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Showing 381 to 400 of 1239 Records

• 2012 (12) TMI 861 - BOMBAY HIGH COURT
  

  Preventive detention – Smuggling of goods - Section 3(1) of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act) - Smuggling of red sanders to Dubai - The red sanders recovered from the three containers - Seized under the provisions of the Customs Act, 1962

  The detenu was served with the grounds of detention, which advert to the continual criminal activities of the detenu necessitating issuance of detention order, with a view to prevent him from indulging into smuggling activities in future

  Petitioner says and submits that the detaining authority has not formulated the grounds of detention at all - Detaining authority has merely replaced the names of detenu and co-detenues with words like "you" and "your" in the grounds of detention served on the detenu and co-detenues, implying that the grounds of detention have been formulated by the sponsoring authority and not by the detaining authority - The petitioner says and submits that the detention law, in the instant case, has been invoked against the detenu as he refused to bribe the concerned senior officers of the sponsoring authority

  Held that:- Following the decision in case of Rajesh Vashdev Adnani vs. State of Maharashtra (2005 (10) TMI 493 - SUPREME COURT) that similar cosmetic changes were noticed in the grounds of detention purportedly formulated by the Detaining Authority. The Detaining Authority has not made any amends to ensure that the grounds of detention, and more particularly, the basis on which the subjective satisfaction has been reached must be formulated by the Detaining Authority on his own and not by bodily lifting the contents of the proposal sent by the Sponsoring Authority by making cosmetic changes thereto. Such approach of the Detaining Authority has been repeatedly frowned upon by the Courts considering the fact that the exercise of power to detain a person without a trial on the basis of circumstances of suspicion is a very drastic order to be passed, which cannot be and ought not to be resorted to lightly. Direct the State Authorities to forthwith release the detenu. In favour of assessee

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• 2012 (12) TMI 860 - KARNATAKA HIGH COURT
  

  Provisional release of the vessel - Furnish security in the form of a bank guarantee - Section 129A (1)(a) of the Customs Act - Held that:- With regard to the facts of the case and the urgency pleaded by the assessee. Direct the Tribunal to dispose of the appeal within three weeks from the date of its filing and removal of defects.

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• 2012 (12) TMI 859 - DELHI HIGH COURT
  

  Scheme of Amalgamation - Application seeking directions from Hon’ble court for dispensing with the convening of the meetings of the equity shareholders and creditors of the Applicant Transferor Company - Held that:- Consedring the certificate of Chartered Accountants certifying that the Applicant Transferor Company was having no secured or unsecured creditors there is no need for convening and holding meetings of either secured or unsecured creditors.

  As all the shareholders of the Applicant Transferor Company have given their consent to the Scheme in writing and that the Applicant Transferor Company does not have any secured or unsecured creditors at all, the convening and holding of meetings of equity shareholders as also of the creditor of the Applicant Transferor Company are dispensed with.

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• 2012 (12) TMI 858 - DELHI HIGH COURT
  

  Scheme of Amalgamation - Held that:- The proposed Scheme has been approved by the Board of Directors of all the Applicant Companies with no proceedings under Section 235 to 251 of Companies Act, 1956 pending against any of the Applicant Companies as on the date of the present Application.

  In view of the written consents/NOC given, the requirement of convening meetings of Shareholders and secured and unsecured creditors of the Transferor Companies and the Transferee Company are dispensed with - shareholders of the transferor companies and transferee company have also given their consents - scheme of arrangement allowed.

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• 2012 (12) TMI 857 - DELHI HIGH COURT
  

  Winding up petition - flat let out on by Appellant-company on pre defined conditions - respondent in pursuance of the 'mutual discussions' regarding the said flat, vacating the flat with immediate effect and waiving the notice period sought refund of the amounts deposited with the appellant - Held that:- The dispute raised by the appellant about non receipt of the letters dated 12.07.2007 and 12.12.2008 is irrelevant. At least the letter dated 12.07.2007, even if there is nothing to show dispatch/delivery thereof, is in consonance with the contemporaneous events.

