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2016 (12) TMI 945 - AT - Income TaxDeemed dividend addition workout u/s 2(22) - Held that:- Assessee has neither placed on record the dates of receipt nor the accumulated profit of the company on the date of receipt of money. In fact, no details - except the accumulated profit as on 31-03- 2002- were furnished to the AO. AO seems to have made a mistake of arriving at the accumulated profit at ₹ 9,72,990/- as the same amount could not be verified either from the Balance Sheet or from any other details placed on record. We are unable to determine how this amount of ₹ 9,72,990/- has been arrived at by the AO. As seen from the Balance Sheet, the amount of accumulated profit as on 31-03-2002 was only ₹ 3,26,333/-. The depreciation claimed in the P&L A/c was at ₹ 7,77,416/-. Since there are already judicial pronouncements that the accumulated profits are to be arrived at on the basis of IT computation, the depreciation allowable under IT Act at ₹ 9,31,388/- has to be reduced. Thus, the accumulated profit for the year works out to ₹ 1,72,362/-. The Co-ordinate Bench in the case of Bagamane Leasing and Finance Pvt. Ltd.,(2010 (11) TMI 662 - ITAT, Bangalore) has held that Explanation-2 to Section 2(22)(e) does not have the effect of inclusion of current year’s business profits. It followed the principles laid down in the case of M.V. Murugappan [1965 (11) TMI 144 - MADRAS HIGH COURT], which these assessees have relied on and submitted before the AO. In view of that, in the absence of any working given by assessee and due to non-co-operation by assessee before the CIT(A) also, we have no option than to determine the accumulated profits as per the Balance Sheet of M/s. Eye Ads Pvt. Ltd., as stated above. AO is directed to re-workout the deemed dividend in each of assessees’ hands at the same ratio i.e., 73:27, considering the accumulated profit on ₹ 1,72,362/- only
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