2025 (7) TMI 1357 - AT - Income Tax

Deemed dividends u/s 2(22)(e) - scope of term advance - payment of an advance for a commercial purpose to the assessee company by its sister concern - HELD THAT - There could be hardly any dispute that the assessee has duly filed his evidence representing the impugned sum as in the nature of commercial sale/purchase transactions between M/s Anand Lighting Co. and M/s Sanskriti Villas Pvt. Ltd. That being the case hereby reject the department s stand treating the same as non-genuine transactions to delete the impugned section 2(22) (e) deemed addition in light of CIT Vs. Creative Dying and Printing (P) Ltd. 2009 (9) TMI 43 - DELHI HIGH COURT - Assessee appeal allowed.

Summary

The Appellate Tribunal (ITAT Delhi) heard three appeals (ITA Nos. 3473, 3474 & 3475/Del/2019) concerning Assessment Years 2011-12, 2012-13, and 2013-14, arising from CIT(A)-8 New Delhi's orders under sections 147/143(3) of the Income Tax Act, 1961. The appeals challenged the reopening of assessments and addition of deemed dividends under section 2(22)(e) amounting to approximately Rs. 15 lakh. The Revenue contended that reopening under section 148/147 was justified and that the addition was rightly upheld by the CIT(A). The CIT(A) had confirmed the addition, referencing a prior appellate order for AY 2011-12 which upheld a similar addition. The Tribunal, after considering the assessee's evidence that the impugned sum represented genuine commercial transactions between M/s Anand Lighting Co. and M/s Sanskriti Villas Pvt. Ltd., rejected the department's characterization of the transactions as non-genuine. Relying on the precedent in *CIT Vs. Creative Dying and Printing (P) Ltd.* (2009) 318 ITR 476 (Del.), the Tribunal deleted the addition under section 2(22)(e). Accordingly, the Tribunal allowed all three appeals, holding that the deemed dividend addition was not justified. The order was pronounced on 02/06/2025.