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TMI Blog2024 (3) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the documentary evidences is factually incorrect observation and cannot be acceptable. In view of that matter we hold that it is established by the appellant that the amount incorrectly shown as loan, was in fact an advance towards remuneration which is adjusted later on and TDS was also deducted by the company. Therefore, in our view, this amount cannot be treated as deemed dividend. As pertinent to mention here that in the present case, there is no loss to the revenue because even if this advance is treated as deemed dividend, then it would be reduced from the salary/remuneration amount being paid to the assessee as the assessee is paying tax at maximum marginal rate and he has not taken any deduction out of salary/remuneration received. It is settled law that there cannot be the double taxation on one receipt/income and therefore, this amount is once treated deemed dividend then it would be reduced from the salary income shown by the assessee in computation of income. In our view, the action of the learned AO was not justified and thus, the addition is rightly deleted by the Ld. CIT(A). Appeal filed by the Revenue is dismissed. - DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 153A was issued by AO on 11.12.2017 and served upon the appellant requiring the appellant to prepare a true and correct return of total income including undisclosed income for A.Y. 2017-18. In response to notice u/s 153A, a return was filed by the appellant on 21.02.2018 declaring total income of Rs. 2,88,40,220/-. The appellant derives income under the head salaries income from M/s Wagad Infraproject Pvt. Ltd., income from house property, profits and gains from business or profession income from firm and income from other sources Interest income received from bank. Assessment order u/s 153A r.w.s. 143(3) of the Income tax Act, 1961 was passed by the AO on 30.12.2019 at assessed income of Rs. 4,70,40,220/- after making addition of Rs. 1,82,00,000/- on account of undisclosed deemed dividend u/s 2(22)(e) of the Income tax Act, 1961. 4. Being aggrieved with the assessment order, the assessee went in appeal before the ld. CIT(A) who has granted relief to the appellant assessee by observing vide para 4.3 as under: 4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain. It is further argued that it was submitted before the learned AO that the company has paid remuneration of Rs. 2,70,00,000/- to the appellant during the year under consideration and TDS of Rs. 96,50,000/- was deducted. The appellant has shown income of Rs. 2,70,00,000/- in his computation of income and due tax has been paid. The amount of Rs. 1,82,00,000/- was part of salary/remuneration paid to the assessee which the AO has added as deemed dividend U/s 2(22)(e) of the income tax act 1961. The appellant argued that if this amount of Rs. 1,82,00,000/- is treated deemed dividend then it should be reduced from the salary income shown by the appellant in computation of income. There cannot be the double taxation on one receipt. On verification of computation of Income furnished with the return of income the contention of the appellant is found to be correct with regard to salary of Rs. 2,70,00,000/- received from WaghadInfraprojects Pvt. Ltd. as salary income. Also copy of ledger account of Shree Ashok Jain in the books of assessee company is enclosed. On going through these details the contention of the appellant are found to be true. Therefore, the observation made by the AO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accountant has wrongly posted the same in short term loan account and only on the basis of same the learned AO has drawn wrong inference. However, there is no loss to the revenue because if this advance is treated as deemed dividend, then it should be reduced from the salary/remuneration amount claimed to be paid to the assessee. The assessee is paying tax at maximum marginal rate. The assessee has not taken any deduction out of salary income or from remuneration received. So, if this amount of Rs. 1,82,00,000/- is treated deemed dividend then it should be reduced from the salary income shown by the assessee in computation of income. There cannot be the double taxation on one receipt. So, the action of the learned AO was not justified in this regard and the addition deserves to be deleted. In a number of cases, it has been held by the various courts that if any amount is paid to the employee in advance for the services rendered by him, it cannot be treated as loan or advance and accordingly, question of deemed dividend does not arise. The following cases are quoted in support:- A. NH Securities Ltd. Vs. DCIT 11 SOT 302 wherein it has been held that the advance was basically a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrent and inter banking accounts containing both types of entries i.e. giving and taking amount, same could not be considered as loans and advances as contemplated u/s 2(22)(e) (Assessment Year 2008- 09) (In favour of assessee) It is further submitted that the Ld. AO was wrong in making addition of Rs. 2,10,40,400/- without reducing the payment of Rs. 60,00,000/- made by the assessee. The balance in the saving account of the assessee in the books of the company was only of Rs. 1,50,40,400/-. The addition could not exceed this amount of Rs. 1,50,40,400/-. The following case law is quoted in support, however it is submitted that the main plea of the assessee is that the entire addition is unlawful, the same being in the saving account of the assessee and not in the loan and advances account. (d) Bharat Bir Mohindra Vs. Asstt. CIT (88 taxmann.com 322) Chennai Trib. :- While computing deemed dividend, payments made by company to assessee had to be considered and after reducing amount which was repaid by assessee in same year, balance amount had to be treated as deemed dividend (Assessment Year 2007- 08) (Partly in favour of assessee) 6. Decision of the Learned CIT(A)- The Learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not supported by the documentary evidences is not found to be acceptable in view of the fact that all these details were furnished before the AO. In view of the fact it is established by the appellant that the amount incorrectly shown as loan and advance was actually remuneration which is adjusted later on and TDS was also deducted by the company. In view of these facts this amount cannot be treated as deemed dividend. The addition made by the AO is not found to be sustainable and deleted. ( from page 9 of the appellate order ) In view of this it is prayed that the order of the Learned CIT(A) may kindly be confirmed and the appeal of the revenue may kindly be dismissed. 7. We have heard the rival contentions, perused the material on record, impugned order and case laws cited before us. It is seen that in the statement of the director of the company Sh. Ashok Jain, vide question no. 19, he was asked that the company M/s WagadInfraproject Pvt. Ltd has provided an advance of Rs. 1,82,00,000/- out of which Rs. 20,00,000/- was repaid by him to the company as a result closing balance as on 18.07.2016 was Rs. 1,62,00,000/-, therefore, why not the amount of Rs.1,82,00,000/- be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is found to be correct with regard to salary of Rs. 2,70,00,000/- received from WaghadInfraprojects Pvt. Ltd. as salary income as evident from the copy of ledger account of Shri Ashok Jain in the books of assessee company. The Ld. DR failed to rebut the contention of the appellant which were found to be factually correct on record. Therefore, the observation made by the AO that claim of the assessee is not supported by the documentary evidences is factually incorrect observation and cannot be acceptable. In view of that matter we hold that it is established by the appellant that the amount incorrectly shown as loan, was in fact an advance towards remuneration which is adjusted later on and TDS was also deducted by the company. Therefore, in our view, this amount cannot be treated as deemed dividend. 11. It is pertinent to mention here that in the present case, there is no loss to the revenue because even if this advance is treated as deemed dividend, then it would be reduced from the salary/remuneration amount being paid to the assessee as the assessee is paying tax at maximum marginal rate and he has not taken any deduction out of salary/remuneration received. It is settled la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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