  The appellant in its reply to the winding up petition also admitted that the arrangement between the parties with respect to the flat continued till July, 2007 only. The appellant admits that thereafter no rent as was earlier being paid, was paid by the respondent and no demand therefor was also raised by the appellant on the respondent. This is in consonance with the letter dated 12.07.2007 whereunder the respondent claims to have vacated the flat with immediate effect and demanded refund of security deposit. In this regard, it may also be mentioned that the respondent in its legal notice preceding the winding up petition had expressly referred to the letter dated 12.07.2007 whereunder the flat was vacated and though the appellant had in its reply thereto generally denied the contents of the legal notice but had not expressly denied the receipt of the letter dated 12.07.2007. In fact the appellant in the said reply evaded to even set out as to on what account the amounts aforesaid had been received if not as Security Deposit/Extra Deposit and vaguely stated that they were under some other arrangement known to Mr. Birla only. Such conduct of the appellant also is indicative of the appellant surely building up its defence and the same being not based on true facts.

  The payment by the respondent to the appellant of Rs. 1,16,340/- per month till July, 2007 was towards rent of Rs. 1,50,000/- per month, less TDS as agreed and not in reimbursement of Rs. 1,50,000/-, admittedly refunded by appellant out of extra deposit of Rs. 54,00,000/-, in terms of letter dated 10.10.2005 supra. Letting was for three years terminable prior thereto by a 12 months notice and which had not been given, that the respondent is thus not entitled to refund of Security Deposit. The appellant has to sail or sink on his pleas and cannot on the one hand contend that the tenancy has not been determined by the respondent and on the other hand also deny enjoyment of the flat as tenant to the respondent. Even otherwise, a Lease for three years could be created by a registered document only and which admittedly does not exist. The Lease in the present case is by delivery of possession on the terms proposed by the appellant itself a couple of months prior to letting and such a Lease would be a month to month Lease and would not require a notice of determination of 12 months notwithstanding a stipulation to the said effect in the letter of offer of the premises. Such a lease is terminable by a 15 days notice and the maximum claim which the appellant can have on the said account can be for 15 days rent only.

  Thus finally in law, the appellant Company is a distinct entity from its Directors and the payment due to its Director could not have been received by the appellant Company. This is yet another illegality in the defence of the appellant. Seen in this light, it is obvious that the defence of the appellant to the winding up petition indeed was a moonshine and illusory and unsustainable in law and has been rightly rejected by the learned Company Judge. Once the appellant to be having no defence to the refund of the amounts admittedly received by the appellant, the power of winding up has been correctly exercised and no ground in opposition thereto has been urged.

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• 2012 (12) TMI 856 - GUJARAT HIGH COURT
  

  Demand u/s 11D - Reversal of cenvat credit and collected the same from the purchasers - The Department was of the opinion that the entire transaction was irregular, was in breach of the Cenvat Credit Rules, as applicable from time to time. As per Section 11D of the Central Excise Act, therefore, the respondent was liable to refund such amount. - Held that:- The view of the Tribunal that in any case the respondent could have encashed the unutilized credit in the Cenvat account and that therefore the same did not make any difference to the Department, in our view, suffers from fallacy. Firstly, as noted, Rule 5 of the Rules, 2004 permitted refund of Cenvat credit under certain circumstances which provides that such refund shall be allowed subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification.

  It can, thus, be seen that grant of refund is neither automatic nor a matter of course. Nothing has been brought on record to suggest that the respondent was entitled to such refund as a matter of right. Secondly, utilization of Cenvat credit for the purpose of payment of unauthorizedly collected so called excise duty was not permissible under the Rules. The contention of the Department that by doing so, the respondent passed on Cenvat credit to the purchaser to be availed by them ultimately which credit such purchasers were not entitled to, cannot be brushed aside.

  Regarding period of limitation - held that:- Section 11D of the Central Excise Act does not provide any rigid time limit. In such cases, as so long as the recovery proceedings are initiated within reasonable time, the same cannot be struck down only as time-barred.

  Demand u/s 11D confirmed - Order of Tribunal reversed - Decided in favor of revenue and against the assessee.

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• 2012 (12) TMI 855 - CESTAT, NEW DELHI
  

  Cenvat Credit on tool kits sold along with two wheelers - denial - Held that:- Clause 4(b) of Rule 138 of Central Motor Vehicle Rules, 1989 (as amended) dealing with “signals and additional safety measures” for motor vehicle makes it incumbent on driver of every vehicle to carry the tool kit prescribed by the manufacturer.

