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TMI Blog2018 (10) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... s not given any independent finding with regard to claim of the expenditure made by assessee-company as against proportionate income offered for taxation. No fault have been found in the accounting system followed by assessee-company. No material have been produced by the Revenue to rebut the contention of the assessee-company. No justification to disallow the expenses claimed by the assessee-company being cost of the land and development expenses incurred by the assessee-company. - Decided in favour of assessee. Deemed dividend addition u/s 2(22)(e) - Held that:- As perusing the relevant records, it reveals that they are in the form of current and inter banking accounts and contain both types of entries i.e. giving and taking the amount and appear to be a current account and cannot be considered as loans and advances as contemplated u/s 2(22)(e) of the IT Act. The identical issue have been decided by the Tribunal in the case of assessee and other group concerns. Following the same, we are of the view that the amount in question could not be treated as deemed dividend under section 2(22)(e). - Decided in favour of assessee. - ITA.No.2053/Del./2017, ITA.No.2054/Del./2017, ITA.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of land, development thereof, construction of residential apartments, commercial complexes etc. The assessee filed its return of income on 26.03.2012 declaring an income of ₹ 1,45,27,554/- which was processed under section 143(1) of the IT Act, 1961. The case of the assessee was taken up for scrutiny and assessee filed necessary details, information and documents as called for by the assessing officer from time to time and the case was discussed. The A.O. completed the assessment under section 143(3) dated 26.03.2013 at an income of ₹ 4,85,83,320/- as against the returned income of ₹ 1,45,27,554/- wherein the assessing officer made an addition of ₹ 62,59,639/- on account of development rights, ₹ 2,30,88,128/- as disallowance of expenses and ₹ 47,08,000/-under section 2(22)(e) of the I.T. Act, 1961. 3.1. The assessee challenged all the three additions before Ld. CIT(A). The Ld. CIT(A) confirmed all the three additions. The assessee is in appeal challenging the above three additions on all the seven grounds of appeals. 4. On ground Nos. 1 to 3 assessee challenged the Orders of the authorities below in confirming addition of ₹ 62,59,63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were transferred and appropriate consideration was received. Since there was still further land to be acquired, the process of acquisition of land by the Saamag Group of companies continued in the subsequent years also. During the assessment year, the assessee-company had transferred development rights of land measuring 1.314 acres. Accordingly, a Development Agreement dated 25th March 2010 was entered into by the assessee-company and M/s. Sare Saamag Reality Pvt. Ltd. for transfer of development rights in the said 1.314 acres of land. For transfer of this land, the assessee received a total consideration of ₹ 3.52 crores which is also noted by the A.O. It can be seen from the various agreements placed on record that the transfer of development rights is only a transfer in vacuum. The right to carry out development work on this designated land is subject to various compliances, regulatory approvals, encumbrances etc. There is also a possibility that even after the transfer of development rights in the impugned land, the Ghaziabad Development Authority may not allow construction to take place. The Ghaziabad Development Authority gives approval to develop land in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year . It was further held that It would not be proper to extend the meaning of the word accrue or arise in Section 4 of the I.T. Act to take any amount received by the assessee in a later year though the receipt was not on the basis of right accrued in earlier year . 6.2. The assessee-company, therefore, contended that this principle in Gajapathy Naidu s case reiterates assessee s submissions that the assessee s rights to development rights, income will accrue and will be taxable only in the year when the assessee-company has complied with all its obligations, and the approval of the Ghaziabad Development Authority (GDA) is received for construction of the specified FAR area. In fact, the assessee-company whenever received GDA s approval for construction of the specified approved FAR area, had admitted income, though the actual construction of the superstructure was completed at a later point of time. The assessee-company has relied upon the decision of Hon ble Supreme Court in the case of CIT vs. Hindustan Housing Land Development Trust Ltd., 161 ITR 524 (SC). The assessee-company, therefore, submitted that when a sum of money is received with certain restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and the agreed area of land. As per the same agreement there are heavy financial burden on the