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TMI Blog2020 (6) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... ssues have not been examined by ld. CIT(A). Therefore, we think it fit and appropriate to remit this issue back to the file of CIT(A) for fresh examination. Therefore, we set aside the order of CIT(A) and remit this issue back to the file of ld. CIT(A) for fresh adjudication in accordance to law. For statistical purposes, the ground raised by the Revenue is allowed. Addition u/s 2(22)(e) being trade advance received from EDP Software Ltd - whether such advance was given by EDP Software Ltd in the ordinary course of business and substantial business of the said company were to deal in loan and advance, as evident from the audited accounts? - HELD THAT:- Section 2(22) (e ) of the Act states that any payment by a company .for the individual benefit of any such shareholder, to the extent to which the company in either case possesses accumulated profits . That is, deemed dividend would be to the extent of accumulated profits of the company and that accumulated profit should be as on 31st March 2012 ( P.Y.2011-12), however, in assessee`s case under consideration the accumulated profit as on 31st March 2012 is in negative, that is,loss to the tune of ₹ 10,60,332/- , therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the transaction with E-edit Infotech Pvt. Ltd, ignoring the fact that the assessee was holding all the shares of the above said company which needed to be considered whereas the amount of advances which was received by the assessee from its subsidiaries was rightly treated by the Assessing Officer as deemed dividend. 2. The ld. CIT(A) has erred in deleting the addition of ₹ 24,25,168/- being transaction with EDP Software Ltd. ignoring the fact that the assessee is holding all the shares of the above said company which needed to be considered, whereas the amount of advance which was received by the assessee from its subsidiaries was rightly treated by Assessing Officer as deemed dividend. 3. That the appellant craves leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. Ground No. 1 raised by the Revenue relates to addition of ₹ 2,88,30,842/- being the transaction with E-edit Infotech Pvt. Ltd; treated by assessing officer as deemed dividend u/s 2(22) (e) of the Act. 4. Facts of the case which can be stated quite shortly are as follows:The assessee company filed its return of income for the assessment year un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vances from the three companies separately since the applicability of section 2(22)(e) of the Act is dependent on several facts which arenot identical in all the cases.In respect of addition of ₹ 2,88,30,842./- with respect to amount received from E- Edit Infotech Pvt. Ltd., 1 find that the appellant was maintaining two ledgers for E-Edit Infotech Pvt. Ltd., one with respect to sale of immovable property and second one, being in the nature of current account. This is even evident from the assessment order wherein at Page 6, the Ld. Assessing Officer has reproduced ledger copy of first nature of transactions and at Page 7 to 9, wherein he has reproduced ledger copy of second nature of transactions. The Assessing Officer has separately calculated peak credit for both the types of transactions and applied the provisions of section 2(22)(e) of the Act. Ld AR emphasized that the money advanced to the assessee co. by EIPL is either an advance for property and current account transaction or a loan. If it is an advance for property then it is a business advance and therefore section 2(22) (e) would not apply. The AR argued that alternatively if it is a loan then since substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 10. We have heard both the parties and perused the materials available on record. The ld Counsel submitted before us that in the instant case, the ld. Assessing Officer failed to appreciate the fact that there was no accumulated profit in the books of EDP Software Ltd as on 31.03.2011. At this juncture it is relevant to mention here the written submissions furnished by the assessee before the ld CIT(A) in respect of accumulated profit in the books of EDP Software Ltd as on 31.03.2012: Debit Balance of profit loss account of EDP Software Ltd. was ₹ 10,60,332/-. Break up of Reserves Surplus as on 31.03.2011 of EDP Software Ltd. is given below: Sl. No. Particulars Amount (Rs.) Amount (Rs. ) 1. Securities Premium Account 34,85,000 2. Debit Balance in Profit Loss Account (33,55,749) 3. Add: Surplus / (Deficit) during the year 2011-12 22,95,417 (10,60,332) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 31st March 2012 ( P.Y.2011-12), however, in assessee`s case under consideration the accumulated profit as on 31st March 2012 is in negative, that is,loss to the tune of ₹ 10,60,332/- , therefore, the provisions of section 2(22) (e ) does not apply.That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is therefore, upheld and the grounds of appeal of the Revenue are dismissed. 