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TMI Blog2020 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... All the grounds of appeal are related to the deletion of addition made by the Assessing Officer (AO) u/s 2(22)(e) of the Income Tax Act, 1961 (in short 'Act'). During the assessment proceedings, the AO found that the assessee is the beneficial owner having 75% shareholding in the company M/s Manoj Vaibhav Gems N Jewellers Pvt. Ltd.,(MVGNJPL) formerly known as M/s Vaibhav Empire Pvt. Ltd. (VEPL), which has advanced the sum of Rs. 17,49,58,335/-. The said company is having accumulated profits of Rs. 59,15,92,870/-, hence assessed the sum of Rs. 17,49,58,335/- as deemed dividend u/s 2(22)(e) of the Act. The AO in the assessment proceedings found that the assessee has made the adjustment entry for Rs,17,50,00,000/- on the last day of the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, thus, the assessee explained that the entire transactions were trade transactions and no personal benefit was derived by the assessee directly or indirectly. It was also submitted that on identical facts for the A.Y.2014-15, the AO made the addition u/s 2(22)( e) of the Act and on appeal Hon'ble ITAT dismissed the appeal of the revenue holding that there was no direct or indirect benefit derived by the assesse to tax the same as deemed dividend u/s 2(22)(e) of the Act. The AO examined the explanation of the assessee and not being impressed with the explanation of the assessee, held that the outstanding as on 31.03.2014 was a loan and the assessee got direct benefit from the company, hence taxed the same as deemed dividend u/s 2(22)(e) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding was Rs. 15,98,60,104/-. The account shows the opening Rs. 2,67,13,952/- as 31.03.2014 and the same day a sum of Rs. 17,50,00,000/- was transferred with journal entry resulting in balance of Rs. 20,17,13,952/- credit and there was a debit entry of Rs. 4,18,53,812/-, which the AO has considered as loan and taxed the same as deemed dividend. On close scrutiny of the accounts of the assessee as well the VEPL, it is evident that there was no loan and the receivables are outstanding at Rs. 15,98,60,104/- as per the books of the assessee. Therefore, there is no direct or indirect benefit derived by the assessee by withdrawing the amount receivable from the company. Hence, there is no case for making the addition on account of deemed di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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