Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (12) TMI 1772 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - assessee is a Director and having more than 10% share holding in M/s.Shree Velu Builders (P) Ltd., a company in which public are not substantially interested was having accumulated profits of ₹ 84,51,787/- as on 31.03.2007 and it has transferred the flat constructed by the company valued at ₹ 38 lakhs to the assessee. After transfer of the flat of ₹ 38 lakhs, the outstanding balance in the current account maintained by the assessee was at ₹ 32,25,049/-(Dr.), which means that the assessee owe the company an amount of ₹ 32,25,049/- as at the end of the year. HELD THAT:- The amount of ₹ 31,57,569/- is outstanding as a loan/advance being the amount excess drawn in the current account, which is nothing but a loan/advance because of the transfer of the company asset to the assessee. Though, the amount paid is not in cash, the asset of the company (money’s worth) was transferred to the assessee resulting into reduction of the assets of the company and the ultimate result is outstanding as a loan from the assessee. Therefore, the transfer of assets which resulted in a advance/loan is held to be payment by the company to the assessee and falls within the four corners of the deemed dividend as per the provisions of the Sec. 2(22)(e) of the Income Tax Act . See KANTILAL MANILAL AND OTHERS VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, KUTCH AND SAURASHTRA, AHMEDABAD [1960 (11) TMI 11 - SUPREME COURT] Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value. The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend. It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value. But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered. Payment made to the assessee by the company is rightly brought to tax by the AO as deemed dividend and the addition made by the AO is confirmed. - Decided against assessee.
|