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TMI Blog2021 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee represents the trading receipt i.e. in the course of the business, the usage of the same whether for commercial or personal purposes cannot change the character such receipt. As such the trading receipt is available at the disposal of the assessee and the revenue cannot direct to him for the usage of such trading receipts in a particular manner. In the given case, the assessee was to supply 150 refrigerated truck bodies and against such supply the assessee inter-alia received a sum which was directly disbursed by the bank on behalf of M/s Aartee Roadways private Ltd. There may be several reasons for transferring the sum to the personal saving account of the assessee such as the fund was not immediately required for use in the business or there was sufficient capital of the assessee in his business which has been withdrawn or for any other reason. But such withdrawal cannot be a basis to draw an inference that such trading receipts represents the loans and advances in the nature of deemed dividend as provided under section 2(22)(e) - There was no colourable device adopted by the assessee in the given facts and circumstances as alleged by the AO by holding that the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. transferred to capital A/c. to the extent of ₹ 5.25 crores 2. Whether on the facts and circumstances of the case and in law the Ld. C.I.T. (A) was justified in holding that the sum of ₹ 12.50 crores was received by assessee's proprietory concern M/s. CRS Transport System as part of trade dealing and not as a loan or advance and* once the sum was received by the entity, the assessee appropriated a sum of ₹ 5.25 crores out of it, for his personal purposes, without appreciating that a sum of Rs. 8,878,32,500/- out of ₹ 11.67 crores received from Artee Roadways Pvt. Ltd. was credited on 23-07-2010 in his bank A/c. with Indian Bank ( Current) A/c. No. 89433789 ), and said sum of ₹ 5.25 crores, withdrawn from his current A/c. with Indian Bank was credited on 23-07-2010, in his saving bank account No. 73014908 with Indian Bank, which clearly indicate that appropriation of ₹ 5.25 crores by the assessee in his capacity as proprietor of M/s. C.R. Transport System was not a part of trade dealing and the A.O. in the assessment order clearly recording his finding on assessee's utilisation of ₹ 5.25 crores for personal use. 3. Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. Chairman/managing director of Aartee Roadways private Ltd in which the assessee holds shares to the extent of 94.15%. 4.1 The assessee during the assessment proceedings claimed that he is carrying on specialized business for building the refrigerated trucks bodies for the last many years. As per the assessee such business of building the refrigerated trucks bodies was very technical and it acquired specialization in this line. It was also contended that it has received the sum of ₹ 12,50,63,193.00 from M/s Aartee Roadways private Ltd for building the refrigerated truck bodies. Out of the said sum, it received a sum of ₹11.67 crores directly from the bank namely Central Bank of India which was disbursed as loan to Aartee Roadways private Ltd. However, the entire sum received from Aartee Roadways private Ltd was representing the business transaction for building the specialized trucks. Accordingly, the assessee argued that such amount cannot be treated as deemed dividend under the provisions of section 2(22)(e) of the Act as it does not represent any loans and advances to the assessee. 4.2 However, the AO found that the assessee out of the total amount receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. Even the Assessing Officer has noted this point in para 3.1 of the assessment order. M/s Artee Roadways Pvt. Ltd. had procured a loan of ₹ 11.67 crores from M/s Central Bank of India, for expansion of their business, which included inducting refrigerated trucks in their fleet. These refrigerated trucks were to be fabricated by M/s CRS Transport System, for which, the loaned amount was directly disbursed by the bank, on behalf of M/s Artee Roadways Pvt. Ltd. to M/s CRS Transport System. It is also obvious that M/s CRS Transport System has been doing this kind of job for M/s Artee Roadways Pvt. Ltd. for quite some time and this was a regular business transaction between the concerned parties. Therefore, it transpires that the amount advanced by M/s Artee Roadways Pvt. Ltd. to M/s CRS Transport System was neither in the nature of loan nor( advance , rather, it was in the nature of trade advance, with no obligation of repayment attached to it. The word advance , which appears in the company of the word loan , in section 2(22)(e) can only mean such advance which carries with it an obligation of repayment. Hon'ble Delhi High Court in CIT vs Raj Kumar [2009] 181 Taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one off transaction since M/s CRS Transport System was in the business of fabricating bodies for the trucks owned by M/s Artee Roadways Pvt. Ltd. for quite some time. It was an ordinary commercial transaction, carried out in the normal course of the business and it cannot be termed as 'loan or advance' in terms of section 2(22)(e) of the Act, as the assessee or M/s CRS Transport System have no attendant obligation, to repay the amount, as in the case of 'loan or advance'. Further, the Assessing Officer has, though alleged, but failed to bring any evidence on record to establish that the transaction between M/s Artee Roadways Pvt. Ltd. and M/s CRS Transport System was a smoke screen to cover a surreptitious payment of money to the assessee. I also tend to agree with the argument of the assessee that merely because the assessee had withdrawn a sum of ₹ 5.25 crores from his proprietory concern, out of the total sum of ₹ 12.50 crores received by it as a trade advance in the course of its regular business with M/s Artee Roadways Pvt. Ltd., it cannot be termed as deemed dividend u/s 2(22)(e) of the Act. Withdrawal of the sum by the assessee was merely ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man 128 (Bom.) held that advances made by a company to the assessee towards purchases to be made by the said company from the assessee could not be treated as deemed dividends. 10.4 The CBDT vide Circular No. 19 of 2017, dated 12th June,2017 under the subject Settled view on section 2(22)(e) of the Income-tax Act, 1961, trade advances after noting at para.2 that the Board has observed that some Courts in the recent past have held that trade advances in the nature of commercial transactions would not fall within the ambit of the provisions of section 2(22)(e) of the Act. Such views have attained finality and referring to some of the High Court decisions on this issue clarified at para.3 as under- In view of the above it is, a settled position that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word advance in section 2(22)(e) of the Act. Accordingly, henceforth, appeals may not be filed on this ground by Officers of the Department and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon . 10.5 In the case on hand, the assessee has received a trading advance from M/s Aartee Roadways pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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