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2019 (9) TMI 370 - ITAT LUCKNOWDeemed dividend as per Section 2(22)(e) - determination of substantial interest / voting rights in the company - clubbing of the shares held by the individual and shares held by the HUF through its Karta - clubbing of the shares held by the partner in his individual capacity and shares held by the partnership firm - CIT(A) deleted the addition, holding that the intention behind enacting the provisions of Section 2(22) (e) of the Act is that closely held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits, would not distribute such profit as dividend - HELD THAT:- As decided in NATIONAL TRAVEL SERVICES [2011 (7) TMI 288 - DELHI HIGH COURT] Assessing Officer’s contention that for purposes of applicability of section 2(22)(e) shareholding of individual & HUF can be clubbed is not valid and therefore this stand cannot be upheld. The primary condition of 10% beneficial shareholding of Mr. K.M Aggarwal is not established the remaining amount/ part of the addition becomes an exercise in futility because nothing can be added under section 2(22)(e). Person both as registered and beneficial owner, he is not covered by the provisions of section 2(22)(e). Addition made is deleted on this ground as not sustainable. - Decided against revenue Unaccounted sales - unaccounted purchase by the assessee-company; and that similarly, the same amount of difference was found as unexplained sales - HELD THAT:- As observed by the CIT(A), it is a settled accounting practice that in a customer's account, the amount of sale is debited inclusive of the amount of VAT & Excise. However, for purchase, the customer’s account is the net of excise & VAT, as the aforesaid taxes are available to the customer as Cenvat/ Input Vat against Excise duty payable/output Vat payable. Through the reconciled account statements filed befoe the ld. CIT(A), both in the books of SCPL and M/s Synthetic Silica Products & M/s Chhavi Microfine together with Tax Audit report of SCPL, the assessee established that there were no difference in the books of the two accounts. Therefore, we find that the ld. CIT(A) has decided the issue in correct perspective and no interference is called for in his order on this issue. Accordingly, ground of the Revenue is rejected. Addition on account of interest expenses on unsecured loans - HELD THAT:- CIT(A) has decided the issue, placing reliance on various case laws and partly sustained the addition made by the Assessing Officer. No cogent material or case law was brought to our notice by the D.R., contrary to that brought on record by the ld. CIT(A). We, therefore, confirm the order of the CIT(A) on this issue and reject ground taken by the Revenue.
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