assessee-company when it is unable to deliver duly approved (by GDA) specified FSI of 34,94,371 sq. ft. 6.3. The Ld. CIT(A) considering the findings of the A.O, submissions of the assessee-company and material on record and all the agreements in question of the consortium, noted that during the year under consideration there is an increase of ₹ 3.52 crores under the head Advance received against Development Rights in the balance sheet of the assessee-company. Cost of land is reduced and difference amount is added by the A.O. The Ld. CIT(A) noted that similar issue have been considered by him in A.Y. 2008-2009 and similar contention of assessee has been rejected that income from transfer of development rights is not taxable. Based on the same, Ld. CIT(A) held that the assessee s contention regarding income of ₹ 62,59,639/- from transfer of development rights during the year under consideration is not taxable is not tenable. Therefore, this ground of appeal of assessee was dismissed. 7. Learned Counsel for the Assessee reiterated the submissions made before the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year under appeal. 8. On the other hand, Ld. D.R. though relied upon the Orders of the authorities below, but stated that issue may be covered by the Order of the Tribunal as above. 9. We have considered the submissions of the parties and gone through the material on record. The Ld. CIT(A) following the Order for A.Y. 2008-2009 confirmed similar addition against the assessee-company. In A.Ys. 2008-2009 and 2012-2013 the group appeals of the assessee-company and others have been decided by the Tribunal vide Order dated 12.01.2018 on identical facts (supra). The findings of the Tribunal in paras 10 to 11.9 of the Order is reproduced as under : Grounds No. 1 to 3/Additional Ground in all appeals Chargeability and accruability of value of development rights together with land. 10. The facts in all appeals are common and identical, hence for the sake of convenience we are dealing with the facts of M/s Saga Developers Pvt. Ltd. The brief facts of the case are that the assessees are in the business of real estate development along with other group companies and were in the process of development of integrated township at Village Shahpur Bameta, Ghaziabad. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, on mortgage of land, be transferred in favour of SPV and also performance guarantee of ₹ 4,75,00,000/- provided by GDA. 2.6 In case Saamag fails to obtain permission to transfer the loan facility in favour of SPV, then Saamag shall repay the whole amount and obtain a No Dues Certificate at its own cost and then SARE shall infuse the withheld amount as per clause 2.7. 3.1 The authorized capital of SPV shall be ₹ 240 crores. 3.1.2 It is agreed that the development right together with the land in respect of 36.2246 acres of land owned by members of Construction Development Project Agreement together with the land has been valued at ₹ 103,45,74,870/- vested in SPV. The SPV shall pay to the parties of the first part : ₹ 62,07,44,920/- in cash being 60% of the land development rights; AND Equity shares and fully convertible debentures of ₹ 10/- (at face value) to the parties of the first part which shall be in proportion to the land area they owned respectively, multiplied by the agreed floor space index rate of ₹ 595/- per sq ft of the project area and which collectively shall value ₹ 41,38,29,950/- being a sum equivalent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the project by SPV is the responsibility and obligation of Saamag and such responsibility and obligation includes but is not limited to those stated in this agreement and Saamag shall be exclusively responsible for the project from the beginning till its completion. 8.2.2 Saamag shall issue separate and individual irrevocable power of attorneys pertaining to their respective share in the project area, in favour of the SPV in order to facilitate and develop, construct, transfer or create charge of the project area by the SPV. 8.2.3 Saamag shall undertake all statutory compliances and shall further apply, obtain seek all the necessary sanctions, permits, approvals, permissions which may be required by the SPV for the completion of the project from the Government or any or all of its agencies, departments including but not limited to Uttar Pradesh Public Works Department, Uttar Pradesh Jal Nigam, Uttar Pradesh Power Corporation Limited etc. It is hereby agreed that the completion of the project under the terms of the agreement refers to entire gamut of activities which shall include but not be limited to the construction, development, marketing, sale promotion and sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appellants acquired the land and such agreements in the year under consideration were dated 29th September 2007 and 19th October 2007. Whatever the sale considerations had been fixed under the shareholders agreement, the appellants had credited the same to the advance account in its books because they were of the view that keeping into consideration the overall terms