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TMI Blog2020 (1) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... a P. Ltd. Keeping in view the fact, that the said company that is M/s. Apra Auto India p. Ltd. was also having accumulated profits of Rs. 21.65 crore, the amount so received by the assessee has been treated as deemed dividend as per the Section 2(22)(e) of the Income Tax Act, 1961. 4. The assessee claimed before the AO that the amount received from M/s Apra Auto India Pvt. Ltd. represented following three distinct transactions: "i) Advance against commercial building Rs. 5,62,00,000/- ii) Anumod Sharma (expense account) Rs. 73,76,584/- iii) Anumod Sharma ledger account Rs. 6,00,84,793/-" (showing Rs. 1,95,390/- as credit Balance) 5. The AO after considering the assessee's explanation on the issue highlighted that claim of receiving advance against commercial building was a ploy to escape the deeming provision of section 2(22)(e). The AO highlighted that agreement to sell between the assessee and M/s Apra Auto India Pvt. Ltd. was dated 03.04.2011 in which reference of bank transaction dated 08.04.2011 was recorded representing a sum of Rs. 1.40 crore given as advance payment and credited in assessee's bank account on 08.04.2011. The impugned agreement also recorded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the assessee in the books of said company appear to have been prepared in so haste that in those ledger accounts the name of the bank in all entries (Debit/Credit) has been mentioned as bank of Baroda whereas all the transactions have been made through bank account of assessee as well as of the company in Nainital bank. She has taken us to the contents of the assessment order along with the Annexures which have been duly perused by us. 7. The ld. AR relied on the submissions made before the ld. CIT (A) and reiterated the same and relied on the order of the ld. CIT (A). 8. Heard the arguments of both the parties and perused the material available on record. The assessee is also engaged in the business of real estate development in collaboration with M/s Unitech Limited and was developing Signature Tower - II, Sector - 15, Gurgaon, Haryana. The assessee entered into buyer's agreement with intending buyers in respect of commercial space in the said property and received advances during the financial year under consideration. The assessee has also entered into Buyer's Agreement with M/s Apra Auto (India) Private Limited for sale of 7000 Sq. Ft. commercial space a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 Repaid To Anumod Sharma 5,700,000 10,484,793 30/05/2011 Repaid To Anumod Sharma 50,000 10,434,793 07/06/2011 Received from Anumod Sharma 250,0000 12,934,793 14/06/2011 Received from Anumod Sharma 900,0000 21,934,793 22/06/2011 Repaid To Anumod Sharma 5,000,000 16,934,793 22/06/2011 Repaid To Anumod Sharma 400,000 16,534,793 30/06/2011 Repaid To Anumod Sharma 50,000 16,484,793 01/07/2011 Repaid To Anumod Sharma 50,000 16,434,793 05/07/2011 Repaid To Anumod Sharma 500,000 15,934,793 07/07/2011 Repaid To Anumod Sharma 100,000 15,834,793 08/07/2011 Repaid To Anumod Sharma 160,000 15,674,793 14/07/2011 Repaid To Anumod Sharma 1,300,000 14,374,793 25/07/2011 Received from Anumod Sharma 7,500,000 21,874,793 27/07/2011 Repaid To Anumod Sharma 700,000 21,174,793 28/07/2011 Repaid To Anumod Sharma 600,000 20,574,793 29/07/2011 Repaid To Anumod Sharma 700,000 19,874,793 01/08/2011 Repaid To Anumod Sharma 500,000 19,374,793 11/08/2011 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, it can be gauged that the assessee had credit balance during the entire financial year in the books of the M/s Apra Auto India Private Limited. Therefore, it can be said that the assessee has not taken any loan from the said company, while the assessee has actually given loan and received repayment during the financial year under consideration of loan given to M/s Apra Auto India Private Limited. 11. We find that the assessee has entered into buyer's agreement with M/s Apra Auto (India) Private Limited for sale of 7000 Sq. Ft. commercial space at Signature Tower - II, Sector - 15, Gurgaon, Haryana for a consideration of Rs. 7,00,00,000/- and received advance of Rs. 5,62,00,000/- against sale of such commercial space from M/s Apra Auto (India) Private Limited. As per the buyer's agreement, the buyer, M/s Apra Auto (India) Private Limited has to pay total consideration upto 31st December 2011. The buyer has paid Rs. 1,40,00,000/- as advance payment to the assessee vide cheque no. 845668 drawn on the Nainital Bank Limited, Gurgaon in favour of the assessee upon signing of the said buyer's agreement. 