Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 35 - AT - Income TaxAddition u/s 2(22)(e) - deemed dividend - interest bearing Loans - Property purchased for use by the company - Revenue contended that, the CIT(A) ought to have considered the fact of loan/advance reflected in the name of assessee in the books of account of “company”, coupled with the fact that proportionate ownership of property acquired out of borrowed fund by the “company” to the extent of loan/advance lies with the assessee and payment of full interest. The “company” also paid full amount of interest on entire loan and claimed as expenditure in the return of income. HELD THAT:- It is an admitted position that M/s. Bajaj Finance Ltd. sanctioned the loan only on the condition that the assessee should be a co-borrowers. Therefore, when the assessee signed the loan documents as a borrower the primary responsibility to repay the loan rests upon the assessee, to safeguard against any future liability on him. The assessee insisted the property be registered in his name which was being used by the business purpose of the company i.e. M/s. Subu Chem Pvt. Ltd. It is admitted position that the assessee is not enjoying own rent from the company. Therefore, this shows that substance of transaction is purchase of property for the purpose of business of the company i.e. M/s. Subu Chem Pvt. Ltd. and it cannot be called as a gratuitous loan or advance given by the company to the assessee. It is a pure business transaction carried out by the company i.e. M/s. Subu Chem Pvt. Ltd. and ratio laid down by the Hon”ble High Court of Calcutta in the case of Pradeep Kumar Malhotra [2011 (8) TMI 16 - CALCUTTA HIGH COURT] is squarely applicable to the present case. CIT(A) is justified in holding that the AO is not right in bring to tax sum as a deemed dividend in the hands of the assessee. Since, We held that the provision of section 2(22)(e) of the Act have no application to the facts of the case, there is no necessity to deal with the other contentions raised on behalf of the assessee. Thus, grounds by the Revenue fails and are dismissed. Addition made on account of protective basis in the case of assessee - HELD THAT:- We note that the CIT(A) held in Para No. 7.3.4 that no addition is maintainable in the hands of the assessee as the same was retained in th hands of its Director on substantive basis. We dismissed in the aforementioned paragraph the similar ground raised by the assessee raised by the Revenue is misconceived and it is dismissed. Proportionate interest paid to NBFC for non-deduction of TDS - HELD THAT:- Since the assessee claimed the proportionate interest on loan granted to Director, Shri Jitendra K. Gupta in its books of account. On such submission the CIT(A) confirmed the addition in the hands of the assessee. Therefore, we find no infirmity in the order of CIT(A). DR has rightly pointed that the CIT(A) without making any detailed discussion on such amount simply allowed the said amount and vehemently argued to restore the issue to the file of AO for verification regarding the non-deduction of TDS - AO sought details but the assessee as it appears from Para No. 4.2 of AO”s order that the assessee did not give any submissions but the CIT(A) discussed the issue in details in the impugned order in respect of interest paid to HDFC Bank Ltd. and Standard Chartered Bank, but, however, we find no reasons as to how the allowability given by the CIT(A), therefore, we deem it proper to remand the issue to file of AO for its verification in view of the grounds raised by the Revenue that the proportionate amount of interest paid to M/s. Bajaj Finance Ltd., a NBFC as claimed by the ld. DR in ground Nos. 2 and 3. raised by the Revenue is allowed for statistical purpose.
|