of the contract, the agreement was in respect of the transfer of development rights together with land and because on the date of agreement, the stipulated land was not approved by GDA for development purposes in terms of UP Urban Planning Development Act, 1973, no development rights can be said to have accrued to the appellants. This sale consideration has been appropriated by the appellant in subsequent years as and when the GDA had granted the approval. The assessees stated that the approval has been granted by GDA not in one go but in piecemeal basis and accordingly as and when GDA granted the approval for the development of the land, the proportionate sale consideration have been appropriated and the profits have been disclosed by the appellants in subsequent years, viz. 2010-11, 2013-14 and 2014-15. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to which it falls to be interpreted. 10.10.1 Ld. Counsel of the assesee further stated that in the instant case, the AO has not considered the very shareholders agreement as a whole but only considered clause No. 3.1.2 of the agreement and ignored the other clauses of the agreement containing the various obligations, liabilities of the assessees flowing from the other clauses of the contract as well as also ignored the various prohibitive and penal clauses flowing from the contract which have to be faced by the appellants on account of any breach of the terms of the contract. The AO also fails to take into cognizance the clause 4.2.2 containing prohibition of withdrawals of the amount in consideration within the lock in period till all the approvals and sanctions including completion certificate are received from the concerned authorities. The aforesaid shareholders agreement is a composite contract and indefeasible contract. 10.10.2 Ld. Counsel of the assessee further stated that having regard to the various clauses of the shareholders agreement, it was clear that under the agreement, it was the obligation of the consortium parties to provide fully developed land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act has been brought to the Statute Book by the Finance Act, 1987 with effect from 1st April 1988 and prior to that it has been consistently held by various High Court and the Supreme Court including the Jurisdictional High Court that the taxability in respect of transaction relating to immovable property accrued or arisen in the year in which the sale deed has been registered irrespective of allowing of the possession of the property at an earlier date. Such law was held in the following cases: Alapati Venkata Ramaya vs. CIT 57 ITR 185 (SC) CIT vs. Meatles Ltd. 84 ITR 37 (SC) CIT vs. Hindustan Cold Storage Refrigeration Pvt. Ltd. 103 ITR 455 (Del) Ghansham Dass Krishan Chander vs. CIT 121 ITR 121 (AP) Ld. Counsel of the assessee further stated that now after amendment made in the Registration Act by the Amendment Act, 2001 by way of insertion of Section 17(1A) of the Registration Act, same position again prevails and such law has been declared by the Hon ble Supreme Court in the case of Balbir Singh Maini (supra). 10.11 On the contrary, Ld. CIT (DR) stated that during the course of search conducted in the above group of cases on 29.01.2009, Mr. Dinesh Pandey a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Counsel of the assessee also stated that even the AO has not proceeded based on the surrender so made but he proceeded independently and at this moment the Revenue cannot justify its case based on the alleged surrender. 10.14 Ld. Counsel of the assessee further stated that as far as the registration with GDA is concerned, the same cannot amount to registration as contemplated u/s 17(1A) of the Registration Act, 1908, meant for compulsory registration of transfer of immovable property governed by the Transfer of Property Act with the Registration Authorities. The registration with GDA of the consortium parties has no relevance for the purpose of determination of the year of taxability. So much so, the AO is not fastening any liability on the basis of the said consortium agreement but he is fastening the liability based on the shareholders agreement dated 18th May 2007 which has no connection with the registration with GDA. The Hon ble Supreme Court in the case of Balbir Singh Maini has considered such joint development agreement in relation to the land in terms of section 2(47)(v) of the IT Act for the purpose of levy of tax. 11. We have both the parties and perused the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act. This being the case, we are of the view that the High Court was right in stating that in order to qualify as a transfer of a capital asset under Section 2(47)(v) of the Act, there must be a contract which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. The ITAT was not correct in referring to the expression of the nature referred to in Section 53A in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi (supra), that the Section appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the owner of the land and has at no stage purported to