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2005 (10) TMI 225 - AT - Income TaxDeemed Dividend u/s 2(22)(e) - Share capital - accumulated reserves and surplus shown in the company's balance-sheet - HELD THAT:- As per the facts of the case, the construction of the commercial-cum-residential complex was entrusted to the company as per the agreement between the parties. As per the terms of the contract, the assessee retained the basement floor, ground floor, first floor, and the constructions which had been completed before 1-4-1995. The assessee let out the ground floor of the building and offered the rental income for taxation from the assessment year 1996-97 onwards. The ld. Chartered Accountant of the assessee has filed copies of the ledger accounts of the assessee in the books of M/s. Seethal Apartments (P.) Ltd. which show that by way of journal entry on 30-3-1996, a sum is debited. As per the argument of the ld. CA, there is another journal entry on the credit side in the name of the assessee amount, which was said to be in the business and not due to any loan or advance. The CIT(A) has deleted the addition by concluding that there was no cash flow or any payment to the assessee during the previous year and hence, the provisions of section 2(22)(e) are not attracted. It is not disputed that there was no transaction of any nature whatsoever during the previous year relevant to the assessment year 199697. Whatever book entries were passed, those were relating to the earlier years and that was also in respect of the agreement between the assessee and the company. The agreement is not disputed as a device used by the assessee for circumventing the provisions of section 2(22)(e) of the IT Act as was the issue in the case of M.D. Jindal. In this case also, it is not the contention of the Assessing Officer that some benefit was given to the assessee by the company. We, therefore, find no infirmity in the order of the CIT (Appeals). The CIT (Appeals) has rightly deleted the said addition. We, therefore, confirm his order. In the result, the appeal filed by the revenue stands dismissed.
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