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TMI Blog2020 (5) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... as "the Act") dated 16/10/2018 relevant to the Assessment Year 2013-2014. The assessee has raised the following grounds of appeal. 1. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming addition by applying provisions of section 2(22)(e) for the additional amount of credit transactions from Shreem Design & Indrastructure Pvt. Ltd. amounting to Rs. 2,62,31,369/- 1.1 On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming addition by applying provisions of section 2(22)(e) of the Act ignoring exemption in sub clause (ii) of S.2(22)(e). 1.2 On the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year under consideration has accepted loan for Rs. 2,62,31,369/- from M/s Shreem Design & Infrastructure Pvt Ltd. (in short SDIPL) in which he is director and also holding 11.61% of equity share. 3.1 The AO was of the view that such advance for Rs. 2,62,31,369/- amounts to deemed dividend under the provision of section 2(22)(e) of the Act. However the AO observed that the total accumulated profit of the lender is amounting to Rs. 1,71,13,533/- only. Accordingly the AO purposed the addition of Rs. 1,71,13,533/- under section 2(22)(e) of the Act. 3.2 The assessee in response submitted that the lender SDIPL advance the amount during the course of normal business activity. Thus the provision of section 2(22)(e)(ii) provide exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance i.e. interest of Rs. 11,26,187/- paid during the year on which he has deducted TDS u/s 194A of the Act. Accordingly the assessee claimed that advances given by SDIPL is in the course of ordinary business. The assessee further submitted that the SDIPL has given loan and advances for Rs. 9,48,46,082 during the year and accepted unsecured loan of Rs. 22,78,14,682/-. Similarly received interest income from such advances for Rs. 53,39,658/- and paid interest on unsecured loan for Rs. 2,55,22,818/- which constitute substantial portion of the business income of the SDIPL. Thus he is entitled for the relief under section 2(22) (e) (ii) of the Act. 4.1 Further the assessee contended that the provisions of section 2(22)(e) of the Act do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of above, the addition of Rs. 1,71,13,533/- made by AO u/s. 2(22)(e) of the Act is hereby confirmed. The concerned grounds of appeal are dismissed. Being aggrieved by the order of the learned CIT (A), the assesse is in appeal before us. 6. The learned AR for the assesse before us filed a paper book running from pages 1 to 91 and submitted that the assessee has borrowed fund from the company on interest at prevailing rate in the market. Thus the assessee has not derived any benefit out of such loan taken from the company as discussed above. The learned AR in support of his contention further submitted that this tribunal in the own case of the assessee involving identical facts and circumstances for the assessment year 2015-16 in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 2(22)(e) of the Act. We also note that this Tribunal in the own case of the assessee involving identical facts and circumstances for the assessment year 2015-16 in ITA No. 29/AHD/2019 vide order dated 12/04/2019 has decided the issue in favour of the assessee. The relevant extract of the order is reproduced as under: 14. We further find that the loan taken from the SDIPL and AIPL were compensated by way of interest @9% being market rate paid by the assessee on loan, therefore, the assessee in real sense did not derive any benefit of the company so as to the provisions (ii) of sec. 2(22)(2) of the Act. The learned counsel for the assessee relied in the case of ACIT vs. M/s. Zenon (India) Pvt, Ltd, ITA NO 1124/Kol/2012 (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Smt. Sangita Jain vs. ITO ITA NOL 1817/K0V2009 (Paper Book 44 to 51), the loans and advances taken by the assessee. are not covered by the provisions of section 2(22)(e) of the AcL Itas. considering the totality of facts and judicial decision as discussed above , we hold that the AO was not justified in making addition on account of deemed dividend of Rs. 2,50,80.923 from SDIPL and Rs. 76,53,711 from AIPL. Hence, same are directed to be deleted. Accordingly, grounds of appeal raised by die assessee are allowed. 8.4 The facts of the case as discussed above are squarely applicable to the present facts of the case. The learned DR has not brought anything on record contrary to the arguments advanced by the learned AR for the assessee. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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