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TMI Blog2017 (11) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... nt change in circumstances’ would not have come in the way of alleged sale transaction of the subject property. We have with due respects perused the case laws on which the assessee had placed strong reliance and of the view that those case laws will not come to the rescue of the assessee. The case laws relied on by the assessee are for the proposition that when amounts are advanced for business transaction / out commercial expediency, the same would not come within the purview of deemed dividend u/s 2(22)(e). In the instant case, as mentioned earlier, the amounts received by assessee is nothing but loan / advance from NIPL and assessee is camouflaging the same as a commercial transaction relating to sale of property in order to get over the provisions of Section 2(22)(e). AO was within his realm to invoke the provisions of s. 2 (22)(e) of the Act.- Decided against assessee. - ITA No.396/Bang/2017 - - - Dated:- 3-11-2017 - Shri George George K, JM Shri Jason P.Boaz, AM For The Appellant : Shri Lakshmy Karthik, CA For The Respondent : Shri Padmameenakshi, JCIT ORDER Per George George K, JM This appeal, at the instance of the assessee, is directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the assessee s case. In Bagmane constructions Pvt Ltd, the land was being purchased by the shareholder on behalf of the company out of the company s funds. The facts of the assessee s case are different from those cited by the assessee. In the case of the assessee, the property is held by him on his own behalf and he has ultimately not transferred the property to the company. Therefore, the transaction cannot be accepted a s a commercial transaction and is nothing but a pure and simple loan. The assessee has shown the amount of ₹ 1,53,00,000/- as a loan in the return of income. The assessee owns shares in the company, not being shares entitled to a fixed rate of dividend, holding not less than ten per cent of the voting power. In the circumstances, the provisions of section 2 (22)(e) are clearly attracted in the case of the asssessee. 6. As mentioned earlier, the accumulated profit of M/s. Nokha Investments Pvt. Ltd at the beginning of the year on 1.4.2012 was ₹ 1,00,50,743/-. In respect of the income earned by M/s. Nokha Investments Pvt. Ltd during the relevant previous year, it has been submitted that the same accrued to the company in connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y due to fall in market value of property and consequent change in circumstances. By this act of the appellant, the company has not derived any benefit whatsoever. M/s. Nokha Investments Pvt Ltd is not in the money lending business.................................................. . 5. Aggrieved, the assessee come up with the present appeal before appeal. During the course of hearing, the learned counsel for the assessee had reiterated what has been contended before the authorities below. In furtherance, the elaborate submissions made are summarized as under: - during the year under dispute, the assessee agreed to sell his property situated at III Block, HRBR Extension which he had constructed partly through own funds and through housing loan borrowed from HDFC Bank to NIPL for a consideration of ₹ 3 crores; - that when NIPL was looking for a property around HRBR area for locating its corporate office, the assessee volunteered to sell his property and, accordingly, a Memorandum of Understanding dt. 7.9.2012 was entered into between them wherein it was agreed, among others, that before executing the agreement for sale, the assessee will ensure that the subject proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial transaction relating to sale of property and the same cannot be considered to be in the nature of loan or advance as upheld by various judgments (supra). 5.3 In conclusion, it was prayed that the provisions of s. 2(22)(e) of the Act shall not apply to the impugned transaction and, hence, the addition made by the AO and, subsequent confirmation by the CIT (A) requires to be deleted. 5.4 To substantiate his contentions, the learned counsel had furnished copies of (i) Memorandum of Understanding; and (ii) case laws relied in the form of a paper book. 6. On the other hand, the learned D.R supported the stand taken by the assessing officer as well as the first appellate authority. As there was no infirmity in the stand of the authorities below, it was pleaded that the addition made as well as confirmed by the CIT (A) deserves to be sustained. 7. We have carefully considered the rival submissions and perused the relevant case records as well as the various case laws relied on by the learned counsel [Refer: paper book of the assessee]. 8. Before taking up the issue for adjudication, we would like to point out that during the course of hearing; the learned counsel had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,00,50,743/-.During the relevant previous year, NIPL had earned further profits. According to the AO, in terms of s. 2 (22)(e) of the Act, the amount of advance to the extent of accumulated profits as on the date of giving the advance was liable to be taxed as deemed dividend income of the assessee. To strengthen his stand, the AO held that the explanation was a self-serving argument and was an attempt to give a simple and straight-forward loan the colour of an advance for purchase . Subsequently, the first appellate authority also took a stand that the assessee had more than 10% of shares in NIPL from whom the money was received, NIPL was a company in which the public were not substantially interested and it had sufficient accumulated profits. Thus, the payment made to the assessee can be strictly construed as deemed dividend. The argument of the assessee, according to the CIT(A), that the money was not a loan doesn t appear to be correct. The assessee had taken loan from the company in which he had 55.05% interest. All the paper work submitted by the assessee was only to camouflage the real intention of the assessee. In the view of the CIT (A), the assessee had given very flims ..... X X X X Extracts X X X X X X X X Extracts X X X X
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