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2013 (11) TMI 818 - AT - Income TaxAddition on account of section 2(22)(e) - Deemed dividend - Shri Sunil P.Mantri is a common shareholder of M/s. Sunil Mantri Realty Ltd. and its 3 group concerns, namely, M/s Mantri Power Ltd, M/s Sunil Mantri Builtech Pvt Ltd and M/s Mantri Lifestyle Developers Pvt Ltd – Held that:- Merely because the assessee, Sunil P. Mantri has not received any sum directly from the lender concern M/s Sunil Mantri Realty Ltd. or through above said 3 group concerns, it cannot be said that assessee has not received any benefits from the transactions - Lender concern, M/s Sunil Mantri Reality Ltd is not engaged in the business of money lending - Loans/advances have not been made in the normal course of business. Contention of the assessee that the MoU dated 15th May, 2007 evidences payments of advances towards awarding of preferential contract to lender concern of any new project that may arise in future by the recipient concerns is hypothetical in nature which lacks any evidentiary value as the MoU pertains to future projects, if any which does not quantify any amounts of consideration – Thus, Sunil P.Mantri clearly falls u/s 2(22)(e) of the Act – But, additions are to be restricted only to the extent of the accumulated profits of the lender concern up to March 31st of the previous years relevant to the assessment years under consideration during which the loans/advances have been made to various concerns - Decided against the assessee. Computation of income from House property on estimated basis @ 7% of cost of the property - Disallowance/addition on account of notional interest in respect of the property located at Ambey Valley, Lonawala and the allowability of interest expenses respectively - AO estimated the gross annual value @ 7% of the cost of acquisition and after allowing 30% standard deduction u/s 24(a), the AO determined the income from house property – Held that:- When the assessee claims for a lower ALV, the assessee is duty bound to file municipal valuation to substantiate his claim of lower value, which he has not discharged during the assessment/appellate proceedings – No any merit in the contention of the Ld.AR that the estimation of gross annual value ought to have been made as per the rent fixed by the municipal authority - Gross rent estimated by AO @ 7% of cost of the property is reasonable - Assessee has paid interest on borrowed capital is also not disputed – Decided against the Assessee. Protective assessment against the companies for taxing deemed dividend - Held that:- The deeming provisions as it applies to the case of loans or advances by a concern to concern in which its share-holder has substantial interest, is based on the presumption that the loans or advance would ultimately be made available to the share-holder of the concern giving the loans or advances. The intention of the legislature is therefore to tax dividend only in the hands of the share-holder and not in the hands the concern. The said proposition is supported by the decision of the Bombay High Court in the case of CIT Vs. Universal Medicare P. Ltd. [2010 (3) TMI 323 - BOMBAY HIGH COURT]. Accordingly, the decision of the Ld. CIT(A) in deleting the additions made by the AO on protective basis in the hands of the recipient concerns are upheld.
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