9911796707
TMI Blog2021 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ) relevant to the Assessment Year 2011-2012. 2. The Revenue has raised the following grounds of appeal: 1. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,28,02,530/- made u/s.2(22)e of the Act not considering the findings of the Assessing Officer especially in view of the amendment made by the Finance Act, 1987. 2. On the facts and in the circumstances of the case, the Ld. Commissioner of Income tax(A) ought to have upheld the order of the Assessing Officer. 3. It is therefore, prayed that the order of the Ld. Commissioner of the Income tax(A) may be set aside and that of the Assessing Officer be restored. 3. The only issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omotive Pvt. ltd., are having common shareholder holding more than 20% shares in each company. Accordingly the AO made the addition of Rs. 2,28,02,530/-, equivalent to available accumulated reserve and surplus in the books of M/s Planet Automotive Pvt Ltd., to the total income of the assessee. 4.3 The assessee carried the matter before the learned CIT (A) and claimed that the appellant is not holding shares in M/s Planet Automotive Pvt Ltd. Thus in such a case, the provisions of section 2(22)(e) of the Act do not apply to it. 4.4 The assessee further claimed that transactions with above mentioned party is in the nature of Current Accommodation Adjustment Entry which was carried out in the ordinary course of business. As such both the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of deemed dividend as provided under section 2(22)(e) of the Act. The learned DR vehemently supported the order of the AO. 8. On the other hand the learned AR before us contended as under: Since the "assessee " herein is not at all a "registered share-holder" of the "payer company", no addition can be made as deemed dividend: Since the assessee-company is not at all a "registered share-holder" in PAPL (an undisputed fact), no addition can be made as deemed dividend in the hands of the assessee merely because there are common shareholders in the payer and payee company. Reliance is placed on followings: * M/s. Precimetal Cast. Pvt. Ltd. vs. ITO-ITA 3499/Ahd/2015 (Annecure-"A") * ACIT Vs. Leela Ship Reculcing Pvt. Ltd. - 1658/Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit and credit) showing movement of funds both ways on need basis. * Transactions in the nature of loans and advances are usually very few in number whereas in the present case, transactions between assessee and payercompany are large in numbers indicating that such transactions are in the form of "current accommodation adjustment entries". * It is a settled law that when there are large number of adjustment entries in accounts between two entities, amounts reflected therein are not in the nature of loans/advances but merely adjustments and hence, provisions of S.2(22)(e) would not apply. Reliance is placed on followigs: * CIT vs. Schutz dishman Bio-tech Pvt. Ltd. Tax Appeal Nos.958 & 959 of 2015 (Guj.) (Annexure "E") * ITO Vs. Mehu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing not less than 10% of the voting power in the Company from whom the loan or advance is taken. However, on considering Section 2(22)(e) of the Act, we are not at all impressed with the aforesaid. If the contention on behalf of the revenue is accepted, in that case, it will be creating the third category / class, which is not permissible. What is provided under Section 2(22)(e) of the Act seems to be that the assessee company must be a shareholder in the Company from whom the loan or advance has been taken and should be holding not less than 10% of the voting power. It does not provide that any shareholder in the assessee- Company who had taken any loan or advance from another Company in which such shareholder is also a shareholder havin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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