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2020 (9) TMI 916 - AT - Income TaxAddition u/s 2(22)(e) for deemed dividend - CIT-A deleted the addition - HELD THAT:- The debit balance has been notionally worked out by the assessing officer by working out the balance in ledger account of shareholder on the basis of clearing date of cheque received (not paid) in the bank account, which is not correct. As per accounting principles entries in the books of accounts are required to be made on the basis of transactions entered which is the receipt of cheque, which was subsequently honoured by the bank, hence the entries appearing in the ledger account is correct and same cannot be ignored and balance cannot be worked out on notional basis and even if he wants to do the same, then also the amount was never paid to the Share Holder but in fact was received from the Share Holder and the date of debit should also be transferred to the date on which the amount was cleared. In no way by this company has paid any amount to the shareholder and thus provisions of section 2(22)(e) are not applicable. The substance of section 2(22)(e) is “any payment made by a company that too by way of advance or loan” which shows that for invoking the provisions of section 2(2)(e), there must be a payment by way of advance or loan. This vital aspect is missing in the case of the assessee as neither there is any payment nor the company made any advance or loan to the assessee, thus debit balance worked out by the assessee company will not fall within the ambit of the provisions of section 2(22)(e) and thus are not applicable in the case of the assessee. Detailed finding recorded by the ld. CIT(A) are as per the material on record, accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) for deleting the addition so made. Hence, we uphold the same. Addition u/s 56(2(vii)(c) - Allotment of shares - difference calculated between fair market value and that of face value under section 56(2)(vii)(c) - CIT-A deleted the addition - HELD THAT:- Mumbai Bench of ITAT in the case of ACIT Vs Subodh Mennon [2018 (12) TMI 981 - ITAT MUMBAI] have held that only when a higher than a propionate allotment of fresh shares issued by a company is received by a shareholder, the provisions of section 56(2)(vii) get attracted; provisions of section 56(2)(vii) are not applicable to the facts of the case - addition under 56(2)(vii)(c) being the difference between alleged fair market value of shares and the subscribed value of shares was not sustainable. It is only when a higher than propionate allotment of fresh shares issued by a company is received by a shareholder, the provisions of section 56(2)(vii) get attracted. Detailed finding so recorded by the ld. CIT(A) while deleting the addition made U/s 56(2)(vii)(c) are as per material on record which do not require any interference on our part. - Decided against revenue.
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