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2015 (12) TMI 1529 - AT - Income TaxDeemed dividend u/s 2(22)(e) - whether the debit balance and the accumulated profits in the books of accounts of the company in the name of the assessee in the company’s books, is a loan or deposit which attracts provisions of section 2(22)( e) or which is merely a sale advance? - Held that:- We are of the opinion that the assessee is trying to circumvent the loan taken by her from the company by creating the sale agreement. On perusal of the sale agreement, we noticed that one of the condition of sale agreement is that the sale should be completed within one year from date of the sale agreement. The assessee could not adduce any reason for not completing the sale. It is quite unusual that agreement of sale has been prepared on stamp paper which was purchased almost two years back. Further, there is nothing in the company’s books to indicate that any such transaction has been taken during the relevant financial year under consideration. The assessee is continuing to enjoy the benefits of the property by getting rent from the company. The assesse contention is that the property is given as collateral security to bank to avail the loan for the company business purpose. But, from this fact alone we cannot come to the conclusion that the company is having the possession of the property and the assessee has entered into a sale agreement. Therefore, in our opinion, the assessee is trying to circumvent the alleged loan and advances by furnishing an unregistered sale agreement, which was later not acted upon by both the parties even now. Hence, we hold that the A.O. is right in treating the loan received by the assessee as deemed dividend under the provisions of section 2(22)(e) of the Act. The CIT(A) has considered the issue elaborately and upheld the additions made by the A.O. - Decided against assessee.
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