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2017 (6) TMI 17 - ITAT DELHIAddition on account of “Deemed Dividend” u/s 2(22)(e) - subject of transaction was transfer of commercial space by VAPL to SSPD - as per revenue the assessee was holding interest in both the transferor and transferee companies, and the amount remained unpaid during the year - Held that:- It is not a case of payment of cash but transfer of assets, and the transaction was duly recorded in the books of both entities. These accounting entries and the books of account have not been rejected or assailed by the revenue. Further, there is no evidence to suggest that the assessee was the real beneficiary and the transaction itself was sham. Thus, there appears no justification for the assumption that the assessee stood to benefit from the transfer. Suspicion, however strong, cannot take the place of evidence as has been held in a catena of judgments. We further find that the present case is also not hit by the provisions of section 2(22)(a) of the Act as it is not the case of revenue that profits have been distributed. Thus, the argument of the assessee that VAPL did not have accumulated profits, or that the AO was wrong in considering the assessed income as part of accumulated profits, is only academic and not relevant to the case. No basis for concluding that the transaction of transfer of commercial space between VAPL and SSPD was sham or colourable, and amounted to payment for the benefit of the assessee. Even if it was for the benefit of the assessee, no money has been received by the assessee and the assessee did not hold controlling shares in the transferor company. Thus, the provisions of section 2(22)(e) are not applicable. The case is also not hit by the provisions of section 2(22)(e). Therefore, the Ld. CIT(A) has rightly deleted the addition/disallowance in dispute - Decided in favour of assessee.
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