  Since carrying of the tool kit in the vehicle is obligatory for the driver, it can be safely inferred that tool kit and first aid kit are necessary accessories of the motor vehicle as driving of the vehicle without those accessories would be violative of Rule 138(4)(b) of Central Motor Vehicle Rules, 1989. Thus, the appellant had supplied the tool kit as per statutory requirements under Central Motor Vehicle Rules, 1989 as accessories to be used in relation to the manufacture of vehicle. Thus, ‘tool kit' is squarely covered by the definition of ‘input’ given under Rule 2(k)(i) of CRR and that the appellant had rightly availed the Cenvat credit in relation to tool kits - in favour of assessee.

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• 2012 (12) TMI 854 - CESTAT MUMBAI
  

  Exemption under Notification No. 67/95-CE - Naphtha attributable to the electricity generated in the captive power plant used for allied activities such as lighting of the road, administrative office and canteen – Held that: - As decided in CCE vs Solaris Chemtech Ltd [2007 (7) TMI 2 - SUPREME COURT OF INDIA] while interpreting the provisions of Rule 57A of the erstwhile Central Excise Rules, 1944 which provides that input means inputs used for generation of intermediate electricity used within the factory of production for manufacture of final product or for any other purposes held that the electricity generated within the factory which is supplied to the residential colony of the factory, school etc to that extent credit is not admissible. The definition of input under the Cenvat Credit Rules, 2004 is also similarly worded.

  Benefit of exemption notification 67/95 allowed in respect of (a) Naphtha cleared, availing exemption under Notification No.4/2006-CE dated 1.3.2006 for manufacture of fertilizers under International Competitive Bidding (ICB) and (b) On that much quantity of Naphtha, attributable to electricity generated in captive power plant/co-generation plant, used for manufacture of exempt goods viz. LPG (Domestic) and Superior Kerosene Oil (PDS)

  Benefit of exemption notification 67/95 denied in respect of On that much quantity of Naphtha, attributable to electricity generated in captive power plant/co-generation plant, used for allied activities like lighting in the artillery (sic) roads/yard, administrative building, canteen/cafeteria.

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• 2012 (12) TMI 853 - CESTAT, MUMBAI
  

  Wrong Availment of Cenvat Credit - procedure was not proper in contravention of provisions of Rule 6(1) r.w.e. III of the Rule 6(3) and Rule 6(3)(b) of the Cenvat Credit Rules, 2004 - Held that:- As decided in REPRO INDIA LTD. Versus UNION OF INDIA [2007 (12) TMI 209 - BOMBAY HIGH COURT] exempted goods can be exported under Bond/UT-1 in terms of Rule 19 of the Central Excise Rules, 2002. It has also been held that in terms of Rule 6(6)(v) of the Cenvat Credit Rules, 2004, the provisions of Rule 6(1) and 6(3) are not applicable in respect of excisable goods cleared without payment of duty for export under Bond. In view of this, the orders of Commissioner confirming the duty demand of CENVAT Credit cannot be sustained. Consequently, also set aside the order for recovery of interest on the dues.

  Wrong availment of CENVAT Credit on aggregates (i.e. IC engines, transmission assembly and sheet metal components etc.) used captively in the manufacture of exempted tractors cleared for export - Held that:- Parts of tractors are unconditionally exempted vide Sr. No. 92 of Notification No. 6/2006-CE dated 1.3.2006 when captively used in the manufacture of tractors within the factory. By virtue of Section 5A, Central Government may, in public interest, exempt either absolutely or subject to any condition (to be fulfilled before or after removal) as may be specified in the Notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon - upheld the demand of duty and also Commissioner's order for recovery of interest on these demands confirmed by the Commissioner - these demands were raised invoking normal period of limitation - ingredients of Section 11AC are not present in this case and, therefore, penalty equal to duty imposed by the Commissioner needs reduction - penalties to reduced to Rs. 1.25 crores and Rs.1 crore in respect of Appeal respectively - appeal allowed partly.

  CENVAT Credit of advertisement services used in relation to manufacture of tractors cleared within the country - Held that:- Assessee is not entitled to take the CENVAT Credit on advertisement services used in relation to manufacture of tractors cleared within the country. Therefore, the CENVAT Credit taken is to be reversed. So far as the interest is concerned, in terms of Rule 14 of the Cenvat Credit Rules, 2004, interest is payable from the date of taking wrong credit - penalty of Rs. 2000/- imposed on the assessee by the Commissioner is set aside.