transfer the rights taken to ownership to the SPV. 11.3 In the case of Balbir Singh Maini (supra), the Hon ble Supreme Court, even after declaring that in the absence of registration of the joint development agreement u/s 17(1A) of the Registration Act, the provision of section 2(47)(v) of the IT Act is not applicable even if the possession has been handed over, has also examined the issue with reference to sections 4 and 5 of the IT Act on the point of accruality of income. The Hon ble Supreme Court at pages 550-552 of the Report observed as under: 24. The matter can also be viewed from a slightly different angle. Shri Vohra is right when he has referred to Sections 45 and 48 of the Income Tax Act and has then argued that some real income must arise on the assumption that there is transfer of a capital asset. This income must have been received or have accrued under Section 48 as a result of the transfer of the capital asset. 25. This Court in E.D. Sassoon Co. Ltd. v. CIT AIR 1954 SC 470 at 343 held: It is clear therefore that income may accrue to an assessee without the actual receipt of the same. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrues, the assessee gets vested with the right to claim that amount even though it may not be immediately. This Court further held, and in our opinion more importantly, that income accrues when there arises a corresponding liability of the other party from whom the income becomes due to pay that amount . 11.4 It follows from these decisions that income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee. 11.5 As far as the present case is concerned, even if it is assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement passbook, there was no corresponding liability on the Customs Authorities to pass on the benefit of duty-free imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is, therefore, not the income of the assessee. 11.6 In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval for construction for specified FAR area from GDA. Unless and until it does not receive the approval from GDA, income would not accrue to the assessee-company. The assessee-company also rightly contended that as per the above agreements, transfer of development rights is only a transfer in vacuum because the Town Planning Scheme may be required for construction of roads and other public facilities for public at large and in that situation, assessee-company may not be able to complete the development work in property in question. Therefore, it was a conditional agreement depending upon the approval taken from various authorities for completion of the agreement. The agreements also contain the penalty clause i.e., in case, the project is not completed, the assessee-company has to comply with all its obligations till the approval from GDA is received for construction of specified FAR area. Therefore, income would accrue to the assessee-company only on satisfying the conditions of the agreement. The assessee-company rightly offered the amounts for taxation in A.Ys. 2010-2011, 2013-2014, 2014-2015 on such basis. The agreements in question are unregistered as have been considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. while dealing with this issue, had disallowed the development and other relatable expenses attributable to said FSI aggregating to ₹ 2,30,88,128/-. It was submitted that even the gross revenue of ₹ 3,89,29,660/- referable to sanctioned FSI does not accrue in the captioned assessment year. This is because, even after sanction of such FSI, before construction by the assessee-company, the Government of Uttar Pradesh can acquire the impugned land when it is required for public purpose and this would be evident from this Supplementary Agreement Dated 15.10.2009. It was submitted that expenses incurred by assessee-company are allowable deduction. In A.Y. 2008-2009, assessee-company had transferred development rights referable to 46.67 acres of underlying land to M/s. Saamag Realtors Private Limited. The above referred sanctioned FSI of 65,428 sq. feet is part and parcel of 46.67 acres of land in respect of which, development rights were transferred in A.Y. 2008-2009. Such addition made by A.O. has been confirmed. Thus, inclusion of revenue of ₹ 3.89 crores will be an addition which has already been made in A.Y. 2008-2009. The assessee-company filed complete d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the Hon ble Supreme Court in the case of Calcutta Co. Ltd. 37 ITR 1 it was held that the expression profit or gains in Income Tax Act has to be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipt is deducted therefrom . Learned Counsel for the Assessee further submitted that when the assessee has offered income from sanctioned FSI in A.Y. 2013-2014, the A.O. vide Order dated 30.03.2016 under section 143(3) (PB-202, accepted such expenses which were proportionately claimed in A.Y. 2013-2014, details of the same, are filed at page-281 of the paper book). In A.Y. 2014-2015 such proportionate expenses have been allowed under section 143(1) of the I.T. Act. PB-191 is P L A/c for A.Y.2013-2014 to support the explanation of assessee-company. Learned Counsel for the Assessee, therefore, submitted that addition is wholly unjustified. 15. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that expenses were unverifiable. 16. We have considered the rival submissions and perused the material available on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been accepted by the Tribunal in A.Y. 2008-2009. When the assessee-company followed the same accounting system in subsequent year and accepted by the A.O, there is no reason for the A.O. to deviate from the same. The Ld. CIT(A) has not given any independent finding with regard to claim of the expenditure made by assessee-company as against proportionate income offered for taxation. No fault have been found in the accounting system followed by assessee-company. No material have been produced by the Revenue to rebut the contention of the assessee-company. In this view of this matter, we are of the view that there is no justification to disallow the expenses of ₹ 2,30,88,128/- claimed by the assessee-company being cost of the land and development expenses incurred by the assessee-company. We, accordingly, set aside the orders of the authorities below and delete the addition. Ground No.4 of appeal of assessee-company is allowed. 17. On Ground Nos. 5 and 6, assessee-company challenged the Order of Ld. CIT(A) in confirming addition of ₹ 47,08,000/- under section 2(22)(e) of the I.T. Act, 1961. 18. During the course of assessment proceedings, transaction between gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther business purposes. The assessee-company filed chart showing utilization of funds received from (1) Hamshir Exim Pvt. Ltd., and (2) Max Buildtech Pvt. Ltd., It was submitted that money have been utilised and applied towards business of real estate development in respect of Bamhetta project and Rudrapur Project. Not a penny of monies so received has reached the shareholders. Nothing has enured to the benefit of shareholders i.e., Members of Pandey family who are having substantial shareholders in all Saamag group of companies. All monies have been applied for business purposes. Therefore, Section 2(22)(e) will not apply. The assessee-company relied upon the decision of Hon ble Delhi High Court in the case of Creative Dyeing and Printing Pvt. Ltd., 318 ITR 476 (Del.) in which it was held that the amounts advanced for business transaction will not fall within the definition of deemed dividend under section 2(22)(e) of the I.T. Act. The assessee-company also relied upon decision of Hon ble Delhi High Court in the case of CIT vs. Ambassador Travels Pvt. Ltd., (2009) 318 ITR 376 (Del.) in which the assessee-company also entered into normal business transactions as a part of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. It is not in dispute that Samag group of companies consisted of various entities engaged jointly in the business of real estate development in the State of Uttar Pradesh. Consortium Agreement and other Agreements were executed between all the group concerns. Different responsibilities have been attached to each member of consortium. The assessee-company and other group companies have been taking money from others group company and utilized same for the purpose of development in respect of Bamhetta Project and Rudrapur Project. No amount have gone to shareholder. The above contention of assessee-company have not been disputed by the authorities below. It is, therefore, clear that amounts have been received by assessee-company for business consideration and business transactions only carried out by the group companies. An identical issue have been considered by ITAT, Delhi Bench in the case of assessee-company and others and vide Order dated 12.01.2018, the Tribunal in paras 14 to 14.5.2 of the Order held as under : 14. The aforesaid grounds relate to the issue with regard to the deemed dividend. The assesses are the group companies and are in the business of real estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals) is not only against the very purpose of provision of section 2(22)(e) of the IT Act but is also not covered by the provision of section 2(22)(e) of the IT Act. (iii) The provision of section 2(22)(e) of the IT Act is a deeming provision. Hence the deeming provision should be construed strictly and be confined and limited to the purpose for which they are created and should not be extended beyond their legitimate field as held by the Supreme Court in the case of CIT vs. Vadilal Lalubhai in 86 ITR 2 and 181 ITR 1 (Kerala), CIT vs. P.V. John. (iv) In the case of CIT vs. Sarathy Mudaliar in 83 ITR 170, the Hon ble Supreme Court 14.3.1 In the case of CIT vs. Sarathi Mudaliar in 83 ITR 170, the Hon ble Supreme Court, while considering the provision of Section 2(6A)(e) of the Indian Income-tax Act, 1922 (which is parimateria to Section 2(22)(e) of the IT Act), observed as under: Sec 2(6a)(2) gives an artificial definition of dividend . It does not take in dividend actually declared or received. The dividend taken note of by that provision is a