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TMI Blog2018 (2) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer noted that there was certain transaction of loans and advances with related parties. He, therefore, asked the assessee to explain as to why the provisions of section 2(22)(e) should not be attracted. The assessee in its reply submitted the details of loans and advances, the details of which are as under :- (i) Mr. Dinesh Pandey Rs.10,00,000/- (ii) M/s Fare Township Pvt. Ltd. Rs.5,00,000/- (iii) M/s Saga Realtors Pvt. Ltd. Rs.9,00,000/- (iv) M/s Saamag Construction Ltd. Rs.19,15,000/- (v) Zenith Township Pvt. Ltd. Rs.50,000/- (vi) M/s Max Buildtech Pvt. Ltd. Rs.31,10,000/- (vii) M/s Saga Developers Pvt. Ltd. Rs.25,000/- (viii) M/s Saamag Infrastructure Ltd. Rs.12,00,000/- 4. It was submitted that the assessee has taken money in normal course of business and, therefore, it does not attract the provisions of section 2(22)(e) of the I.T. Act. Further, the assessee also gave item-wise details which are as under :- "(i) Advance received from Mr. Dinesh Pandey, being individual, does not fall under the mischief of section 2(22)(e). (ii) M/s Fare township Pvt. Ltd. has no accumulated reserve and surplus therefore amount re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot find any merit in the contention of the appellant. Even if it is considered that these advances are business advances, section 2(22)(e) does not differentiate between trade/ business advances or other advances. Section 2(22)(e) of the Act provides, inter alia, that dividend include any payment by a company, not being a company in which the public are substantially interested, or any sum (whether as representing a part of the assets of the company or otherwise) made after 31st day of May, 1987, by way of advance or loan to a concern in which a beneficial shareholder (shareholder in lending company holding more than 10% shares) is a member or a partner and in which he has a substantial interest. In the case in hand, appellant had borrowed Rs. 12,00,000/- from M/s Saamag Infrastructure Ltd. Mr. Dinesh Pandey have common shareholding (more than 10%) in the appellant company as well as in M/s Saamag Infrastructure Ltd. Accordingly the transactions are covered u/s 2(22)(e) of the Act. Thus additions made by AO are upheld and grounds of appeal no.'s 1, 2 & 3 are dismissed." 8. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal. 9. Ld. counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd.. 13. Referring to the decision of Hon'ble Delhi High Court in the case of R. Dalmia vs. CIT reported in 133 ITR 169, he submitted that the Hon'ble High Court in the said decision has held that the expression 'possessed accumulated profits' means that the payer company must have physical availability of accumulated profits for its disbursement and in case the accumulated profits are not physically available for disbursement, no addition can be made u/s 2(22)(e). He submitted that after considering the above judgment, the Jaipur Bench of the Tribunal in the case of Bhim Singh vs. ACIT in ITA No.89/JP/2008 and in the case of Smt. Madhuwanti Singh vs. ACIT in ITA No.88/JP/2008 order dated 1109.2008 has held that if the payer company has already made the investment in either to the extent of accumulated profits or more than that then it means that the company does not possess accumulated profits under its control to make any payment out of accumulated profits to its shareholders. 14. Referring to the Balance Sheet of the assessee company, he drew the attention of the Bench to the figures of Reserves/Liabilities and Investments, the details of which are as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be upheld. 19. Ld. counsel for the assessee in his rejoinder referred to the decision of the Hon'ble Supreme Court in the case of CIT vs. Mahalakshmi Textile Mills Ltd. reported in 66 ITR 710 and submitted that new contention may be considered by the Tribunal. 20. I have considered the rival arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the Assessing Officer made addition of Rs. 12,00,000/- under provisions section 2(22)(e) on the ground that the advance of Rs. 12,00,000/- from Saamag Infrastructure Ltd. received by the assessee during the impugned year falls under the deeming provisions of section 2(22)(e) ld. CIT(A) upheld the action of the Assessing Officer, the details of which are already reproduced in the preceding paragraphs. It is the submission of the ld. counsel for the assessee that accumulated profits, which was available with the assessee company was already exhausted and the advance of Rs. 12,00,000/- given by Saamag Infrastructure Ltd. was out of loan from Zenith Township Pvt. Ltd. and, therefore, the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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