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TMI Blog2024 (4) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... chhala Magic Land Pvt. Ltd., (in short "MMLPL"). During the year under consideration, the assessee declared remuneration from MMLPL, rental income, share of profit from partnership firms and interest from bank etc. 4. During the course of the assessment proceedings, Assessing Officer observed that assessee has received a loan of Rs..60,18,566/- from MMLPL during the year under consideration, wherein the assessee is holding 32.83% equity shares in the company. The company MMLPL has advanced loan has accumulated profits to the tune of Rs..5,25,64,264/- as per its Balance Sheet on at 31.03.2012. The Assessing Officer observed that Section 2(22)(e) of the Act provides that 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 a shareholder, being a person who is the beneficial owner of shares holding not less than ten percent of the voting power, to the extent to which the company in either case possesses accumulated profits is to be treated as deemed dividend. Accordingly, Assessing Officer observed that assessee has received payment from MMLPL which is squarely covered by the deeming provision of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The learned commissioner of Income Tax (Appeals). National Faceless Appeal Centre [CIT(A)] erred on facts as also in law in partly deleting the deemed dividend addition and confirming the balance addition of Rs. 50,77,000/-. The addition has been made on the alleged ground of deemed Dividend u/s. 2(22)(e) on the alleged loan and advances given by Muchhala Magic Land Pvt. Ltd. to the appellant and two other companies in which appellant has substantial interest. The addition confirmed by CIT(A) is bad in law as also on facts and therefore the same may kindly be deleted. 3. The learned Commissioner of income-tax (Appeals). National Faceless Appeal Centre [CIT(A)] erred on facts as also in law in partly allowing any one property at the option of the appellant to be treated as SOP and confirming the addition of remaining property as deemed rent of Rs. 2,64,242/- (after computing one property as SOP as per appellant option). The addition has been made on the alleged ground of Deemed Let Out Property u/s. 23(1) on the alleged vacant premises. The addition confirmed by CIT(A) is bad in law as also on facts and therefore the same may kindly be deleted. 4. The appellant craves leave t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements, he submitted that the RHPL has utilized the above funds for its own business purpose and no funds were diverted to any other purpose. He brought to our notice the relevant transactions and relevant utilization on the same day or subsequent day by referring to the bank statements of RHPL. He submitted that the funds received from the sister concerns were utilized for the business purposes and none of the funds were utilized for the benefit of the shareholder or director. Therefore, the provisions of section 2(22)(e) of the Act will get attracted only when the funds received from the company in which sufficient accumulated funds are available are indirect benefit are passed on to the shareholders of such company are to be considered as a deemed dividend. In the given case there is nothing on record to suggest that assessee has directly benefited by such payment to the RHPL and he prayed that no addition is called for in the case of RHPL. 13. Similarly, he brought to our notice Page No. 95 of the Paper Book to show that the funds received from MMLPL of Rs..1,50,000/- is utilized by SSPDPL for the business purpose. Similar to the case of RHPL, he submitted that the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,000 30.6.2011 Remuneration to Directors 1,00,000 5,50,000 31.7.2011 Remuneration to Directors 1,00,000 6,50,000 31.8.2011 Remuneration to Directors 1,00,000 7,50,000 29.9.2011 Withdrawal from MMLPL (1,02,000) 6,48,000 30.9.2011 Remuneration to Directors 1,00,000 7,48,000 12.10.2011 Payment to the MMLPL 7,00,000 14,48,000 1.11.2011 Remuneration to Directors 1,00,000 15,48,000 16.11.2011 Withdrawal from MMLPL (6,25,000) 9,23,000 30.11.2011 Remuneration to Directors 1,00,000 10,23,000 31.12.2011 Remuneration to Directors 1,00,000 11,23,000 31.1.2012 Remuneration to Directors 1,00,000 12,23,000 29.2.2012 Remuneration to Directors 1,00,000 13,23,000 9.3.2012 Withdrawal from MMLPL (5,50,000) 7,72,000 31.3.2012 Remuneration to Directors 1,00,000 8,72,000 31.3.2012 T.D.S. (2,50,000) 6,22,000 17. From the above we notice that assessee has not withdrawn any loan during the year under consideration and the outstanding balance on each closing day is credit balance during the year. Since there is no debit balance in any closing day of the year under consideration, we deem it fit and proper to delete the additions proposed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he individual benefit of any such shareholder. Therefore, from the above definition it is clear that the provisions of Section 2(22)(e) of the Act is attracted if any advances or loan given directly to the shareholder or to a concern in which the shareholder is having a substantial interest or any payment by such company in which assessee is having a substantial interest on behalf of or for the individual benefit of any such shareholder. From the above definition we infer that the payment made to the concern in which the assessee is having a substantial interest and in turn above such concerns makes a payment to the assessee direct / indirect benefit of the assessee the provisions of Section 2(22)(e) of the Act are attracted. 22. In the given case, the assessee has demonstrated that no doubt the concern in which assessee is having substantial interest has received certain funds from the company and it was utilized by them for their own business purposes and none of the funds received by those companies in which the assessee is having substantial interest has made any payments directly or indirectly to the benefit of the assessee. Therefore, the payment received by RHPL and SSPDPL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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