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TMI Blog2016 (1) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... by : Sh.Rajneesh Behari Mathur, C.A. Respondent by : Sh. M.K.Jain, Sr.D.R. ORDER This is an appeal filed by the Assessee directed against the order of the Ld.Commissioner of Income Tax (Appeals), Faridabad dt. 4.3.2015 pertaining to the Assessment Year (A.Y.) 2007-08. 2. Facts in brief:- The facts leading to the addition are as follows. The assessee was holding more than 10% of the total shares of the company M/s Prescomec Auto Co.Pvt.Ltd., Faridabad. He was a Director as well as a Member Shareholder of this company. He had a running account from the company, a copy of which was placed at page 3 of the assessee s paper book. The assessee was having a credit balance of ₹ 41,25,880.71 at the beginning of the F.Y. 1.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing personal guarantees the Company Prescomec Auto Co.Pvt.Ltd. permitted the Directors to make temporary drawings of advances to the maximum extent of ₹ 50 lakhs. Under these circumstances the issue before me is whether a temporary advance of ₹ 8,84,029/- can be held as deemed dividends u/s 2(22)(e) of the Act. 3.1. The Hon ble Calcutta High Court in the case of Pradeep Kumar Malhotra vs. CIT-V, (WB) (2011) 15 Taxman.com 66(Calcutta) at para 11 held as follows. 10. After hearing the Ld.Counsel for the parties and after going through the aforesaid provisions of the Act, we are of the opinion that the phrase by way of advance or loan appearing in sub clause (e) must be construed to mean those advances or loans which a sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier. 13. We therefore, find that the authorities below erred in law in treating the advance given by the company to the assessee by way of compensation to the assessee for keeping his property as mortgage on behalf of the company to reap the benefit of loan as deemed dividend within the meaning of S.2(22)(e) of the Act. 3.2. The Chennai A Bench of the Tribunal in the case of ACIT vs. Smt. G.Sreevidya (2012) 24 Taxmann.com 75 (Chennai) held as follows Held: In order to attract the provisions of S.2(22)(e), the important consideration is that there should be loan/advance by a company to its shareholder. Every amount paid must make the company a creditor of the shareholder of that amount. At the same time, it is to be borne in min ..... X X X X Extracts X X X X X X X X Extracts X X X X
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