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TMI Blog2017 (10) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Hon’ble Supreme Court. In view of above facts and circumstances, we do not find any infirmity in the finding of the Ld. CIT-(A) on the issue in dispute and accordingly, we uphold the same - Decided against revenue - ITA No.6553/Del/2015 And C.O. No. 79/Del/2016 - - - Dated:- 11-10-2017 - SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Department : Ms. Sweta Nakara Datta, Sr.DR For The Assessee : Sh. Ram Samujh, Adv. ORDER PER O.P. KANT, A.M.: Both the appeal of the Revenue and the cross objection of the assessee are directed against order dated 23/09/2015 of the Commissioner of Income Tax (Appeals) - 4, New Delhi [in short the CIT- (A) ] for assessment year 2009-10. Both appeal and cross objection being emanated from the impugned order, same were heard together and disposed of by way of this consolidated order. 2. The grounds raised by the Revenue in the appeal and grounds raised by the assessee in the cross objection are reproduced as under: Grounds of appeal: 1. On the facts and in the circumstances of the case and law, the learned CIT(A) erred in deleting an addition of ₹ 1,12,05,965/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income on 22/03/2010, declaring income of ₹ 81,82,765/-. The assessment was completed under section 143(3) of the Income Tax Act, 1961 (in short the Act ) on 22/11/2011 after making certain disallowances. Subsequently, on receipt of information from another Assessing Officer, the Assessing Officer of the present assessee initiated reassessment proceedings by way of recording reasons to believe that income escaped assessment and issued notice under section 148 of the Act on 31/03/2013. The assessment under section 147 of the Act was passed on 31/03/2014 after making addition of ₹ 1,12,05,965/- under section 2(22)(e) of the Act, with the observation that the assessee received loans and advances of ₹ 1,21,25,956/- from M/s. GD Goenka Tourism Corporation Limited , which was liable to be assessed as deemed dividend under section 2(22)(e) of the Act in the hands of the assessee. Aggrieved, the assessee filed appeal before the Ld. CIT-(A), challenging the validity of the reassessment under section 147 of the Act as well as merit of the addition. The Ld. CIT-(A) upheld the validity of the reassessment, however deleted the addition on merit. Aggrieved, both the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t material on record. In the case of the assessee, it is relevant to reproduce the reasons recorded by the Assessing Officer, which are available on page 63 of the assessee s paper book, as under: The income tax assessment of M/s. G D Goenka Pvt. Ltd. for the assessment year 2009-10 was completed after scrutiny in November, 2011 determining income of ₹ 1,43,24,070/-. From the assessment order of 2010-11 of M/s G.D. Goenka Tourism Corporation Ltd, it is also observed that the following amounts are to be included in the income of M/s G D Goenka Pvt. Ltd. as deemed dividend as per the provisions of Section 2(22)(e) of the, Income Tax Act, subject to the accumulated profit: ( i) Quantum of payments : ₹ 1,21,25,956/- ( ii) Accumulated profits : ₹ 1,12,05,965/- ( iii) Deemed Dividend : ₹ 1,12,05,965/- On the basis of the facts as stated above, I have reasons to believe that income chargeable to tax exceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for making the loans and advances liable for deemed dividend under section 2(22)(e) of the Act were fully disclosed to the Assessing Officer. In the circumstances, the contention of the learned counsel that reopening was based on change of opinion, cannot be accepted. In view of the above discussion, we are of the opinion that reassessment proceedings have been validly initiated and accordingly the grounds of cross objection are dismissed. 10. In the grounds of appeal raised by the Revenue, the deletion of the amount of addition of deemed dividend amounting to ₹ 1,12,05,965/- has been challenged. 11. According to the Assessing Officer advances made in the course of bonafide trade transactions are covered by section 2(22)(e) of the Act. The Assessing Officer held that the payment received by the assessee from M/s. G.D. Goenka Tourism Corporation Limited fulfilled all the condition of section 2(22)(e) of the Act as under: i. The assessee is a registered and beneficiary shareholder of the G.D. Goenka Tourism Corporation Ltd. ii. The assessee company is holding 26.83% shares of the assessee company. Therefore, any payments received by the assessee company being sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Secondly, the lending of money should be forming substantial part of the business of the creditor which is also fulfilled in this case. As per the AO, the second condition has not been fulfilled. The AO has wrongly interpreted the legal provisions; the Hon'ble Bombay High Court in the case of Pyarelal Plastic Ltd. has held that substantial part does not connote the idea of being major part. In this case M/s G.D. Goenka Tourism Corporation Ltd. has been receiving interest income from year to year regularly which is the substantial amount and also the substantial part of the business. In this year, the loan amount was only ₹ 99,70,000/- and not ₹ 1,21,25,956/-. The AO has taken this figure as on 18.3.2009 being the peak of the debit balance which is not justifiable as the concept of peak credit applies only u/s 68 and not u/s 2(22)(e). I also agree with the argument of the appellant that term loans and advances do not include intercorporate deposits and the Section 2(22)(e) is not applicable to the inter-corporate deposits. Hence, the addition of ₹ 1,12,05,965/- is deleted. 16. Before us, the Ld. Sr. DR relied on the order of the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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