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• 2012 (12) TMI 852 - CESTAT, MUMBAI
  

  Non maintenance of separate accounts of the inputs used in manufacture of dutiable as well as exempted goods - Waiver of pre-deposit of duty, interest and penalty - Held that:- Applicants are required to reverse the proportionate credit in respect of the inputs/input services used in manufacture of exempted goods as they are not maintaining separate records in respect of the inputs used in manufacture of dutiable as well as exempted goods - directed to deposit Rs.15 lakhs within a period of eight weeks and report Compliance on 13.09.2012.

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• 2012 (12) TMI 851 - MADRAS HIGH COURT
  

  Revised assessment orders u/s 27(1)(a) of the Tamil Nadu Value Added Tax Act 2006 - assessee contested against non providing of opportunity of hearing in terms of Section 40(2) - Held that:- Keeping in view the nature, scope and consequences of direction under sub-rule (7) of Rule 633 of the Excise Manual as decided in Kesar Enterprises Limited v. State of Uttar Pradesh [2012 (12) TMI 828 - SUPREME COURT] the principles of natural justice demand that a show-cause notice should be issued and an opportunity of hearing should be afforded to the person concerned before an order under the said Rule is made, notwithstanding the fact that the said Rule does not contain any express provision for the affected party being given an opportunity of being heard.

  If the requirement of an opportunity to show cause is not read into the said Rule, an action thereunder would be open to challenge as violative of Article 14 of the Constitution of India on the ground that the power conferred on the competent authority under the provision is arbitrary. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial as decided in Sahara India (Firm) v. CIT [2008 (4) TMI 4 - SUPREME COURT] - matter remitted to the first respondent for fresh disposal on merits after providing an opportunity of hearing to the petitioner before deciding the revision of assessment.

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• 2012 (12) TMI 850 - MADRAS HIGH COURT
  

  Writ of Certiorari - Business Auxiliary Service - demand of service tax, Interest thereon and penalty - invoking extended period of limitation - Held that:- As the petitioner does not plead violation of principles of natural justice, lack of jurisdiction or that the impugned order has been passed in an arbitrary and capricious manner by the authority but on the interpretation of the various provisions based on factual issues in the case.

  It is trite law that this court under Article 226 of the Constitution will not be a court of appeal or examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made. As decided in Veerappa Pillai vs Raman and Raman Limited [1952 (3) TMI 31 - SUPREME COURT] that where matter involves disputed questions of fact or mixed question of law and fact or even ordinary question of law, it could be raised in appeal provided under the statute. See also Sohan Lal vs. Union of India [1957 (3) TMI 45 - SUPREME COURT], Basant Kumar v. Eagle Rolling Mills (1964 (2) TMI 73 - SUPREME COURT) & Thansingh vs. Superintendent of Taxes [1964 (2) TMI 79 - SUPREME COURT].

  Therefore prima facie this court is not inclined to interfere with the order at this stage. As a result the petitioner has to pursue the alternative remedy provided under the Act. Writ Petition stands disposed.

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• 2012 (12) TMI 849 - CESTAT MUMBAI
  

  Refund of duty - direction by Tribunal to return the excess amount recovered over and above the Service Tax amount within 30 days and report compliance - Held that:- While passing the order dated 12.10.2012, it was committed by the A.R that notice under section 87 has been withdrawn and the direction of the Tribunal will be complied within one month. Two months have elapsed since then and no action has been taken by the concerned officer. This is wilful disobedience of the directions of this Tribunal. Accordingly, the Dy. Commissioner, Service Tax Division, Raigad Commissionerate is hereby directed to show cause as to why contempt proceedings shall not be initiated against him for non-compliance of the direction of this Tribunal vide order dated 12.10.2012 cited supra. This notice is returnable within 15 days from today.

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• 2012 (12) TMI 848 - MADRAS HIGH COURT
  

  Writ of Certiorari - challenging the notice of attachment of immovable property alleging default in payment of service tax - Held that:- The petitioner is not the owner of the property in question, thus is not open for her to challenge the notice of attachment.

  If the notice has been wrongly issued to the petitioner, it is open to the petitioner to give a representation to the respondent authority setting out the details of the transaction that has taken place as above. If any action is proposed to be taken as against the petitioner, thereafter the petitioner can defend such action as per law. At this stage, no relief as sought for can be granted. The petitioner, however, is directed to give a reply to the respondent authority explaining the facts as above so as to enable the department to take appropriate action as per law without expressing any opinion on the merits of the case. Writ petition disposed of in the above terms.

