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TMI Blog2018 (12) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 250(6) r.w.s 143(3) of the Act. Since the assessees are interconnected all the appeals are heard together and disposed off by this common order. 3. Revenue's Appeal in the case of M/s. Aban Ventures Pvt. Ltd., for the Assessment year 2013-14:- The lone issue raised by the Revenue is that the Ld.CIT(A) has erred in deleting the addition made by the Ld.AO towards deemed dividend amounting to Rs. 1.40 crores invoking the provisions of Section 2(22)(e) of the Act. 4. Assessee's Appeal in the case of Mr. Reji Abraham for the Assessment year 2013-14: The lone issue raised by the assessee in his appeal is that the Ld.CIT(A) has erred in sustaining the order of the Ld.AO who had made additions towards deemed dividend Rs. 1.40 crores invoking the provisions of Section 2(22)(e) of the Act. 5. Assessee's Appeal in the case of Mr. Reji Abraham for the Assessment year 2014-15: The lone issue raised by the assessee in his appeal is that the Ld.CIT(A) has erred in sustaining the order of the Ld.AO who had made addition towards cash credit Rs. 10,91,34,125/- invoking the provisions of Section 68 of the Act with respect to the sum found credited in the books of accounts of the assessee aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Travel Services reported in 347 ITR 305, the Ld.AO invoked the provisions of Section 2(22)(e) of the Act and made addition of Rs. 1.40 crores in the hands of the assessee. On appeal, the Ld.CIT(A) relying in the decision of the Hon'ble Delhi High Court in the case CIT Vs. Ankitech Pvt. Ltd., & others which was further upheld by the Hon'ble Supreme Court in the case of Madhur Housing & Development Company (Civil Appeal No.3961 of 2013 dated 05.10.2017) deleted the addition made by the Ld.AO because the assessee company did not hold shares of M/s. Tuticorin Power Company Ltd., and therefore no dividend would have been brought to tax in the hands of the assessee. 6.2 Since the Ld.CIT(A) had only followed the ratio laid down in decision of Hon'ble Delhi High Court and Hon'ble Apex Court cited supra while deciding the case of the assessee wherein the facts are identical we do not find it necessary to interfere in his order. Hence appeal of the Revenue is devoid of merits. 7. Assessee's appeal The brief facts of the case are that the assessee is an individual engaged in business, filed his return of income for the assessment years 2013-14 & 2014-15 on 30.07.2013 & 30.01.2015 admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as the same is chargeable to tax under the provisions of Income Tax Act." 8.2 Before us also the Ld.AR reiterated the submission made before the Ld.Revenue Authorities and further pleaded by stating that the amount advanced by M/s. Tuticorin Power Company Ltd., to M/s. Aben Ventures Pvt. Ltd., was arising out of commercial exigencies and not a loan. Therefore the provisions of Section 2(22)(e) cannot be invoked. The Ld.AR also took the plea that the accumulated profit of M/s. Tuticorin Power Company was arising out of sale of its land and therefore it is a capital reserve which cannot be distributed as dividend. It was therefore pleaded that the provisions of Section 2(22)(e) of the Act cannot be invoked. The Ld.DR on the other hand relied on the orders of the Ld.Revenue Authorities. 8.3 We have heard the rival submissions and carefully perused the materials on record. As observed by the Ld.AO, the decision of the Hon'ble Apex Court in the case CIT Vs. Mukundray K.Shah cited supra is squarely applicable to the facts of the case, wherein the Hon'ble Apex Court has held as follows: "Held, reversing the decision of the High Court and affirming that of the Appellate Tribunal, (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d profits as dividends to the shareholders. In such companies, the controlling group can do what it likes with the management of the company, its affairs and its profits. It is for this group to decide whether the profits should be distributed or not. The declaration of dividends is entirely within the discretion of this group. Therefore, the Legislature realised that though funds were available with the company in the form of profits, the controlling group refused to distribute accumulated pro-fits as dividends to the shareholders but adopted the device of advancing the said profits by way of loan to one of its shareholders to avoid payment of tax on accumulated profits. This was the main reason for enacting section 2(22)(e) ." Further the plea of the Ld.AR that M/s. Tuticorin Power Company Ltd., has only capital reserve and therefore provisions of Section 2(22)(e) of the Act cannot be invoked is erroneous. The Hon'ble Apex Court in the case CIT Vs. Urmila Ramesh reported in 230 ITR 422, the Hon'ble Apex Court held as follows: "Section 2(22) has used the expression 'accumulated profits' whether capitalized or not. This expression tends to show that under section 2(22) it is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erage Board was entrusted with task of completing the said project. The said ____________ on 27/04/1998, the Joint venture was informed that CWSSB was contemplating changes in the pipe line alignment. Therefore the Joint venture could not proceed with work. Again Board abandoned the project and the Joint venture partners approached the Gujarat High Court for compensation and damages. The following arbitrators were appointed the Gujarat Board, however did not accept the award of the Arbitrators. a) Mr.B.J.Diwan b) Mr.P.H.Chauhan c) Mr.A. T.Doshi 2. After a prolonged legal battle the Joint 'venture agreed to receive from the Board Rs. 37,67,62,404/- by settling the dispute out of the court. The Gujarat GWSSB released Rs. 37,67,62,404/- in full and final settlement of the dispute. AN amount of Rs. 3,76,76,240/- was deducted as TDS for the above payment. The amount was credited in the South Indian Bank, Hyderabad. Out of the said amount Rs. 11,65,43,082/- was received by Mr. Reji Abraham on behalf of M/s.Aban Construction. The partnership firm of Mrs.Aban Construction was converted into Private Limited Co. on 18/04/2001 under Chapter IX of the Companies Act and all the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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