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2018 (1) TMI 654 - AT - Income TaxDeemed dividend u/s. 2(22)(e) - relevant assessment year - whether loans given by M/s. Classic Linens International Pvt Ltd is on account of commercial expediency - Held that:- the loan given by the company only in the immediate preceding year, i.e., assessment year 2007-08, should be assessed as deemed dividend in accordance with the provisions of sec. 2(22)(e) in that year. The deemed dividend so assessable in that earlier assessment year is liable to be deducted from the amount of “accumulated profits” for the purpose of computing the deemed dividend during the year under consideration Deemed dividend does not include any dividend paid by the company in the assessment year under consideration and it is to be set off against the amount of deemed dividend. Hence, the factual aspect on this matter requires verification from the end of the ld. Assessing Officer. Accordingly on the matter of accumulated profits and deemed dividend computed by the lower authorities, which are not in accordance with the provisions of Sec. 2(22) (e) of the Act. The issue is remanded to the file of the ld. Assessing Officer with the direction to carry out necessary verification with regard to the computation of accumulated profits and thereafter determine the quantum of deemed dividend as discussed above specifically with reference to Sec. 2(22)(e)(iii) of the Act and to consider the accumulated profit which do not include current year’s business profit which accrues only at the end of the years. It is needless to say that an opportunity of hearing is to be given to the assessee by the Assessing Officer. - Decided partly in favour of assessee for statistical purposes.
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