9911796707
TMI Blog2022 (8) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... paid. Mr. Abhay Avchat also sought to highlight fact the assessee has preferred its cross objections as against the CIT(A) s instant order well regarding erroneous computation impugned addition amount to this effect. The foregoing cross objection(s) is neither registered nor listed as on date.It shall be very much open to the assessee to seek correct computation of the impugned addition in-consequential proceeding. - ITA No. 1938/PN/2017 - - - Dated:- 12-8-2022 - SHRI S.S. GODARA, JM AND SHRI DR. DIPAK P. RIPOTE, AM For the Assessee : Shri Abhay Avachat For the Revenue : Shri Arvind Desai ORDER PER S. S. GODARA, JM : 1. This Revenue s appeal for A.Y. 2011-12 is directed against the CIT(A) - 1, Pune s order dated 24/05/2017 passed in case No. PN/CIT(A) - 1/DCIT Cir.1(2)/PN/294/15-16, involving proceeding u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 ; in short the Act . Heard both the parties. Case file perused. 2. The Revenue s sole substantive grievance raised in the instant appeal pleads that the CIT(A) has erred in law and on facts in reversing action making section 2(22)(e) deemed dividend of Rs. 1,61,35,222/- vide following detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s loans/advances, according to us the authorities below were not right in treating the same as deemed dividend under s. 2(22)(e) of the Act. Since facts of the case being identical, following the above decision of the Hon. Mumbai Tribunal, it is held that the Assessing Officer was not right in invoking the provisions of sec. 2(22)(e) of the Income Tax Act, 1961 in respect of deemed dividend. Accordingly, he is directed to delete the same. Thus, Grounds No. 2 and 3 are allowed. 3. It next emerges that the very issue had arisen between the parties in succeeding assessment year 2012-13 where in this tribunal s co-ordinate bench has accepted the Revenue s appeal ITA No.1440/PUN/15 on 11.02.2020 as follows :- 4. We have heard the rival contentions and perused the material available on record. In the present case, the assessee company namely, M/s.Dhariya Construction Pvt. Ltd. had received loan/advances amounting to Rs. 2,93,26,224/- from M/s. Dhariya Infrastructure Development Pvt. Ltd. for which during the assessment year under consideration, interest of Rs. 3,26,224/- was paid to lender company. Further, it was mentioned that the assessee company was beneficial owner of 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, in consultation with the Reserve Bank of India, prescribe the limits up to which, the manner in which and the conditions subject to which deposits may be invited or accepted by a company either from the public or from its membeRs. (2) No company shall invite, or allow any other person to invite or cause to be invited on its behalf, any deposit unless- (a) such deposit is invited or is caused to be invited in accordance with the rules made under sub- section (1), and (b) an advertisement, including therein a statement showing the financial position of the company, has been issued by the company in such form and in such manner as may be prescribed. 4.5 In our opinion, though there is distinction between Inter Corporate Deposits and loan/advances, but for that purpose, the assessee was required to substantiate that the amount received by the assessee was in the form of Inter Corporate Deposits . As mentioned herein above, the assessee was failed to bring on record any documentary evidences except oral submission that the amount received by it was in the form of Inter Corporate Deposit . No evidence towards the nature of amount received by the assessee was brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was in the nature of loan/advances only. Merely by mentioning in the ledger account, it was Inter Corporate Deposit , the nature and colour of transaction would not changed to Inter Corporate Deposit , as it continues to be loan/advances. Hence required to be taxed for the purposes of deemed dividend. We may rely upon the Jurisdictional High Court in the Durga Prasad Mandelia v. Registrar of Companies [1987] 61 Comp. Cas. 479 (Bom., has noticed the distinction between deposits and loans in the context of section 370 of the Companies Act. The Court held as under : There can be no controversy that in a transaction of a deposit of money or a loan, a relationship of a debtor and creditor must come into existence. The terms deposit and loan may not be mutually exclusive, but nonetheless in each case what must be considered is the intention of the parties and the circumstances. In the present case, barring the assertion of the respondent that the moneys advanced by the company to the Associated Cement Companies Ltd. constitute a loan and offend section 370 of the Companies Act, there is nothing else to show that these moneys have been advanced as a loan . In the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of law arises out of the same. The issue involved in this appeal requires the interpretation of section 2 (22) (e) of the Act. 4. The ITAT treated/considered the amount received from shareholder as loan‟ instead of treating it as inter corporate deposit as stated by the Assessee in its record and submissions. 5. The observations of the ITAT Pune bench in its order of AY 12 13 are reproduced hereunder for discussion. 6. The said financial transaction had not satisfied the terms and condition of deposits: Some of the conditions are as follows : There should be availability of the fund with the lender which is not out of the borrow funds. ii. As per rules 58A of Companies Act 1956, before accepting deposit there should be proper advertisement for accepting the deposit. iii. There should be voluntariness emanating from the lender to give deposits to the borrower. 7. The lender (Dhariya Infrastructure Private Limited) had no surplus in the Balance Sheet for giving funds to the Assessee (Dhariya Construction Private Limited). 8. That the assessee company and lender company was having common Managing Director namely Shri Mukund Dhariya. 9. There w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant Assessee Company had substantial shareholding / interest in the borrower company . 18. The Hon ble ITAT completely misread provision under section 58A of the Companies Act, 1956. The concerned provision requires the Company inviting deposits to publish an advertisement for the same. The Hon ble ITAT wrongly read the provision to mean that the Company would require to publish an advertisement even for accepting deposit. The clear distinction between the words invite and accept has been missed by the Hon ble ITAT. 19. The Hon ble ITAT failed to appreciate that as per Rule No. 2 (b) (iv) of the Companies (Acceptance of Deposits) Rules, 1975 framed under section 58A (1) of the Companies Act, 1956, any amount received by a Company from any other Company is not considered as deposit for the purpose of section 58A of the Companies Act, 1956 and hence the pre-requirement of publishing an advertisement for inviting deposits does not apply to the Inter Corporate Deposits. 20. There is a subtle distinction between a deposit and a loan. In the case of a loan, the amount is given by the creditor to the debtor at the request of and for the requirements and dues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount is a loan and not inter corporate deposit. 27. Whether the Hon ble ITAT is justified in treating the amount of Rs. 2,93,26,224/- transferred by Appellant's sister concern to the Assessee Company as loan instead of Inter Corporate Deposit just because Assessee Company holds 50% shares in the depositor Company. 28. Whether an amount transferred by one Company to another Company can be presumed to be a loan in absence of any evidence in support, especially evidence about any financial requirement of the Assessee Company. 29. Whether an advertisement under section 58A of the Companies Act, 1956 is mandatory for Inter Corporate Deposits in the light of the Rule No. 2 (b) (iv) of the Companies (Acceptance of Deposits) Rules, 1975 30. Whether the Hon ble ITAT was correct in reading and interpreting the provision under section 58A of the Companies Act, 1956 to mean that the advertisement is necessary even for accepting the deposit by a Company. The concerned provision requires the Company inviting deposits to publish an advertisement for the same. The Hon ble ITAT wrongly read the provision to mean that the Company would require to publish an advertisement ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
