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2019 (8) TMI 43 - AT - Income TaxDeemed dividend u/s 2(2)(e) - purchase of property in the name of shareholder-director - concept of beneficial owner vis-à-vis a registered owner - HELD THAT:- Board Resolution is the most crucial and clinching evidence to show that it is the Company that is the beneficial owner of this properly and not the assessee, who merely holds the same in her name for and on behalf of the Company, being a Director of the Company. The Board Resolution coupled with the entries in the books of account and Balance Sheets as at 31.3.2012 and 31.03.2013 constitute the clinching evidence to show that the said property really belongs to the Company and the assessee merely held the same for and on behalf of the Company. In view of the above facts clearly spell out that the property does not belong to the assessee and where the property does not belong to the assessee, then where is the question of the company making payment on behalf of the assessee so as to attract the provision of section 2(22)(e). Hence, we are of the view that the AO and CIT(A) clearly erred in holding that the moneys paid by the Company to Godrej was for the benefit of the assessee and hence, to be treated as deemed dividend u/s.2(22)(e). As in case of ACIT vs. Harshad V. Doshi [2010 (4) TMI 677 - ITAT, CHENNAI] wherein the Tribunal held that provisions of section 2(22)(e) of the Act did not apply to advances made by the company to the assessee, who was the Managing Director thereof and also holding substantial interest therein, to acquire land in his name for the purpose of development by the company so as to reduce the incidence of stamp duty on the ultimate sale of flats to the customers. Tribunal held that the company advanced money to the MD out of commercial expediency to reduce the cost and be more competitive, and therefore it was clearly motivated by business exigencies, and that did not amount to loan' or 'advance' within the meaning of section 2(22)(e). This addition cannot be sustained hence, we delete the addition made by AO and confirmed by CIT (A). Appeal of the assessee is allowed.
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