deemed dividend and not a real dividend. The loan granted to a shareholder has to be returned to the company. It does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied on the shareholders on the basis that the accumulated profits will be deemed to have been distributed against them. Similarly, section 12(1B) provides that if a controlled company adopts the device of making a loan or advance to one of its shareholders, such shareholders will be deemed to have received the said amount of the accumulated profits and would be liable to pay tax on the basis that he has received the said loan by way of dividend. It is clear that when such a device is adopted by a controlled company, the controlling group consisting of shareholders have deliberately decided to adopt the device of making a loan or advance. Such an arrangement is intended to evade the application of section 23A. The loan may carry interest and the said interest may be received by the company; but the main object underlying the loan is to avoid payment of tax. 14.3.3 It has been consistently held by the various High Courts and the Tribunals that the business transactions are not covered by the provision of Section 2(22)(e) of the Act. The payments under business transaction are outside the purview of the provision of Section 2(22)(e) of the Act. 77 ITR 393 (Bom), CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o relationship of borrower or lender then the amount received cannot be considered as loan. 14.3.9 In the case of Durga Prasad Mandelia s vs. Registrar of Companies (1987) 61 Companies Case 479, the Bombay High Court held as under: There can be no controversy that in a transaction of a deposit of money or a loan, a relationship of a debtor and credit must come into existence., The terms deposit and loan may not be mutually exclusive, but nonetheless in each case what must be considered is the intention of the parties and the circumstances. In the present case, barring the assertion of the respondent that the moneys advanced by the company to the Associated Cement Companies Ltd. constitute a loan and offend section 370 of the Companies Act, there is nothing else to show that these moneys have been advanced as a loan . In the context of the statutory provisions, the word loan may be used in the sense of a loan not amounting to a deposit. The word loan in section 370 must now be construed as dealing with loans not amounting to deposits, because, otherwise, if deposit of moneys with corporate bodies were to be treated as loans, then deposits with scheduled banks woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Ltd. 259 ITR 295 (Bom), Discount Finance House of India Ltd. vs. S.K. Bhardwaj 87 ITD 11 (Del) PN Bank vs. DCIT 115 ITD 218 (Ahd) (SB) Gujarat Gas Finance Service Ltd. v. Assistant Commissioner of Income Tax. [2006]5 SOT 918 (Delhi)(SB) Housing Urban Development Corporation Ltd. vs. JCIT 14.3.12 In the case of Creative Dyeing Printing Pvt. Ltd. in ITA No. 3036/ Del/2005, the Delhi Bench, ITAT vide order dated 9.5.2008 has held that if the amount received by the recipient company as investment from the payer company, then such amount will not be a loan and advance as contemplated u/s 2(22)(e) of the IT Act. The order of the Delhi Bench of the ITAT in case of Creative Dyeing Printing Pvt. Ltd. has also been upheld by the Delhi High Court in CIT vs. Creative Dyeing Printing Pvt. Ltd. in 318 ITR 476. 14.3.13 Section 2(22)(e) of the IT Act only considers those amounts which are having the characteristic of loans and advances. In the instant case, a transaction between the group concerns is not having a character of loans and advances but these are the current accounts. The transactions in current accounts are also outside the purview of section 2(22)(e) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Bombay Oil Industries Ltd. vs. DCIT reported in 28 SOT 383 and Ravindra R. Fotedar vs. ACIT in 167 ITD 100. 14.5.2 Keeping into consideration such position of law, we hold that the additions as made by the CIT (Appeals) in terms of section 2(22)(e) of the IT Act are not correct because such amounts received cannot be considered as loans and advances. Even otherwise also, the payer companies had already made their investment in capital field more than the accumulated profits and in that situation it cannot be considered that those companies were having physical possession of accumulated profits capable of being disbursed. Therefore, the additions in dispute stand deleted . 23.1. In view of the above, it is clear that the identical issue have been decided by the Tribunal in the case of assessee and other group concerns. Following the same, we are of the view that the amount in question could not be treated as deemed dividend under section 2(22)(e) of the I.T. Act. The issue is covered in favour of the assessee by the Order of the Tribunal. We, accordingly, set aside the Orders of the authorities below and delete the entire addition. In the result, Ground Nos.5 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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