12. As per clause of the said agreement, in case of default in payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,50,00,000/- has been received by the assessee during the financial year under consideration as advance as per the terms and conditions of the agreement. The copy of such buyer's agreement with M/s NH Learning Infrastructure Services Limited along with confirmation from the said company for payment of Rs. 2,50,00,000/- to the assessee during the financial year under consideration is similar to the one entered with M/s Apra Auto (India) Pvt. Ltd. The said agreement with M/s NH Learning Infrastructure Services Limited had been terminated during the financial year under consideration and the assessee has repaid an amount of Rs. 2,30,00,000/- out of advance received amounting to Rs. 2,50,00,000/- up to 31.12.2012 to M/s NH Learning Infrastructure Services Limited. 15. Hence, as per the facts it is quite evident that the assessee has not taken any loan from M/s Apra Auto (India) Private Limited instead he has given loan to the said company and received advances from the said company against sale of commercial space as per buyer's agreement and the same was refunded during the financial year under consideration on termination of buyer's agreement as per its clauses. It is to note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Since, the said receipts of advance of Rs. 5,62,00,000/- against sale of commercial space is not a receipt in the nature of loan or advance as contemplated in section 2(22)(e) of the Income tax Act, 1961 which attracts the provisions of in that section as the said advance is in the nature of business advance which did not fall within the ambit of provisions of section 2(22)(e) of the Income tax Act, 1961. 18. We have gone through the rationale given by the ld. CIT (A), the relevant operative portion is as under: "9. I have considered the specific arguments raised by the appellant during appellate as well as assessment proceedings and the comments of the AO/JCIT in the remand report. It is seen that the AO, in the assessment order has highlighted receipt of amount of Rs. 10,08,41,000 from M/s Apra Auto India P. Ltd and the said receipt of payments by the appellant have been highlighted in the assessment order in the form of a account which does not have a opening balance or the closing balance. It is important to appreciate that the appellant on being confronted with the proposed addition had specifically claimed that financial transactions of the appellant with M/s Apra Auto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clarify the issue as raised by the AO in the assessment order. The submission of the appellant are contained at para 1.2.32 to 1.2.35 of his reply dated 29.07.2015. It has been stressed that the mistake had crept in on account of a technical flaw in the accounting software used by the appellant namely TALLY in which the name of first entry on a single day crops up on the query being issued to the software and on this account, the later entry gets eclipsed for which manual cross check has to be done so as to correctly present the factual picture. The mistake, however, has been confirmed to the extent that at the time of submission, the printout taken from the computer was having the name of transaction entered into with bank of baroda being the first entry on that day. In the circumstances, I don't consider it any issue of material consequence as factually, the amount in question has been transacted through the Nainital bank only. 12. The AO had further highlighted in the assessment order at page no 9 that the appellant had taken loans and advances from Apra Auto (India) P Ltd in earlier years as well. In this regard, the appellant was directed to file his ledger account with A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been amounts outstanding towards M/s Apra Auto India P. Ltd rather than the other way round. Therefore, apart from receipt of amounts on account of the proposed commercial sale by the appellant, no amounts had been received by the appellant from M/s Apra Auto India P. Ltd. The amounts that had been received were on account of repayments by M/s Apra Auto India P. Ltd to the appellant rather than other way round. The transaction of proposed sale of commercial space, being on commercial considerations and in the normal course of business of the appellant clearly comes in the exception clause of section 2(22)(e). In view of the above facts and circumstances of the case, the addition made by the AO to the tune of Rs. 10,57,01,194 is directed to be deleted." 19. Having gone through the entire factum of the issue, the case laws cited by both the parties, rationale of the ld. CIT (A), keeping in view the fact that it is the company which owes the assessee the money rather vice-versa, it is unequivocally proved that the advance received from the company by the assessee is in the nature of trade advance against the booking of commercial place being built by the assessee, we hereby decline t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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