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2013 (9) TMI 196 - AT - Income TaxDeemed dividend - whether refund of Share application money to be treated as loan and advance - Applicability of section 2(22)(e) of the Income Tax Act – Held that:- Share application money or share application advance is distinct from the ‘loan or advance'. Although the share application money is one kind of advance given with the intention to obtain the allotment of shares/equity/preference shares etc, such advances are innately different form the normal loan or advances specified both in section 269SS or 2(22)(e) of the Act. Unless the mala fide is demonstrated by the AO with evidence, the book entries or resolution of the Board of the assessee become relevant and credible, which should not be dismissed without bringing any adverse material to demonstrate the contrary - Share application money when partly returned without any allotment of shares, such refunds should not be classified as ‘loan or advance' merely because, share application advance is returned without allotment of share. In the instant case, the refund of the amount was done for commercial reasons and also in the best interest of the prospective Share applicant. Further, it is self explanatory that the assessee being a ‘beneficial share holder', derives no benefit whatsoever, when the impugned ‘share application money/advance' is finally returned without any allotment of shares for commercial reasons. In this kind of situations, the books entries become really relevant as they show the initial intentions of the parties into the transactions. Books entries suggest clearly the ‘share application' nature of the advance and not the ‘loan or advance'. As such the revenue has merely suspected the transactions without containing any material to support the suspicion. Therefore, the share application money may be an advance but they are not advances which are referred to in section 2(22)(e) of the Act. Such advances, when returned without any allotment or part allotment of shares to the applicant/subscriber, will not take a nature of the loan merely because the same is repaid or returned or refunded in the same year or later years after keeping the money for some time with the company – Reliance has been placed upon the Madras High Court judgment in the case of CIT vs. Rugmini Ram Ragav Spinners P Ltd [2007 (7) TMI 237 - MADRAS HIGH COURT] and also on the judgment of the Hon’ble Tribunal, Delhi bench in the case of Ardee Finvest (P) Ltd[2000 (11) TMI 291 - ITAT DELHI-E ] – Decided against the Revenue. Limitation – Condonation of delay in filing cross-objection – Appeal of the Department was received by the respondent on 19th March, 2012, the cross objection ought to have been filed u/s 253(4) by 18th April, 2012. As the Cross Objection is being filed on 18th July, 2012, there is a delay of 90 days -Respondent submits that the said delay was inadvertent and was caused due to the Respondent not being aware of the judgment of the Special Bench of the Tribunal (All Cargo Global Logistics Ltd vs DCIT) which is dated 6th July, 2012 – Held that:- It is a settled law that while condoning the delay, the Court needs to take a lenient view considering the preciousness of the right of appeal granted to parties aggrieved. On considering the SB decision based reasons, the explanation is bona fide and reasonable one – Condonation of delay granted – Decided against the Revenue. Allowability of exemption u/s 54F when the capital amount invested in two adjacent residential flats - Held that:- Reliance has been placed upon the judgment in the case of CIT vs. Gita Duggal [2013 (3) TMI 101 - DELHI HIGH COURT] and applying the ratio of the decision of the abovementioned case to the facts of the present case it has been held that two flats in question are not adjacent and they are not functionally one residential house with two adjacent units. Revenue has not brought any contrary decision to notice of the ITAT – Decided against the Revenue. Construction of a residential house with several independent units - Held that:- The judgment relied upon is CIT vs. Gita Duggal [2013 (3) TMI 101 - DELHI HIGH COURT], wherein it has been held that Section 54/54F requires the assessee to acquire a "residential house" and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the section should be taken to have been satisfied - There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the section which requires that the residential house should be built in a particular manner, income tax authorities cannot insist upon that requirement - Residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under section 54/54F. It is neither expressly nor by necessary implication prohibited. - Decided in favor of assessee.
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