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TMI Blog2021 (8) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue with regard to applicability of Section 2(22)(e) of the Act requires factual adjudication, the order dated 12.08.2016 passed by the Tribunal is quashed and the matter is remitted to the Tribunal for decision afresh after taking into account the material available on record. It is therefore not necessary for us to answer the substantial questions of law. - I.T.A. NO.7 OF 2017 - - - Dated:- 2-8-2021 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE HEMANT CHANDANGOUDAR APPELLANT (BY SRI. ASHOK A. KULAKARNI, ADV.,) RESPONDENT (BY SRI. E.I. SANMATHI, ADV., FOR SRI. K.V. ARAVIND, ADV.,) JUDGMENT ALOK ARADHE J., This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the Act , for short) has been filed by the assessee. The subject matter of the appeal pertains to the Assessment Year 2006-07. The appeal was admitted by a Bench of this Court on the following substantial questions of law: (1) Whether the Assessing Officer to justify action u/s 147 can travel beyond his recording u/s 148(2) and the material therein? (2) Whether on the facts and in the circumstances of the case the Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her sources'. The assessee filed the return of income for the Assessment Year 2006-07 and declared a sum of ₹ 18,10,150/- as taxable income. Admittedly, there was no scrutiny assessment in respect of the aforesaid return of income filed by the assessee. The Assessing Officer received an information that assessee had received loan from a Company namely Gokuldas Images Pvt. Ltd. in which assessee was holding 27.3% of equity shares. The Assessing Officer also received an information that the aforesaid company was having profits and surplus to the extent of ₹ 84,35,22,753/- as on 31.03.2006. The Assessing Officer thereupon issued a notice on 12.03.2010 under Section 148 of the Act requiring the assessee to file return of income for the Assessment Year 2006-07, as reason to believe that income escaped assessment. 3. The assessee by a communication dated 22.04.2010, requested the Assessing Officer to treat the return of income as originally filed on 31.10.2006 as return in response to notice under Section 148 of the Act. The Assessing Officer furnished the reasons recorded under Section 148(2) of the Act to the assessee. The assessee filed a detailed objection to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Board of Direct Taxes (CBDT). 4. On the other hand, learned counsel for the revenue submitted that Assessing Officer has rightly formed the belief that income escaped assessment in the hands of the assessee which was reflected in the reasons recorded by him which show that assessee had received loans of ₹ 6.85 crores from GIPL in which assessee was substantially interested as he was holding 25.3% of the share capital and the same company was having surplus to the extent of 81.8 crores as on 31.03.2006. It is also argued that conditions of invocation of Section 2(22)(e) of the Act are fulfilled in this case. It is also submitted that any payment made by a company to a shareholder or concern in which he has a substantial interest, is also covered under Section 2(22)(e) of the Act. It is also urged that there is no material on record that the amount of loan was to be utilized only for the purpose of business of the company and the amount was advanced as gratuitous loan to the share holders. It is also urged that the aforesaid finding is a finding of fact. In support of aforesaid submission, reliance has been placed on the decisions in 'RAYMOND WOOLLEN MILLS LTD. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the concern in which the assessee substantially interested i.e. PI. It is undisputed fact that the assessee, along with his family members, is 100% shareholder in M/s. Personality Ltd., Any payment made by a company to a shareholder or concern in which he has substantial interest, is also covered by clause (e) of sub-sec.(22) of section 2. The existence of pre-conditions for invoking the provisions of sec.2(22)(e) to tax as deemed dividend in the hands of shareholder are not in dispute. Therefore, we are not going into the issues. The only aspect to be examined herein is payment made by GIP Ltd., to M/s. Personality Ltd., is taxable in the hands of shareholder. The payments made to PL are transferred as 'loan to directors in the books of GIP Ltd'. The purpose of making payment to M/s. Personality Ltd., was stated to be (i) ₹ 5 crores was paid for discharging of its bank loan obligation so as to free GIP Ltd., from this guarantee obligation (ii) An amount of ₹ 5.5 crores was paid initially as consideration for buying the trade brand of M/s. Personality Ltd., but subsequently transferred to HIP Ltd. in which the assessee is substantially interested and these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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