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TMI Blog2023 (9) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... were made on its behalf; and (iii) payments made were not for anybody s individual benefit. A receipt which cannot be liable for tax, unless there are specific provisions to tax the same. Certain transaction is covered by deeming provision have been brought in the statute under deeming provision. Same section 2(22)(e), deeming provision has been brought in the statute to cover up transaction. The benefit is not individual but solely on business exigency. The deeming provision is always under the control of express provision . It is pertinent to observe that the benefit of expressed provision is covered in deeming provision or not. Considering the factual matrix, the assessee did not get any direct benefit of the payment made by GAPL and the amount was returned back to party. We respectfully relied on the order of Suraj Dev Dada [ 2014 (5) TMI 625 - PUNJAB HARYANA HIGH COURT] .Only it is the benefit of business exigency. Decided in favour of assessee. - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : S/Sh. Sudhir Sehgal, P.N. Arora, P.K. Singla, Advs. For the Respondent : Sh. Prashant Singh, Sr. DR OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Company, thus, the amount received by the assessee from GAPL as an unsecured loan, is in the nature of deemed dividend u/s 2(22)(e). 4.2 Thus, the assessment order dated 20.12.2016 was passed by the Ld. AO making an addition of Rs. 32,83,186/- u/s 2(22)(e) of the Act after giving benefit of the amount of accumulated profits already adjusted for the purpose of making addition amounting to Rs. 1,17,17,142 in another case of the group concern of the assessee namely M/s GG Oils Fats Pvt Ltd. 4.3 The assessee filed an appeal before the ld. CIT(A). However, the grounds of Assessee were dismissed, and the addition was upheld. Being aggrieved the assessee filed appeal before us. Facts during the assessment proceedings 5. The ld. AR, Mr. Sudhir Sehgal, Advocate vehemently argued and placed that the assessee has regularly been receiving the funds during the year and in the previous years as and when required by the assessee-company and has been paying the funds to the GAPL as and when required by the said company as per their business requirements. As the credit balance in the books of accounts of the assessee was for a more period of time. The assessee was liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst which the Company GAPL has duly recovered interest @12% from the assessee Company which is as per the market rate of interest and the assesse has clearly paid the interest as per market rates @ 12% p.a. at page 39 of the APB and the other assessee-company has earned an interest of Rs. 24,10,606/- as per page 32 of the APB and the same is undisputed and, thus, it was a business transaction. Form No. 26AS is enclosed in the case of assessee company. Therefore, as the assessee has been paying interest at the prevailing market rate of interest then no unnecessary or undue benefit has been given either and, there is no finding of the revenue. 6.3. The ld. AR argued that the funds has been obtained for the business exigencies, then the provisions of Section 2(22)(e) are not applicable and, thus, the addition made in the case of the assessee deserves to be deleted. The ld. AR respectfully relied on the catena of judgment. The ld AR respectfully relied of order of Hon'ble High Court of Punjab Haryana in the case of CIT vs. Suraj Dev Dada 46 taxmann.com 402/ 367 ITR 78 (P H) . Wherein it has been held that. 10. From the above, it emerges that CIT(A) and the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectfully the reliance was placed on the judgment of the Hon ble High Court of Punjab Haryana in the case of CIT Vs. Amrik Singh, [2015] 56 taxmann.com 460 (Punjab Haryana) in which, it has been held as under: - 5. After setting out the nature of Section 2(22)(e) of the Act, the Tribunal proceeded to examine the factual matrix of the case and held that as a tangible business expediency has been established between the assessee and company, Section 2(22)(e) of the Act cannot be invoked. A relevant extract from the order passed by the Income Tax Appellate Tribunal would be appropriate. Thus, we are of the considered opinion that these advances were received by the assessee in the normal course of business as a matter of fact of business expediency in which provisions of Section 2(22) (e) are not applicable. As per the ratio relied before us, even if the business of the lender company is not that of money lending, the amount advanced by it to its shareholders, otherwise in the course of business etc. would go out of the purview of Section 2(22)(e) of the Act. The decision of Hon'ble Delhi High Court rendered in the case of CIT v. Shri Raj Kumar in ITA No. 1130/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is not covered by Section 2(22) (e) of the Act. We find no reason whether in law or in fact to interfere with these findings of facts, which are neither perverse nor arbitrary. The question of law is, therefore, answered against the revenue and the appeal is dismissed. 7. The ld AR invited our attention on the assessee s Judgement set-II, at pages 116 to 117 related CBDT Circular No. 19/2017, dated 12.06.2017 and it has been stated in the paragraph 2.1(i) of the circular that the amount advanced for business transaction did not fall within the definition of deemed dividend u/s 2 (22) (e) and in para 2.4, it has been held that where the assessee proved the business expediency , the advance was not covered in section 2 (22) (e). 