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2016 (7) TMI 756 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - assessee is a share holder holding more than 10% stake in some private limited companies - Held that:- A careful perusal of the Ledger account copy of the assessee as available in the books of M/s KBJ Jewellery Pvt. Ltd shows that the same has been operated as a current account, i.e., there has been credit of Director’s remuneration; Rent, rates & taxes etc., Besides that there has been repeated deposit and withdrawal of cash. When the credits in the nature of income payable to the assessee are credited to the account of the assessee, the same signifies that those credits constitute liability in the hands of the above said company and hence the above said company is liable to pay those amount to the assessee. Under these set of facts, we find merit in the contentions of the assessee. Accordingly, we are also of the view that the amount withdrawn by the assessee, either by way of advance or as subsequent payment, to the extent of the liability of the company towards Directors Remuneration, Rent, other income items etc. credited to the account, should be considered as payment made towards settlement of those liabilities. Accordingly, in our view, withdrawals to that extent cannot be considered as loan taken by the assessee, which would attract the provisions of sec. 2(22)(e) of the Act. Accordingly, we modify the orders passed by the Ld CIT(A) and direct the AO to compute the loan amount by excluding the withdrawals as stated above in the case of KBJ Jewellery (P) Ltd and also in other two companies referred above. With regard to the computation of accumulated profits, we hold that it shall not include current year’s proportionate profit, since the current years profit shall be deemed to accrue only when the books of account are closed at the year end. Accordingly we direct the AO to compute the accumulated profit in the manner discussed above - Decided partly in favour of assessee
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