9911796707
TMI Blog2023 (11) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... ere are number of transactions between the assessee and the company, where various payments are routed through current account of the assessee, including remuneration and other expenses reimbursed to the appellant. Further, in most of the days, except few days, account always shows credit balance in the books of the company. Therefore, the transactions need to be examined in light of peculiar nature of transactions of the assessee with the company. If the claims of the assessee are true and the debit balance is only because of an inadvertent error and the same has been squared off within short period, then same cannot be treated as deemed dividend u/s. 2(22)(e) of the Act and this principle is supported by the decision of M/s. V. Sriram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tistical purposes. - Shri Mahavir Singh, Hon ble Vice President And Shri Manjunatha. G, Hon ble Accountant Member For the Appellant : Shri. T. Banusekar, CA And Shri. Suraj Nahar, CA For the Respondent : Shri. AR V Sreenivasan, Addl. CIT ORDER PER MANJUNATHA. G, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 17.11.2021 and pertains to assessment year 2011-12. 2. The assessee has raised the following grounds of appeal: 1. For that the order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case to the extent prejudicial to the interests of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t balance in the books of accounts of the company. Since, the appellant is holding more than prescribed percentage of beneficial interest in shareholding of the company, the Assessing Officer treated debit balance of above three dates as deemed dividend u/s. 2(22)(e) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). The Assessing Officer, further noted that on 31.12.2010, the assessee has received a sum of Rs. 12,50,000/- from the company and this payment is not reflected in the current account of the assessee with the company. Therefore, the said payment has been treated as deemed dividend. To sum up, the Assessing Officer has treated a sum of Rs. 65,33,398/- as deemed dividend u/s. 2(22)(e) of the Act. The assessee carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise mainly on account of a payment of Rs. 10 lakhs to Fairyland Foundations (P) Ltd. This payment was made out of his current account with the company, but immediately after noticing debit balance, the appellant has repaid amount on 14.12.2010 within the period of 6 days. In this regard, he relied upon the decision of ITAT, Chennai Benches in the case of M/s. V. Sriram (HUF) vs ACIT (OSD) in ITA No. 863/Chny/2022. 5. The Ld. Counsel for the assessee further submitted that the Assessing Officer had also considered debit balance of Rs. 35,13,267/- on 05.01.2011. The said amount arise because of payment of Rs. 40 lakhs received by the appellant from Mr. B.V. Sundararajan, who was the debtor of the company. The debtor has made the payment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties, perused materials available on record and gone through orders of the authorities below. As per provisions of section 2(22)(e) of the Act, any payment by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to shareholder, being a person who is the beneficial owner of shares holding not less than 10% of the voting power, shall be treated as deemed dividend to the extent of which the company possess accumulated profits. In the present case, there is no dispute with regard to the fact that the appellant is a shareholder holding more than 10% voting power in the company and also the company is having accumulated profit, which attracted provisions of section 2(22)(e) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days and said debit balance was mainly on account of mistake committed by a debtor of the company, where he has made payment to the assessee account instead of company s account. The appellant transferred said amount to the company on 07.01.2011. If the claims of the assessee are true and the debit balance is only because of an inadvertent error and the same has been squared off within short period, then same cannot be treated as deemed dividend u/s. 2(22)(e) of the Act and this principle is supported by the decision of ITAT Chennai Benches in the case of M/s. V. Sriram (HUF) vs ACIT (OSD) (Supra). Similarly, the Assessing Officer has considered the payment of Rs. 12,50,000/- on 31.12.2010 and according to the Assessing Officer the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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