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• 2012 (12) TMI 847 - KERALA HIGH COURT
  

  Challenging limitation on issuing notice u/s 158BD - Block assessment - Held that:- As per Section 158 BE(2)(b) the period of limitation for completion of block assessment in the case of other person referred to in Section 158BD shall be 2 years from the end of the month in which notice has been served on such other person in respect of the search conducted under Section 132. Therefore, it is obvious that the limitation starts only from the service of notice and not from any point of time prior thereto.

  Admittedly, notice in this case was served on the petitioner only by Ext.P6 dated 8.8.2012 and if it is so counted, the proceedings are well within time. This view has been accepted by the Division Bench of this court in Ext.P9 judgment also.

  Unexplained or inordinate delay - Proceedings against the petitioner's brother culminated only by Ext.P5 order of the Tribunal rendered on 28.6.2011. If that be so, as held in Ext.P9 judgment itself, proceedings could have been initiated against the other person, viz the petitioner, only thereafter. If that be the case, unable to agree with the counsel that there has been any unexplained or inordinate delay in this case - against assessee.

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• 2012 (12) TMI 846 - DELHI HIGH COURT
  

  TDS on C & F agents - 2.2% under Section 194C OR 22% under Section 194-I - assessee is a well known manufacture of consumer goods such as detergent, soaps etc. hiring godowns on rent and also engages c & f agents - Held that:- What is discernable from the materials on record is that the assessee had rented premises from their landlords. Payments of rent were made after deducting the tax in terms of Section 194-I. What the assessee paid to the c & f agents as warehousing charges was the consideration in terms of the agreement which was tax deductible under Section 194C at 2.2.%. In this factual background it was for the revenue to have established how Section 194-I could be attracted to the amounts or charges paid to the c & f agents in terms of the agreements.

  No infirmity in the findings of the CIT(Appeals) as endorsed by the ITAT that Section 194-I can only be applied when the immovable properties are let out & none of the heads of payments made to C & F Agents by the assessee is a head of payment by way of rent - in favour of assessee.

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• 2012 (12) TMI 845 - DELHI HIGH COURT
  

  Unexplained credit - share application money from 9 applicants - CIT (A) opined that the assessee had discharged the basic onus cast upon it after considering the ruling in Lovely Exports [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Held that:- While there can be no doubt that in Lovely Exports (2008 (1) TMI 575 - SUPREME COURT OF INDIA) the Court indicated the rule of “shifting onus” i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable.

  In this case, 5 share applicants could not be served as the notices were returned unserved. In the backdrop of this circumstance, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would itself give rise to a circumstance which the AO in this case proceeded to draw inferences from. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. Having regard to the totality of the facts, i.e., that the assessee commenced its business and immediately sought to infuse share capital at a premium ranging between Rs.90-190 per share and was able to garner a colossal amount of Rs.4.34 Crores, this Court is of the opinion that the CIT (Appeals) and the ITAT fell into error in holding that AO could not have added back the said amount under Section 68 - The question of law consequently is answered in favour of the Revenue.

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• 2012 (12) TMI 844 - KERALA HIGH COURT
  

  Registration under Section 12A - Ext.P3 communication requiring the petitioner to rectify the defects - non-compliance of Ext.P3 thus Ext.P2 application for registration rejected - registration u/s 12A for the year 2010-2011 granted as per Ext.P8 - petitioner's request for restoration of Ext.P2 application - Held that:- Ext.P9 judgment has attained finality wherein it has been specifically found that Ext.P2 application was not pending. It was therefore that the petitioner sought restoration of Ext.P2. That request was considered by this Court and in Ext.P10 order, it was directed that the petitioner can seek restoration and the same will be considered if permissible in law.

  The authority has held in Ext.P11, that such a request is not permissible. The correctness of this conclusion of the respondent will depend upon the provisions of Section 12A of the Income Tax Act. Having gone through this statutory provision, it is unable to find any authority for the respondent to restore an application under Section 12A once rejected. If that be so, it is not permissible to restore an application and if so, the conclusion in Exts.P11 and P13 that the petitioner's request for restoration of Ext.P2 application is impermissible, cannot be said to be faulted. In that view of the matter, no tenable grounds justifying interference in the impugned orders.

