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TMI Blog2019 (5) TMI 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... s were either available on the record before the AO or the same were called for by him during the course of assessment proceedings by raising specific queries and after applying his mind to the said details, a conscious decision was taken by him as regards the non-applicability of section 2(22)(e) to the loan amounts in question while completing the assessment un/s 153A/143(3). In our opinion, it, therefore, cannot be said that there was an error in the orders of the AO in not making any enquiry or verification on the issue of applicability of section 2(22)(e) to the loan amounts in question as alleged by the Ld. Principal CIT and the revision under section 263 by the Ld. Principal was not called for. Assessing Officer thus had not only made the enquiry or verification as required in the facts of the case to ascertain the applicability of section 2(22)(e) to the loan amounts received by the assessee from the other group companies, but a conscious decision was also taken by him keeping in view the legal position that section 2(22)(e) was not applicable to the loan amounts in question received by the assessee during the years under consideration from the other Group Companies - no er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 153A/143(3) in not making any enquiries/verification in respect of the said loans so as to consider the applicability of section 2(22)(e). He accordingly issued notices under section 263 requiring the assessee to show-cause as to why remedial action should not be taken by exercising the powers under section 263 to revise the orders passed by the Assessing Officer under section 153A/143(3) for all the three years under consideration. 3. In reply to the show-cause notices issued by the Ld. Principal CIT under section 263, a written submission was filed by the assessee vide letter dated 11.12.2017 stating, inter alia, as under:- With respect to your query regarding implication of section 2(22)(e) of the Income Tax Act, 1961 with respect to loan transactions entered into with M/s. Vijayshree Industries Pvt. Ltd. and M/s. Mantri Engineering Company Pvt. Ltd., we would like to state that M/s. Vijayshree Industries Pvt. Ltd. And Mantri Engineering Company Pvt. Limited has advanced loan to the assessee company in its ordinary course of business and loan advanced by a company in the ordinary course of its business is out of purview of section 2(22)(e) of the I.T. Act, 1961. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals before the Tribunal. 4. The Ld. Counsel for the assessee submitted that the Ld. Principal CIT vide his impugned orders passed under section 263 has set aside the orders passed by the Assessing Officer under section 153A/143(3) of the Act for all the three years under consideration on the ground that the necessary enquiry or verification regarding applicability of the provision of section 2(22)(e) to the loans in question taken by the assessee-company from other group companies was not made by the Assessing Officer. In this regard, he invited our attention to the copies of notices issued by the Assessing Officer under section 142(1) placed in his paper book to point out that the details of all the loans and advances were called for by the Assessing Officer during the course of assessment proceedings and the same were duly furnished by the assessee. He also invited our attention to the relevant Annexure of the Tax Audit Report submitted by the assessee alongwith its returns of income for all the three years under consideration to point out that the loan amounts in question taken by the assessee from other Group concerns during the years under consideration and squared off du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve made the necessary enquiry to ascertain the applicability of section 2(22)(e) to the loan amounts in question received by the assessee-company from the other group companies. He submitted that the query raised by the Assessing Officer and details furnished by the assessee as highlighted by the Ld. Counsel for the assessee were general in nature and there was no specific enquiry or verification made by the Assessing Officer regarding the applicability of section 2(22)(e) to the loan amounts in question taken by the assessee from the other Group Companies. As regards the legal position pointed out by the Ld. Counsel for the assessee by relying, inter alia, on the decision of the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra), the Ld. D.R. contended that there is nothing to show that the Assessing Officer has taken into consideration this legal position while passing the order under section 153A/143(3). He contended that the enquiry or verification on the issue of applicability of section 2(22)(e) as required in the facts and circumstances of the case thus was not made by the Assessing Officer while passing the orders under section 153A/143(3) and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question taken from the other Group Companies and as held by the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra), the said loans given to the assessee-company by the other Group Companies as a consequence of further consideration, which were beneficial to the said companies, cannot be treated as deemed dividend under section 2(22)(e). At the time of hearing before the Tribunal, the Ld. D.R. has not disputed this legal position cited by the Ld. Counsel for the assessee in support of the assessee's case that section 2(22)(e) was not applicable to the loan amounts in question received by the assessee-company from the other Group Companies. He, however, has contended that there is nothing on record to show that this legal position was specifically considered by the Assessing Officer while completing the assessments under section 153A/143(3) of the Act. We are unable to accept this contention of the Ld. D.R. In our opinion, the Assessing Officer is not only expected to be aware of such legal position but is also duty-bound to apply the same while completing the assessments, especially when it is propounded by the Hon'ble Jurisdictional High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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