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TMI Blog2021 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... . 143(1) of the Act. A survey was conducted in the premises of M/s. Kiran Infertility Centre Pvt. Ltd., on 22/10/2013 and during the survey proceedings, it was noticed that the assessee being a shareholder holding 53% shares along with his spouse holding 42% shares in M/s. Kiran Infertility Centre Pvt. Ltd. was in receipt of an advance of Rs. 27,50,000/- from the said company. The accumulated profits of the said company stood at Rs. 90,80,229/- as on 31/03/2010. The AO, therefore, treated the said amount of Rs. 27,50,000/- as deemed dividend u/s. 2(22)(e) of the Act. 2.1. Accordingly, the case was reopened by issuing a notice u/s. 148 of the Act on 01/11/2013, against which, the assessee filed his return of income on 03/12/2013. Accordingly, the AO issued other statutory notices to the assessee. 2.2. During the course of reassessment proceedings, the assessee vide his letter dated 17/02/2014 submitted a detailed explanation stating that as per the MOA of Clause - 8, there is object clause regarding loans or advances and that the advance received from the said company was for commercial advantage of the company and not the benefit of the directors and the directors were charged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they are clearly in the nature of advance and liable to be included as deemed dividend as per the provisions of Section 2(22)(e) of the I.T. Act. " 4. Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT by raising the following grounds of appeal: "1) The order of the learned CIT(A) is erroneous both on facts and in law. 2) The learned CIT(A) erred in enhancing the income determined by the Assessing Officer without providing proper opportunity. 3) The learned CIT(A) erred in confirming the initiation of proceedings u/s. 147 of the I.T. Act. 4) The learned CIT(A) erred in confirming the action of the Assessing Officer in making addition of Rs. 27,50,000 u/s. 2(22)(e) of the I.T. Act. The learned CIT(A) ought to have accepted the various contentions of the appellant and held that the provisions of Sec. 2(22)(e) have no application to the facts of the case. 5) The learned CIT(A) erred in enhancing the addition made by the Assessing Officer u/s. 2(22)(e) by an amount of Rs. 12,67,295.50 without considering the detailed explanation filed by the appellant. 6) Any other ground or grounds that may be urged at the time of hearing." 5. Before us, the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found during the course of survey operation U/s 133(A) of the Income tax Act. 1961. In the opinion of the assessing officer there was a reason to believe that the assessee had escaped its income and, therefore, the legal ground No. 3 raised by the assessee is dismissed. 8. With regard to ground No. 4 regarding challenging the addition made u/s. 2(22)(e) of Rs. 27,5,0,000/- of the Act, we have gone through the documents submitted by the assessee in the paper book. In the financial statement of the assessee, which is placed at page No. 58 of paper book, assessee has shown under the gross receipts - "interest" on loans to directors of Rs. 1,87,405/- and it has also shown in Annexure - II - Loans and Advances - under interest receivable from both the Directors, which is placed at page 62 of the paper book. Therefore, it clearly shows that the company is compensated on the loans and advances to the directors by receiving interest from the directors. 8.1. This issue is squarely covered in favour of the assessee by the decision of the coordinate bench of ITAT, Kolkata in the case of Smt. Sangita Jan Vs. ITO in ITA No. 1817/KOL/2009 for AY 2006-07 vide order dated 11th March, 2016. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from her shareholders, which was beneficial to the Company and the order of the ld. CIT(Appeals) giving relief to the assessee was upheld by the Tribunal vide its order dated 29.06.2015 passed in ITA No. 1124/KOL/2012 by relying on the decision of the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra). Keeping in view the said decision of the Hon'ble Calcutta High Court which has been followed by the Coordinate Bench of this Tribunal in the case of M/s. Zenon (India) Pvt. Limited, we hold that the addition made by the Assessing Officer and sustained by the ld. CIT(Appeals) under section 2(22)(e) on account of loan received by the assessee from M/s. Surya Business Pvt. Limited on which consideration in the form of interest was paid by the assessee to the benefit of the Company is not sustainable. We, therefore, delete the same and allow Grounds No. 1 & 2 of the assessee's appeal. 8.2. As the issue under consideration is materially identical to the issue in the said decision, respectfully following the same, we direct the AO to delete the addition of Rs. 27,50,000/- made by him u/s. 2(22)(e) on account of loan received by the assessee from M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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