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• 2012 (12) TMI 843 - KERALA HIGH COURT
  

  Seeking return of documents seized as per Exts.P1 to P3 mahazars - search under Section 132 - Held that:- Books of account or other documents that may be seized under an authorisation issued u/s 132(1) can be retained by the authorised officer or the concerned ITO for a period of 180 days from the date of seizure, whereafter the person from whose custody such books or documents have been seized or the person to whom such books or documents belong becomes entitled to the return of the same unless the reasons for any extended retention are recorded in writing by the authorized officer/the concerned ITO and approval of the Commissioner for such retention is obtained.

  Sub-section (10) of 132 confers upon the person legally entitled to the return of the seized books and documents a right to object to the approval given by the Commissioner under sub-section (8) by making an application to the Central Board stating therein the reasons for such objection and under sub-section (12) it is provided that the Central Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. Thus the scheme of sub-sections (8), (10) and (12) of Section 132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner's approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communication any further retention of the seized books or documents would become invalid and unlawful.

  In this case even the respondents have no case that Exts.R1(a) or (b) were communicated to the assessee. If that be so, the requirement of Section 132(8) is not satisfied and in which event, the retention of the documents beyond 30 days period of completion of the assessment was illegal. For that reason, the petitioner is entitled to succeed - writ petition disposed of directing the respondents to return the documents seized from the petitioner under Exts.P1 to P3 mahazars within four weeks of receipt of a copy of this judgment.

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• 2012 (12) TMI 842 - ITAT MUMBAI
  

  Deemed dividend u/s 2(22)(e) - reopening of assessment after expiry of four years - assessee had not furnished share holding pattern in respect of ITL Industries Ltd. for assessment year 2002-03 - Held that:- The assessee had let out the properties to M/s. ITL Industries Ltd. in the FY 2000-01 on deposit of Rs.95,68,938/- and monthly rent of Rs.1.5 lacs & vide letter dated 15.3.2001 had requested ITL Industries to increase deposit to Rs.2.00 crores and not to pay any rent during financial year 2001-02. It is clear from records that the assessee was in need of substantial funds for setting up of new project for which assessee was looking for funds from other parties as per its own submission. Money received from ITL Industries Ltd. is obviously of the nature of loans/advances and not deposit and, therefore, amount can not be considered as deposit merely on the ground that the same has been described as deposit in the balance sheet or in correspondence with ITL Industries Ltd. which is a group concern of the assessee. The argument of assessee rejected that he had received deposit and not loan/advances and hold that the assessee had received loan/advances during the year which are covered by the provisions of section 2(22)(e).

  The exception from the provisions of section 2(22)(e) is available if the money is advanced in the normal course of business of the company advancing the money. There is no provision for exemption on the ground that the money received has been used by the shareholder in its business. In the present case, there is no material to show that ITL Industries Ltd. advanced the money in the normal course of its business.

  As decided in CIT vs. V. Damodaran [1979 (10) TMI 5 - SUPREME COURT] & M.B. Stock Holding Pvt. Ltd. vs. ACIT [2001 (12) TMI 190 - ITAT AHMEDABAD-B] that business profit of the company accrued only at the end of the year and, therefore, current year business profit are not to be included in the accumulated profit relying on cases as submiited by assessee as no contrary decision of any High Court or Apex Court has been brought to notice by the DR section 2(22)(e) has to be applied only to loan/advances received during the year which was Rs.1,04,31,062/-.

  The opening balance of Rs.95,68,938/- was in fact not loan/advance but deposit given in connection with letting out of the properties in financial year 2000-01 and therefore, in the earlier year, no addition was required to be made under section 2(22)(e). Therefore, the accumulated profit of Rs.97,91,884/- till 31.3.2001 could not be adjusted against the said deposit in assessment year 2001-02 & will be available for addition u/s 2(22)(e) in respect of loan/advances of Rs.1,04,31,062/- received during the assessment year 2002-03.

  The argument of the assessee that out of the accumulated profit of Rs.97,91,884/-, sum of Rs.95,68,938/- has to be adjusted against deemed dividend in assessment year 2001-02 cannot be accepted as the said amount was deposit and provisions of section 2(22)(e) could not be applied in assessment year 2001-02. Therefore, in assessment year 2002-03 addition has to be made up to accumulated profit till 31.3.2001 which was Rs.97,91,884/- appeal of the assessee partly allowed.

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