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TMI Blog2018 (6) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of fact is concerned by the two statutory appellate fora. We are not inclined to disturb such finding of fact, which the Tribunal has backed with detailed analysis. - Decided in favour of assessee. - ITAT No.160 of 2016 - - - Dated:- 3-5-2018 - MR. ANIRUDDHA BOSE AND MR. AMITABHA CHATTERJEE, JJ. For The Appellant : Mr. P.K.Bhowmick, Advocate For The Respondent : Mr.J.P.Khaitan,Sr.Advocate, Mr.Siddharth Das, Mr.G.S.Gupta, Advocates ORDER The assessee in this case was aggrieved by an assessment order in which a sum of ₹ 3,10,83,635/- had been directed to be added to her income, treating the said sum as deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. The assessment year involved is 2009-10. It transpires from the materials on record that for the previous year the assessee had obtained a sum of ₹ 15,76,77,411/- from Bright Advertising (P.) Ltd. in which she had 25.24% equity stake. In the balance sheet for the said assessment year, this company had disclosed ₹ 1,92,85,832/- as general reserve and ₹ 1,17,97,802/- as surplus profit. These sums were added to the total income of the assessee for taxing purpose under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion between the company and the shareholders. Such payment out of profit in given facts could still be treated as deemed dividend in the hands of the recipient assessee. After drawing our attention to the factual aspects in the case of Miss P. Sarada (supra), he relied on the following passage from that judgement :- From the facts as stated hereinabove, it appears that the withdrawals made by the appellant from the company amounted to grant of loan or advance by the company to the shareholder. The legal fiction came into play as soon as the monies were paid by the company to the appellant. The assessee must be deemed to have received dividends on the dates on which she withdrew the aforesaid amounts of money from the company. The loan or advance taken from the company may have been ultimately repaid or adjusted, but that wil not alter the fact that the assessee, in the eye of law, had recerived dividend from the company during the relevant accounting period. He also cited the following passage from the judgement of Mukundray K. Shah (supra) :- 16. The above two judgments indicate that the question as to whether payment made by the company is for the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits as deemed dividend would not apply. The company in the instant case fits the description conceived in the aforesaid provision to come within the ambit of Section 2(22)(e) of the Act. The controversy which falls for determination is whether the sum received by the assessee formed part of running current account giving rise to mutual obligations or the payment formed one-way traffic, assuming the character of loan or advance out of accumulated profit. A Co-ordinate Bench of this Court in the case of Pradip Kumar Malhotra Vs. Commissioner of Income-Tax [2011] 338 ITR 538(Cal) has laid down the factors for testing the transactions between a company and its shareholder in the light of the aforesaid provision :- . we are of the opinion that the phrase by way of advance or loan appearing in sub-cl. (e) must be construed to mean those advances or loans which a shareholder enjoys for simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power; but if such loan or advance is given to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL is placed at page 47 to 52 of the Assessee s paper book. The same is given as annexure to this order for better appreciation of facts. 12 . A perusal of the statement of balances of transactions between the Assessee and BAPL shows that as on 2.4.2008 BAPL owed Assessee a sum of 1,95,000. BAPL paid the Assessee a sum of ₹ 2.4.2008 a sum of ₹ 21,05,000 and the Assessee owed BAPL a sum of ₹ 19,10,000. The amounts given in the bracket in the last column of the enclosed balances in the running current account is the amount which BAPL owed the Assessee. Mutual transactions go on in this fashion throughout the previous year and as on the last date of the previous year the account is squared i.e., neither the Assessee owes BAPL nor BAPL owes Assessee any sum. The Assessee was beneficiary of the sums given by BAPL at some point of time during the previous year and BAPL was the beneficiary of the sums given by the Assessee at another point of time during the previous year. It was therefore a case of mutual running or current account which created independent obligations on the other and not merely transactions which created obligations on the other side, tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee at another point of time. This finding given by the two statutory appellate fora distinguishes the present case from the factual basis of the decision in the case of Mukundray K. Shah (supra). The ratio of that decision thus does not apply in the facts of the case giving rise to this appeal. In this factual and legal perspective, in our opinion payment of the aforesaid sums to the assessee cannot be treated as dividend out of profit. No perversity has been pointed out on behalf of the Revenue so far as such a concurrent finding of fact is concerned by the two statutory appellate fora. We are not inclined to disturb such finding of fact, which the Tribunal has backed with detailed analysis. We have reproduced earlier in this judgement the Tribunal s observations on this point. If we embark on a fresh factual enquiry into the accounts of the assessee or that of the company involved, such exercise would entail reappreciation of evidence. Such enquiry is impermissible at this stage. The Tribunal s decision thus stands confirmed by us and the question formulated by us is answered accordingly, in favour of the assessee. The appeal stands dismissed. There shall be no o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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