loans and advances have been given to the associate concern. It is an account which is in the nature of current adjustment accommodation account wherein there is a movement of fund both ways, on need basis. Unlike transactions of loans and advances, in this kind of current adjustment accommodation account, the movement of funds is both ways and the same is more in the nature of current account rather than a loan account. Transactions in the nature of loans and advances are usually very few and for a longer duration. In the facts of the present case, the nature of the transaction is in the form of current ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(22)(e) of the Act would not arise. Consequently, no question of law arises. Tax appeals are dismissed. 5.6 The Assessing officer has invoked section 2(22)(o) only because the account contain transactions of payment and repayment between the said Company OIL and firms OC and OBA. Further, he has nowhere ascertained that the payment received and the payments made are towards payment by way of loans or advances. Therefore, simply because there were transactions of cheques received and cheques paid in the mutual, open, current, running account with the sister concerns, the same cannot be considered as payment by way of loans or advances so as to attract provisions of section 2(22)(e) as held in the case of Schutz Dishman Bio-tech Pvt Ltd (supra). Similar transactions have been made in earlier year also but never in past the same has been considered to be transaction attracting section 2(22)(e). Therefore, in view of the binding decision in the case of Schutiz Dishman Bio-tech Pvt Ltd (supra), the transactions is required to be held in the nature of mutual current accommodation entries and therefore outside the purview of provisions of Section 2(22)(e) of the Act. We hold accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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