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TMI Blog2019 (9) TMI 1646X X X X Extracts X X X X X X X X Extracts X X X X ..... and its sister concerns - HELD THAT:- It is apparent that both the assessee and its sister company are dealers in automobiles of different nature and engaged in business with close proximity. The combined endurance to market the products in the same vicinity results in close commercial ties between the assessee company and its sister company. As a result both the companies were maintaining current accounts in order to achieve their respective business targets. Therefore it cannot be said that, the interdependence for meeting several business commitments of the assessee and its sister concerns does not result in commercial nexus between the assessee company and its sister concerns. As pointed out by the Ld.AR some expenses were met by both the companies which were reimbursed by either company. These facts are not disputed. Moreover at the close of the financial year the current account maintained by the assessee with its sister concern showed nil balance. In this situation, we are of the view that the decision of the Jurisdictional High Court in the case CIT vs. C. Subba Reddy would be most appropriate, wherein it was held that when no benefit has accrued to assessee and credit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the order of the ITAT Chandigarh Bench in the case Anil Kumar Singhania reported in 51 taxmann.com 98, wherein it was held as follows: "further there is no force in the submissions that the Assessing Officer has not given any cogent reason for making disallowance in the sense that he has not pointed out which expenditure is relatable. First of all the assessee has not given any working wherein disallowance was made by the assessee himself while filing return. Secondly when the common expenditure and common interest is incurred then allocation has to be made on proportionate basis in terms of Sec. 14A r.w.r. 8D for which discussion has been made in case of Chadha Super Cars (Supra) and relevant paras has already been extracted above." Further the Ld.CIT(A) observed that the assessee had not submitted any proof such as bank statement to prove that the investments were made out of non-interest bearing fund. Accordingly the issue was decided against the assessee by the Ld.CIT(A). 4.1 Before us the Ld.AR submitted that the assessee had not incurred any expenditure towards making the investment or managing the investments. Hence it was pleaded that the addition made by invoking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e maintaining current account and there were interconnected commercial transactions between the companies. (ii) The entire transactions were business transactions between the companies. (iii) Certain expenses incurred on behalf of the sister concerns were reimbursed from time to time and at the end of the year they were squared up. (iv) Both the companies were in the same line of business and there were some connected transactions between the companies. 5.1 It was therefore pleaded that in the case of the assessee provisions of Section 2(22)(e) will not be attracted. However the Ld.AO rejected the explanation offered by the assessee and its representative because of the following reasons:- "The assessee has not proved that the transactions had occurred during the normal course of business between them and M/s.Rajshree Automotive Private Limited. The assessee company is dealing with Mahindra brand of vehicles and Mls.Rajshree Automotive Private Limited deals with Ford brand of vehicles. The argument of the company that "on certain occasions, the vehicles relating to M/s.Rajshree Automotive P. Ltd. are sent to us to carry on service and repair" has not been proved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 1922 Act, of any sum by way of advance or loan to a shareholder, not exceeding the accumulated profits possessed by the company was to be deemed as his dividend u/s 2(6A)(e) read with section 12(1B) of 1922 Act, even it that advance or loan was subsequently repaid in its entirety during the relevant previous year in which it was taken." and in the case Miss. P. Saradha vs. CIT reported in 222 ITR 444 (SC) wherein it was held ""From the facts, as stated hereinabove, it appears that the withdrawals made by the appellant from the company amounted to grant of loan or advance by the company to the shareholder. The legal fiction came into play as soon as the monies were paid by the company to the appellant. The assessee must be deemed to have received dividends on the dates on which she withdrew the aforesaid amounts of money from the company. The loan or advance taken from the company may have been ultimately repaid or adjusted but that will not alter the fact that the assessee, in the eye of law, had received dividend from the company during the relevant accounting period." By applying the ratio laid down in the decisions cited supra the Ld.AO treated the amount of Rs.2,90,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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