9911796707
TMI Blog2017 (11) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Schutz Dishman Bio-tech Pvt (2016 (1) TMI 84 - GUJARAT HIGH COURT) is squarely applicable on these facts and we are therefore of the view that the alleged transactions between the sole proprietary concern of assessee M/s. Monachem –Corporation and M/s. Monachem Additives Pvt Ltd are in the form of current accommodation adjustment entries and movement of funds are both ways on need basis and therefore, cannot be treated as loan and advance as contemplated in Section 2(22)(e) of the Act - Decided in favour of assessee. Default u/s 201(1)/201(1A) - addition on account of deemed dividend under Section 2(22)(e) - Held that:- As the business transactions of the assessee cannot be categorized as loan and advance transactions with the intention to provide facility to the shareholder and, therefore, cannot be treated as loan and advance as contemplated in Section 2(22)(e) of the Act and accordingly the addition has been deleted. In view of the matter, the question of demand under Section 201(1)/201(1A) of the Act does not arise; therefore, the same is cancelled - Decided in favour of assessee. - ITA No.316/Ahd/2016 And ITA No. 317/Ahd/2016 - - - Dated:- 6-10-2017 - SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was required to explain why the loan of ₹ 21,77,500/- may not be treated as deemed dividend u/s 2(22)(e) of the Act. The assessee submitted that it had advanced loan to M/s. Monachem Additives P. Ltd. and recovered interest of ₹ 26,30,749.97. It had received a sum of Rs.21,77,500/- from M/s Monachem Additives P. Ltd. during the last 3 days of F.Y. 2009-10. The assessee asserted that it had not received any substantial benefits from M/s. Monachem Additives P. Ltd. The assessee also asserted that it had received interest from M/s Monachem Additives P. Ltd. on the sum advanced to it and had also paid interest to it on sum received from, therefore, the same could not be classified as deemed dividend u/s 2(22)(e) of the Act. However, the Assessing Officer rejected assessee's contentions and held that since the assessee had(i) received a sum of ₹ 21,77,500/- from M/s Monachem Additives P. Ltd., (ii) the assessee had substantial shareholding in the creditor company, (iii) public was not substantially interested in M/s Monachem Additives P. Ltd. and (iv) there was adequate accumulated profits in the books of M/s Monachem Additives P. Ltd., the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncurred with the view of the CIT (Appeals) and held that the amounts were not in thenature of Inter Corporate Deposits and were therefore, not to be treated as loans or advances as contemplated in section 2(22)(e) of the Act. 5. The issue is substantially one of appreciation of facts. When the CIT(Appeals) as well as Tribunal concurrently held that looking to large number of adjustment entries in the accounts between two entities, the amounts were not in the nature of loan or deposit, but merely adjustments, application of section 2(22)(e) of the Act would not arise. Consequently, no question of law arises. Tax appeals are dismissed. 10.Considering the findings of the First Appellate Authority in the light of thedecision of the Hon ble Jurisdictional High Court of Gujarat (supra), we do not find any reason to interfere with the findings of the ld. CIT(A). Both these appeals of the Revenue are accordingly dismissed. 7. Learned Departmental Representative, on the other hand supported the orders of the authorities below. 8. We have heard the rival contentions and perused the record placed before us. We observe that the assessee is undisputedly a substantial share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Corporation, we find that the assessee was having an opening credit balance of ₹ 4.28 crores in the books of M/s. Monachem Additives Pvt Ltd. There are regular transactions for movement of funds to and from between the two parties. The company is regularly providing for interest on the unsecured loans taken from the assessee. As discussed above, that the company was in urgent need of finance/credit facilities and on the insistence of the HDFC Bank, the credit facility was transferred from individual account to the company account. From perusal of all these transactions of movements of fund, we can clearly envisage that these were regular business transactions which cannot be categorized as loan and advance transactions with the intention to provide facility to the shareholder. We find that the judgment of Hon ble jurisdictional High Court in the case of Schutz Dishman Bio-tech Pvt (supra) is squarely applicable on these facts and we are therefore of the view that the alleged transactions between the sole proprietary concern of assessee M/s. Monachem Corporation and M/s. Monachem Additives Pvt Ltd are in the form of current accommodation adjustment entries and movement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
