9911796707
TMI Blog1984 (7) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds. 1. The assessee had no credit balance in her accounts with the said concern ; and 2. That there were sufficient accumulated profits of the said concern at the time when the excess withdrawal was made by the assessee. The ITO, therefore, added Rs. 93,027 to the total income of the assessee treating it as a dividend under s. 2(22)(e) of the Act. The assessee took the matter in appeal to the AAC, who agreed with the ITO and held that the excess withdrawals made by the assessee should be assessed as dividends within the meaning of s. 2(22)(e) of the Act. The assessee preferred a further appeal to the Tribunal and the Tribunal allowed the assessee's appeal and held that the withdrawals had to be taken as made out of the money lying to the credit of Sri A. C. Mahesh in view of the letter dated April 3, 1972, addressed by Sri A. P. Madhavan, the father of the minor son, Sri A. C. Mahesh, in which he had directed the company to make available to the assessee Rs. 1 lakh from out of his account. The Tribunal found that as A. C. Mahesh owed some money to the assessee and as Mahesh had directed repayments of the amount due to Miss Sarada from out of his credit balance avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, and that so long as the withdrawals by the assessee are shown in the accounts as withdrawals from the company, it is to be taken to be withdrawals from and out of the accumulated profits of the company and, therefore, it will clearly come within the mischief of s. 2(22)(e) of the Act. However, according to the Tribunal, though the withdrawals had been made from the assessee's account, it should be taken to be a withdrawal made from and out of the credit of Mahesh and the fact that the credit and debit entries have been made in accordance with the letter dated April 3, 1972, given by A. P. Madhavan, the father of Mahesh, only on March 31, 1973, will not affect the tenability of the assessee's claim. Thus, the main controversy between the parties is, whether the withdrawal made by the assessee from the company was from and out of the accumulated profits as contended by the Revenue or whether it was a withdrawal from and out of the amounts due by the company to Mahesh. If really the amount withdrawn came from the credit of Mahesh, then it cannot be taken to be an advance or loan to a shareholder from the accumulated profits so as to attract s. 2(22)(e) of the Act. The entries in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has been held by the Tribunal, in view of the fact that the assessing authority did not doubt its genuineness, a sum of Rs. 70,000 only can be withdrawn by the assessee from her accounts. The letter dated April 3, 1972, does, however, authorise the assessee to withdraw from the account of Mahesh a sum of Rs. 1,00,000. But, the excess withdrawal was to the extent of Rs. 93,027 and the same is not limited to Rs. 70,000. From this it appears that the excess withdrawals by the assessee on various dates were without reference to the quantum of the amount due by Mahesh. Even with regard to Rs. 70,000 said to be due by Mahesh to the assessee, till the assessee takes advantage of that letter and gets a credit for the amount mentioned in that letter in her accounts, her withdrawals cannot be said to relate to the amounts which came to be credited in the assessee's account long afterwards. It has been held by the Supreme Court in Tarulata Shyam v. CIT [1977] 108 ITR 345 (SC), that the statutory fiction under s. 2(6A)(e) of the Act would come into operation at the time of the payment of the advance or loan to a shareholder by a company in which the public are not substantially interested an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee out of the amount standing to his credit with the company, so long as the amount is not transferred to the credit of the assessee and such a credit having been given only on March 31, 1973, the said amount of Rs. 1,00,000 cannot be said to have been made available to the assessee on the various dates when the excess withdrawals were made by her. As already pointed out, the relevant date is the date of the loan or advance and in this case on the date of the excess withdrawals, there was no amount to the credit of the assessee and no amount had also been transferred to her credit from Mahesh's account. The fact that the company had credited the amounts in the assessee's account only on March 31, 1973, leads to the inference that the letter by Madhavan on behalf of the minor Mahesh authorising debit of his account and credit to the assessee's account would have been given only on March 31, 1973, and not before. In this connection, Mr. T. V. Balakrishnan for the assessee contends that it is not open to this Court to go behind the finding of fact given by the Tribunal that the letter dated April 3, 1972, is genuine. It is no doubt true, the Tribunal proceeds on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dictory to it, or it has acted on material partly relevant and, partly irrelevant or where the Tribunal draws upon its own imagination and imports facts and circumstances not apparent from the record or bases its conclusions on mere conjectures and surmises or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached and that in all such cases, the findings arrived at are vitiated. As already stated, in this case, the books of the company show that the assessee had overdrawn from her accounts which means that she has taken an advance from the company which had admittedly accumulated profits. If really the letter has been given by Madhavan on behalf of Mahesh to the company to transfer any particular amount to the assessee's account, the company would not show in the accounts the amounts drawn by the assessee as over payments. There is no reason given by the assessee why the letter dated April 3, 1972, has not been given effect to by debiting Mahesh's account and crediting the assessee's account. Admittedly, large amount would stand to her credit if the letter had been given on April 3, 1972, as alleged by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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