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TMI Blog2025 (1) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... p Japan. Thus, the advance was given in return for an advantage conferred upon M/s AGIV India Pvt. Ltd. by the assessee. Such a transaction, being completely in the nature of a commercial transaction, would not fall within the ambit of the provisions of section 2(22)(e)and therefore the addition made by the AO is deleted. As a result, grounds raised by the assessee are allowed. - Shri Amarjit Singh, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Dharan Gandhi, Adv. For the Revenue : Dr. Kishor Dhule CIT-DR, Shri Bhangepatil PushKaraj Ramesh, Sr.DR ORDER PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 07/02/2024 passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [ learned CIT(A) ], for the assessment year 2014-15. 2. In this appeal, the assessee has raised the following grounds: The grounds of appeal hereunder are without prejudice to one another; 1. On the facts and circumstances of the case as well as in law, the Learned CIT (A) has erred in confirming the action of the Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AGIV India Pvt. Ltd. The assessee further submitted that the promoters of M/s AGIV India Pvt. Ltd. has initiated the discussion with M/s FOR-A Group Japan for selling their shares to the prospective buyers, however, the buyers are interested in only prime Broadcast System Integrated Business of M/s AGIV India Pvt. Ltd. Further, M/s FOR-A Group Japan are not interested in taking over the subsidiary companies and allied facilities and liabilities connected with those facilities. It was further submitted that M/s AGIV India Pvt. Ltd. holds 72% shares in IND-AGIV Commerce Ltd. and 90% shares in RST Technologies Ltd. Accordingly, all the shareholders unanimously decided that M/s AGIV India Pvt. Ltd. will advance the money amounting to INR 1,20,06,226 to M/s Paros Corp to purchase the stake of M/s AGIV India Pvt. Ltd. in IND-AGIV Commerce Ltd. and RST Technologies Ltd. and the said amount will be returned as soon as M/s FOR-A Group Japan purchased the shares of the promoters. The assessee further submitted that the advance was granted on 31/03/2014 and the said advance was returned on 05/08/2014. Thus, it was submitted that the advance given to M/s Paros Corp was for the overall benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned. The AO property dealt with the issue that as far as the contention of the appellant that it was done for some commercial purposes is concerned, the section clearly spells regarding loan / advance only and it has no mention of purposes of loan. If this proposition has been accepted, then the very purpose of insertion of these provisions will be defeated. Deemed dividend u/s. 2(22)(e) is taxable in the hands of the shareholder. Even if the loan has been repaid, the loan amount granted to the extent of accumulated profits are treated as deemed dividend. Considering the gamut of issues dealt with in the assessment order, the decision of the assessing officer is upheld and Ground raised in this appeal is dismissed. Being aggrieved, the assessee is in appeal before us. 7. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee is an individual and is a proprietor of a firm named M/s Paros Corp. The assessee is also a director and shareholder of M/s AGIV India Pvt. Ltd., holding 35% of the shareholding. Apart from the assessee, two other shareholders, namely, Mr. S.B. Rupani and Mr. Rajan Chona hold 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which forms part of the paper book from pages 48-57. Therefore, it is the plea of the assessee that he had no funds to purchase the shares of IND-AGIV Commerce Ltd. and RST Technologies Ltd. in order to facilitate the sale of the business of M/s AGIV India Pvt. Ltd. to M/s FOR-A Group Japan. Accordingly, pursuant to the aforesaid MOU, M/s AGIV India Pvt. Ltd. considered the amount of INR 1,20,06,226 as an investment in M/s Paros Corp and duly disclosed the same in its balance sheet for the year ending 31/03/2014. As per the assessee, the amount of INR 1,20,06,226 was paid in two trenches vide two separate cheques dated 22/03/2014 which were cleared on 05/04/2014 and 07/04/2014. As per the assessee, the aforesaid amount of INR 1,20,06,226 was immediately utilised by M/s Paros Corp for the purchase of shares of IND-AGIV Commerce Ltd. and RST Technologies Ltd. On 07/04/2014 an amount of INR 88,45,726 was paid to M/s AGIV India Pvt. Ltd. for purchase of 7,22,100 shares of IND-AGIV Commerce Ltd. Further, amounts of INR 3,78,000 and INR 27,82,500 were paid on 05/04/2014 and 07/04/2014, respectively, to M/s AGIV India Pvt. Ltd. for purchase of 3,01,500 shares of RST Technologies Ltd. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s FOR-A Group Japan, as noted in the Share Purchase and Shareholders Agreement dated 11/07/2014, which is summarised as follows: Name of the Shareholder Shares held before share % of Share Holding Shares held after sale % of Share Holding For A Nil Nil 2800000 70% Mr. S B Rupani 2200000 55% 660000 16.5% Mr. S C Oberoi 1400000 35% 420000 10.5% Mr. Chonna 400000 10% 120000 3% 4000000 100% 4000000 100% 13. From the perusal of the shareholding of M/s AGIV India Pvt. Ltd., it is evident that after the transaction with M/s FOR-A Group Japan, all the shareholders, i.e. Mr. S.B. Rupani, Mr. Rajan Chona and the assessee, still holds in-total 30% shareholding in M/s AGIV India Pvt. Ltd. Therefore, we find no merits in the submissions of the Revenue that the loan transaction was entered solely for the purpose of providing a way out to the shareholders and to rescue the shareholders to enable them to sell its stake in M/s AGIV India Pvt. Ltd. The fact that all the shareholders, i.e. Mr. S.B. Rupani, Mr. Rajan Chona and the assessee, still holds shareholding in M/s AGIV India Pvt. Ltd., though in minority, goes on to prove that the sole purpose for advancing the sum of INR 1,20,06,226 to M/s P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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