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2024 (4) TMI 314 - AT - Income TaxDeemed dividend u/s 2(22)(e) - As alleged assessee has received a loan from company wherein he is holding 32.83% equity shares - HELD THAT:- Assessee has not withdrawn any loan during the year under consideration and the outstanding balance on each closing day is credit balance during the year. Since there is no debit balance in any closing day of the year under consideration, we deem it fit and proper to delete the additions proposed by the Assessing Officer under Section 2(22)(e) of the Act. Payment to RHPL and SSPDPL, there is no doubt that the assessee hold substantial interest in RHPL and SSPDPL and also hold a substantial shares in MMLPL and also MMLPL has accumulated profits during the close of the assessment year - The provisions of Section 2(22)(e) of the Act is attracted if any advances or loan given directly to the shareholder or to a concern in which the shareholder is having a substantial interest or any payment by such company in which assessee is having a substantial interest on behalf of or for the individual benefit of any such shareholder. From the above definition we infer that the payment made to the concern in which the assessee is having a substantial interest and in turn above such concerns makes a payment to the assessee direct / indirect benefit of the assessee the provisions of Section 2(22)(e) of the Act are attracted. In the given case, the assessee has demonstrated that no doubt the concern in which assessee is having substantial interest has received certain funds from the company and it was utilized by them for their own business purposes and none of the funds received by those companies in which the assessee is having substantial interest has made any payments directly or indirectly to the benefit of the assessee. Therefore, the payment received by RHPL and SSPDPL are utilized by them for the purpose of their own business. Therefore, provisions of Section 2(22)(e) of the Act cannot be invoked in this case. Accordingly, Ground No.2 raised by the assessee is allowed.
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