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2014 (8) TMI 1139 - AT - Income TaxDeemed dividend u/s 2(22)(e) - dividend distribution tax and prior period expenses - Held that:- If the AO himself had admitted in the remand report that capital subsidy was not be considered a part of the accumulate profit, then why has he filed an appeal especially when the FAA has endorsed his view. The stand taken by the AO in the ground of appeal is beyond our comprehension. Initially he held that necessary documents were not produced by the assessee. In our opinion his stand at that point of time could be held to be justifiable. But, after admitting a particular position in the remand report about the non-inclusion of capital subsidy out of accumulated profit for the purpose of calculating deemed dividend, he should not accepted the decision of the FAA and should not have filed the appeal. FAA had directed the AO to recomputed the accumulated profit after lying down certain principles. In our opinion direction given by him are as per the provisions of law. He has rightly held that Income tax paid, propose dividend distribution tax and prior period expenses cannot be considered for determining accumulated profits. - Decided against revenue.
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