Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (7) TMI 109 - AT - Income TaxDeemed dividend u/s 2(22)(e) - assessee is a beneficial shareholder in M/s Koradia Construction Pvt Ltd, and having 50% of shares holding with the advance of ₹ 58 lacs stated to have been given to the assessee by the company for purchase of flat - CIT(A) confirmed the partial addition - Held that:- From the books of accounts and audit report of M/s Koradia Construction P Ltd, it is evident that the company has shown this amount of ₹ 58 lacs as advance for the purchase of property aslo as per the Schedule E to the balance Sheet the amount of ₹ 58 lacs has been clearly shown as towards purchase of premises. Thus as company is engaged in the business of construction and dealing in properties and the purpose of advancing money to the assessee, therefore, falls under the business/commercial transaction between the company and the assessee & said amount cannot falls under the ambit of loan and advances in the provisions of sec. 2(22)(e) of the Act. Once the assessee has established that the said amount was given to the assessee for the purchase of flat which is in the nature of commercial transaction between the parties, then in the absence of proving contrary by the department, the addition to the extent of ₹ 58 lacs is not justified. Hence, the addition to the extent of ₹ 58 lacs u/s 2(22)(e) is deleted and consequently, the addition of balance amount of ₹ 7,99,604/- is confirmed. Partly in favour of assessee. Disallowance u/s 57(ii) - interest paid on overdrawn capital with partnership firm - Held that:- The assessee has introduced ₹ 50 lacs as capital in Aditya Developers and withdrawal of ₹ 56 lacs with Sagar Construction. Thus, the assessee has earned interest income from partnership firms M/s Aditya Developers, at the same time, the assessee had interest expenditure of ₹ 65,429/- on debit balance with the other partnership firm. There is no dispute about the fact that the assessee has overdrawn from the partnership firm M/s Sagar Construction; therefore, the interest paid to the Sagar Construction for debit balance in the capital account is an allowable expenditure against the business income of the assessee and particularly against the interest/remuneration received from the partnership firm. In favour of assessee.
|