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2012 (11) TMI 1127 - AT - Income TaxValidity of re-opening of assessment - assessment of deemed dividend u/s 2(22)(e) - Held that:- We notice that the assessee has furnished a copy of the Loan account of the assessee as available in the books of the company in Page 8 of the paper book. On the perusal of the said account, we notice that the dividend amount of ₹ 31,25,100/- was adjusted by the company against the said loan amount. Thus, the observation made by Ld CIT(A) appears to be against the facts available on record. There cannot be any dispute that the dividend amount so set off shall have to be deducted from the deemed dividend amount computed above. However, the observations made by Ld CIT(A) show that the tax authorities have not examined this aspect properly. Hence, the factual aspect on this matter, in our view, requires verification preferably at the end of the assessing officer. The foregoing discussions show that the views entertained by the tax authorities on the matter of “accumulated profits” and “deemed dividend” are not in accordance with the settled position of the law. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to carry out due verification of the computations made with regard to the accumulated profits and also determine the amount of ‘deemed dividend’, if any, accordingly after verifying the record with regard to the amount to be deducted as per clause (iii) of sec. 2(22)(e) of the Act, which was discussed in the preceding paragraph. Appeal of the assessee is treated as partly allowed for statistical purposes.
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