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TMI Blog2014 (11) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... yment by a company to its shareholders may not be loan/advance. In the present case, the amount was withdrawn by the assessee from the company only to meet her short term cash requirements. By virtue of offering personal guarantee and collateral security for the benefit of the company, the liquidity position of the assessee had gone down. In the strict sense if it is to be construed the amount forwarded by the company to the assessee was not in the shape of advances or loans. The arrangement between the assessee and the company was merely for the sake of convenience arising out of business expediency. In the facts and circumstances of the case, it is not appropriate to hold that the amount withdrawn by the assessee partakes the character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be brought to tax as deemed dividend u/s 2(22)(e) of the Act in the hands of the assessee. The assessee filed a reply on 23/12/2011 claiming that there is no deemed dividend taxable u/s 2(22)(e) of the Act in this case. The AO was however, not convinced with the assessee s contention and held that these two amounts which are advanced to the assessee out of accumulated profits of the company are deemed dividend u/s 2(22)(e) of the Act. He, accordingly, brought it to tax. 3. Aggrieved, the assessee preferred an appeal before the CIT(A) who deleted the addition. Aggrieved by the relief given by the CIT(A), the Revenue is in appeal before us. 4. The learned Departmental Representative relied upon the order of the AO while the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the extent of ₹ 266.45 crores. As against M/s.Firepro Systems Pvt. Ltd. getting credit facility from banks and others as on 31/3/2009 of ₹ 266.45 crores, based on collateral security of immovable properties and personal guarantee of the assessee, M/s.Firepro Systems Pvt. Ltd., had advanced the housing loan as well as the advances and therefore it was for the business purposes and not for any benefit to the assessee and hence it cannot be treated as deemed dividend u/s 2(22)(e) of the Act. The CIT(A) had called for a remand report from the AO on the said evidence filed by the assessee and after considering the remand report had held that the facts in the assessee s case are similar to the facts of the case before the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a consequence of any further consideration which is beneficial to the company received from such a share holder, in such case, such advance or loan cannot be said to be a deemed dividend within the meaning of the Act. Thus, for gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of section 2(22) but not to the cases where the loan or advance is given in return to an advantage conferred upon the company by such shareholder. In the case before us, the assessee permitted his property to be mortgaged to the bank for enabling the company to take the benefit of loan and in spite of request of the assessee, the company is unable to release the property from the mortgage. In such a sit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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