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2017 (11) TMI 326 - AT - Income TaxDeemed dividend u/s 2(22)(e) - receipt of advance against agreement to sale the property to the company - subsequently agreement was cancelled due to fall in market price - Held that:- We find that the assessee had himself signed on behalf of NIPL (purchaser) and for himself (seller). The authenticity of the so called MOU cannot also be cross verified as it was not registered with the registering authority. Thus, the AO’s observation that “the explanation [of the assessee] is a self serving argument….” [Para 5 of the asst. order] cannot be brushed aside. The assessee’s argument that due to fall in market value of property and subsequent change in circumstances, the sale process fell through etc., cannot be taken its face value as no documentary evidence was adduced to substantiate its claim. The salient feature in the issue was that the subject property was owned by the assessee [the seller] who himself was holding 55.05% share in NIPL [the purchaser] and, thus, in our view, the so called ‘fall in market value of property and subsequent change in circumstances’ would not have come in the way of alleged sale transaction of the subject property. We have with due respects perused the case laws on which the assessee had placed strong reliance and of the view that those case laws will not come to the rescue of the assessee. The case laws relied on by the assessee are for the proposition that when amounts are advanced for business transaction / out commercial expediency, the same would not come within the purview of deemed dividend u/s 2(22)(e). In the instant case, as mentioned earlier, the amounts received by assessee is nothing but loan / advance from NIPL and assessee is camouflaging the same as a commercial transaction relating to sale of property in order to get over the provisions of Section 2(22)(e). AO was within his realm to invoke the provisions of s. 2 (22)(e) of the Act.- Decided against assessee.
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