12. Now we shall take assessee s cross objection in C.O. No. 86/Kol/2018 for A.Y. 2012-13 wherein the grounds of appeal raised by the assessee are as follows: G. No. 1 That in the facts and circumstances of the case, the Learned Assessing Officer has erred in treating the entire accumulated profit as on 01.04.2011 for the purpose of section 2(22)(e) of Income Tax Act. The Learned Assessing Officer should have reduced the opening balance of advance received while making addition of ₹ 2,88,30,842/- under section 2(22)(e) of the Act. The Learned CIT (A) has erred in not discussing this issue while passing appellate order. G. No. 2 That in the facts and circumstances of the case, the learned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok us through the page Nos. 10 to 12 of Assessing Officer s order wherein the Assessing Officer has mentioned the ledger account of Nathvar Tracon Pvt. Ltd. for the period of 01.04.2011 to 31.03.2012. We have examined the ledger account which is reproduced by the Assessing Officer on page no. 10 to 12 of his order and we noticed that the opening balance in the ledger account of Nathvar Tracon Pvt. Ltd. was debited on 01.04.2011 to the tune of ₹ 40,72,292/-. However, the closing balance as on 31.03.2012 was credited to the tune of ₹ 1,65,97,383/-. The assessee has taken amount from Nathvar Tracon Pvt. Ltd. and paid the amount during the year for the purpose of business therefore it is a current account and as per the ld. Counsel the addition u/s 2(22)(e) should not be made. As per the ld. Counsel for the assessee mere perusal of the ledger account placed on page no. 10 to 12 of the Assessment order, it is clear that the said account was for the purpose of doing business which was in the nature of current account wherein one can find debit entry and credit entry on several occasions which needs to be examined by the ld. CIT(A). Therefore, we are of the view that this m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee is having a current account with that of M/s. Subhchintak VancomPvt. Ltd. and the transactions cannot be characterized as loan/advances. In order to buttress this point, the Ld. AR drew out attention to page no. 62 which is the ledger of M/s. SubhchintakVancomPvt. Ltd. in the books of the assessee. From a perusal of the same, we note that the assessee on 05.06.2011 owed to M/s. Subhchintak VancomPvt. Ltd. ₹ 1.35 cr. On 03.09.2011 the assessee owed ₹ 85,000/- to M/s. Subhchintak VancomPvt. Ltd.. Whereas on 14.10.2011, the assessee gave ₹ 1.09 cr. to M/s. Subhchintak VancomPvt. Ltd.; and on 25.12.2011 gave M/s. Subhchintak VancomPvt. Ltd. ₹ 5 lacs; and ₹ 70 lacs; and on 15.03.2012 the assessee had given ₹ 60 lacs to M/s. Subhchintak VancomPvt. Ltd. In the assessment year under consideration, the assessee had given to M/s. Subhchintak Vancom Pvt. Ltd. ₹ 2,44,25,000/- whereas it owed to M/s. Subhchintak Vancom Pvt. Ltd. ₹ 1,35,85,000/-. From the ledger, the assessee had only debited ₹ 1,35,85,000/- whereas M/s. Subhchintak VancomPvt. Ltd. has drawn ₹ 1,08,40,000/- in excess from the assessee. From the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the Act. Thus, gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of section 2(22) but not cases where the loan or advance is given in return to an advantage conferred upon the company by such shareholder. 4. The Coordinate Bench of this Tribunal in ITO Vs. Smt. Gayatri Chakraborty in ITA No. 151/Kol/2013 has held as under: 14. We are of the view that in the present case also the transactions in question does not benefit the shareholder i.e. the Assessee alone and the results in no benefit to the company BAPL. The loan account is different from a current account with a shareholder and the transactions between the Assessee and BAPL are in the nature of current account and provisions of Sec.2(22)(e) of the Act will not be applicable to the case of the Assessee. We, therefore, concur with the decision of the CIT(A) and dismiss the appeal of the Revenue. 5. Similarly, the Coordinate Bench of this Tribunal in Mr. Purushottam Das Vs. DCIT and vice versa in IT(SS)A Nos. 60 to 62 73-76/Kol/2011 dated 17.10.2014 has held as under: 5. ........ It is pertinent to note here that when dividends are declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that there is mutuality and there were shifting of balances, so it is evident that there were reciprocal demands between parties and thus mutual in characteristic. The account maintained by the assessee with M/s. Subhchintak VancomPvt. Ltd. is an account so maintained in respect of mutual transfer of amount by way of giving and taking financial assistance. Therefore, it has the character of a current account and this current account is different from a loan account for the sole reason that the feature of mutuality is not present in a loan transaction. From the facts narrated above, it is clear that both the parties are beneficiary of the transaction being current account transaction i.e. shifting of balances, therefore, as held by the Hon'ble Supreme Court in Keshri Chand Jaisukh Lal, supra and Hon'ble Calcutta High Court in Pradip Kumar Malhotra, supra, we note that sec. 2(22)(e) of the Act is not attracted in the transaction with M/s. Subhchintak VancomPvt. Ltd. It should be remembered that for exercising revisional jurisdictional the Pr. CIT should find that the order of the AO is not only erroneous but also it should be prejudicial to the interest of reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der' passed by the AO to exercise revisional jurisdiction. In this context, we say that erroneous means if on the face of the record the issue in question has not been enquired at all by the AO. It should be remembered that every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of revenue. When the AO adopted one of the course permissible in law and it has resulted in a loss to the revenue; or where two views are possible and AO has taken one view with which Pr. CIT does not agree, it cannot be stated an erroneous order prejudicial to the interest of revenue unless the order of AO is unsustainable in law as held by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC). In the facts and circumstances of the case as narrated above, original assessment order passed with the approval of JCIT u/s. 153D of the Act cannot be viewed as unsustainable in law. Further, when all the facts and the laws governing the issues were brought to the notice of the Pr. CIT for which show cause notice was issued by the Pr. CIT, while conveying his intention to invoke revisional jurisdiction u/s. 263 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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