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TMI Blog2017 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks, the op. cr. bal. in this year was ₹ 7,82,149/- the cl. cr. bal. was ₹ 2,37,47,149/- (Page No. 1 of PB). The assessee never charged any interest from the company. The Co. in its books, opened the consolidate ledger a/c. of assessee for loan taken and for advance given against purchase of property, however during proceedings, bifurcated loan a/c and advance against property alc was furnished (Page no. 2 PB). Thus it is a case of advance given for purchase of property. Hence, the addition in dispute made by the AO and confirmed by the ld. CIT(A) is untenable and therefore, we delete the same. Our aforesaid view is fortified by the CBDT Circular No. 19/2017 dated 12.6.2017 relating to settled view on Section 2(22)(e) of the Income Tax Act, trade advances reg. wherein it is stipulated that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word advance in section 2(22)(e) of the Act - Decided in favour of assessee. - I.T.A. No. 274/DEL/2016 - - - Dated:- 29-11-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Sh. Sumit Goyal, CA For The Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22)(e) of the Act. Assessee claimed that advance was received against sale of land by assessee to company in which he is Director / Substantial share holder and copy of unregistered agreement was filed. Assessee further stated that agreement was terminated and copy of termination agreement on plain paper was also filed. The Board Resolution in support of his claim were also filed before the AO. AO had made the addition of ₹ 1,67,00,000/- as deemed divided by applying the provision of section 2(22)(e) of the Act and completed the assessment u/s. 14(3) of the Act at ₹ 6,57,94,040/- and Agricultural income ₹ 2,02,567/- vide order dated 30.01.2015. 3. Aggrieved with the assessment order dated 30.1.2015, the assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 17.12.2015 has dismissed the appeal by confirming the addition in dispute. 4. Against the impugned order dated 17.12.2015, assessee has filed the Appeal before the Tribunal. 5. At the time of hearing, Ld. Counsel of the assessee has filed a Paper Book containing pages 1 to 35 containing various documents having the copy of ledger a/c of assessee in the books of M/s IHDP G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as deemed dividends paid on dates when withdrawals were allowed to be made and subsequent adjustment of account made on very last day of accounting year would not alter position that assessee received notional dividends on various dates. CIT Vs Miss P. Sarada [21 Taxman 94) where Hon'ble Madras High Court held that Amount of impugned excess withdrawals, even though adjusted against credit balance before close of year, was assessable as deemed dividend in assessee's hands in terms of section 2(22)(e) 2. Gopal And Sons (HUF) Vs CIT [2017] 77 taxmann.com 71 (SC)/[2017) 245 Taxman 48 ( SC)/[2017] 391 ITR 1 (SC)/[2017] 291 CTR 321 (SC) where Hon'ble Supreme Court held that even if HUF is not a registered shareholder in lending company, advanceslloans received by HUF is taxable as deemed dividend under section 2(22)(e). if Karta-shareholder has substantial interest in HUF. 3. CIT Vs Mukundray K. Shah [2007] 160 Taxman 276 (SC)/{2007] 290 ITR 433 (SC)/[2007] 209 CTR 97 (SC) A search conducted at assessee's premises led to seizure of a diary, which contained purchasing of nine per cent RBI relief bonds by assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infirmity in findings and observations' of Tribunal and, therefore, impugned order was to be set aside. 10. M. Amareswara Rao v. Dy.CIl [157 ITD 657/13~ DTR 153/178 TTJ 700] where Hon'ble ITAT Vishakhapatnam held that deemed dividend-Loan-beneficial ownership of more than 10 per cent shares in a closely held company- Assessable as deemed dividend. 7. We have heard both the parties and perused the records especially the impugned order, written submissions filed by both the parties as well as the Paper Book filed by the assessee s counsel, containing copy of ledger a/c of assessee in the books of M/s IHDP Global (P )ltd; breakup of ledger a/c into loan a/c and advance against prorty a/c; SCN dated 9.1.2015; reply to AO dated 15.1.2015 of SCN; agreement to sale dated 10.5.2011; Board Resolution dated 10.5.2011 (for agreement ot sale); termination agreement dated 11.11.2011; Board Resolution dated 11.11.2011 (for termination of agreement to sale); purchase deeds of property; submission to CIT(A) dated 16.7.2015; submission to CIT(A) dated 27.10.2015 and Date wise running ledger a/c of all transactions with IHDP Global (P) Ltd. We find that in this case asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot considered necessary since there was no doubt of any dispute at a later stage between the parties. Similarly termination agreement being unregistered cannot be a reason for doubting its contents when it is also witnessed by two persons. (Page no. 11 of PB). The only effect of non registration, can be the doubtfulness of its legal enforceability but non registration cannot deny the contents. The observation of CIT (A) that the agreement is dt.1O.05.11 which mentions advance payment of ₹ 14,00,000/- vide cheque dt.12.05.11, is not possible. This observation was unfounded since post dated cheque was issued at the time of execution of agreement. Hence, the addition in dispute made by the AO and confirmed by the ld. CIT(A) is untenable and therefore, we delete the same. Our aforesaid view is fortified by the CBDT Circular No. 19/2017 dated 12.6.2017 relating to settled view on Section 2(22)(e) of the Income Tax Act, trade advances reg. wherein it is stipulated that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word advance in section 2(22)(e) of the Act. We further find force from the decision in the case of Sunil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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