8. Further the reliance is being placed on the judgment of ITAT, Delhi Bench in the case of Saamag Developers Vs ACIT, reported in 90 taxmann.com 20 (Delhi Trib.) , in which, it has been held as under:- Section 2(22) of the Income-tax Act, 1961 - Deemed dividend (Loans or advances to shareholders) - Assessment year 2008- 09 - Whether where Commissioner(Appeals) made addition to assessee's income under section 2(22)(e) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for next Assessment. Year i.e. for A.Y. 2015-16, he has deleted the addition following the judgment in the case of Suraj Dev Dada, reported in 367 ITR 78 and there is no appeal by the department against that order and copy of that order of CIT(A) has been placed at APB pages 47 to 51 . Thus, on the basis of consistency also, addition is liable to be deleted besides the judgment of Jurisdictional High Court in the case of Suraj Dev Dada and of Kolkata High Court and Other judgments as cited above. For the purpose of consistency, the following judgments are being respectfully relied which are as follows: - a. CIT Vs/ DalmiaDadri Cement Ltd. (1970) 77 ITR 410 (P H) Held also, that though as a general rule the principle of res judicata is not applicable to decisions of income tax authorities and an assessment for a particular year is final and conclusive between the parties only in relation to the assessment for that year and the decisions given in an assessment for an earlier year are not binding either on the assessee or the department in a subsequent year, this rule is subject to limitations, for there should be finality and certainty in all litigations including litiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. (Emphasis supplied) 11. The ld. AR during the hearing invited our attention in APB page 26 to 43 related to the running current a/c of both the companies and also the copy of the audit report with financial statement, APB pages 1 to 25 . The ld. AR further placed that the interest was charged amount of Rs. 24,10,606/- on which the TDS was deducted, and the Certificate was also duly annexed with APB. The entire amount was transacted by both the companies for business exigencies. 12. The ld. DR vehemently argued and fully relied on the order of the ld. CIT(A) and also placed that the issue was not covered by the order of ITAT Amritsar Bench, in the assessee s own case in ITA No. 508/Asr/2017, date of order 05.07.2019 . The ld. DR further relied on the cases Smt. Tarulata Shyam v. CIT (1977) 108 ITR 345(SC) Ms. P Sarada v. CIT reported in 229 ITR 444 (SC) 12.1 The ld. DR invited our attention in appeal order para 3.2 which is extracted as below: 3.2 I have carefully considered the submissions of the appellant and find that Sub-clause (e) of section 2(22) brings into its ambit as dividend any payment by way of advance or loan by a closely hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholder from a closely held company at the moment the loan is borrowed, and it is immaterial whether the loan is repaid before the end of the accounting year or not. This proposition is strengthened by the decisions of the Hon ble Supreme Court on this issue in the cases of Tarulata Shyam [1977] 108ITR 345 Miss P. Sarada [1998] 229 ITR 444, 448. So far as the accumulated profits of M/s GurdasAgro Private Limited is concerned, it is seen that as at the close of the Financial Year i.e. 31/03/2014, the reserves and surplus including the profits for the year stands at Rs. 1,50,00,328/-. The AO has chosen to work out the prorata accumulated profits for the Financial Year 2013-14 till 06/11/2013 [Rs. 1,17,17,142/-], when maximum balance of advances was outstanding in the case of another group company namely G.G. Oils Fats Pvt.Ltd.. The balance accumulated profits of Rs. 32,83,186/- [Rs. 1,50,00,328 (-) Rs. 1,17,17,142/-] has been considered as deefned dividend in the hands of the appellant and I find that this is, in fact, more than a reasonable view of the matter on the art of the AO. In view of the aforesaid, the action of the AO in treating the loans and advances re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d nothing less. In fact, loan/advance by one to another would only be if the funds are for the time being surplus with the lending company and, thus, independent of a subsequent loan, if any, to the borrower company. Further, it would arise only where, though available, the money is, at the same time, required by the borrowing company, so that there is no certainty under such an arrangement, both with regard with the quantum and time of the source of funds for such an arrangement to be regarded as viable or a dependable one, or to contend of the loan being temporary. No business purpose has been shown or otherwise stated, so that the contention in its respect is a bald one. The period of retention has again been found to be not relevant. The aspect of set off of subsequent credits (receipts), i.e., subsequent to repayment of the earlier receipt, advanced in Tarulata Shyam (supra), though not answered by the Apex Court, being hypothetical (refer pg. 358 of the Reports), also do not arise in the instant case as the Revenue has brought only the peak credit during the year to tax. It may be noted that inasmuch as each payment qualifying as a loan or advance falls within the ambit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter due consideration of the facts of the case, the Hon ble Apex Court was pleased to rule that, Held 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. With highest regards, we would like to point out that the issue before the Hon ble Apex Court was on the different footing which has no relevance to the issue on hand on the very ground that the assessee had not received any loan or advance for its own benefit, but, the funds were provided for the execution specific purpose on behalf of GAPL. Thus, in our considered view, the case law cited by the authorities below is distinguishable With due respects, we would like to make it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal year deducted TDS on interest as calculated on entire transaction with GAPL. It is also pertinent to note that, same contention was also raised by the assessee before the AO during the assessment proceedings as well as before us which was not disputed either by the AO or by the ld. DR. 13.3. A receipt which cannot be liable for tax, unless there are specific provisions to tax the same. Certain transaction is covered by deeming provision have been brought in the statute under deeming provision. Same section 2(22)(e), deeming provision has been brought in the statute to cover up transaction. The benefit is not individual but solely on business exigency. The deeming provision is always under the control of express provision . It is pertinent to observe that the benefit of expressed provision is covered in deeming provision or not. Considering the factual matrix, the assessee did not get any direct benefit of the payment made by GAPL and the amount was returned back to party. We respectfully relied on the order of jurisdictional High Court in the case of Suraj Dev Dada (supra).Only it is the benefit of business exigency. Accordingly, in our humble understanding, the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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