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2019 (4) TMI 1226 - ITAT HYDERABADDeemed dividend addition u/s 2(22)(e) - assessee has taken an advance over and above the accumulated profit declared in the Balance sheet of the company - reduction of tax liability from accumulated profit - HELD THAT:- As relying on GAUTAM SARABHAI TRUST NO. 23. [2001 (3) TMI 229 - ITAT AHMEDABAD-B] the accumulated profit, which is freely available for distribution of dividend, it does means that the profit after deduction of all liabilities due from the company is still profit which is available for distribution of dividend. The profit which is completely free from liabilities are the profit available for distribution of dividend. In the given case, no doubt, it is showing accumulated profit, but, it has determined tax liabilities, after deducting the tax liabilities, the profit available in the business for the purpose of dividend is negative accumulated profit. Therefore, the accumulated profit for the purpose of section 2(22)(e) is nil, hence, we delete addition u/s 2(22)(e) even though in this case, all the ingredients available to invoke the provision but the company does not have enough accumulated profit for distribution of dividend after deduction of tax liabilities. Accordingly, ground raised by the assessee is allowed.
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