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2020 (6) TMI 290 - AT - Income TaxDeemed dividend u/s 2(22) (e) - Addition being the transaction with E-edit Infotech Pvt. - as per AO fresh advances have been given by the subsidiary companies to the assessee company and since such advances were not in the normal course of business, therefore the provisions of Section 2(22)(e) of the Act shall get attracted to the extent of accumulated profits of the respective subsidiary companies - HELD THAT:- Assessee emphasized the money advanced to the assessee company by EIPL (E-edit Infotech Pvt. Ltd.) is either an advance for property or current account transaction. CIT(A) has also gone through the audited account of E-edit Infotech Pvt. Ltd. and noticed that substantial part of business of E-Edit Infotech Pvt. Ltd. was granting of loans. DR submits before us that object clause of memorandum of association of E-Edit Infotech Pvt. Ltd. does not say that the company is in the business of money lending. It is also not clear that said advance by E-Edit Infotech Pvt. Ltd. is for advance for purchase of property / land. Both these issues have not been examined by ld. CIT(A). Therefore, we think it fit and appropriate to remit this issue back to the file of CIT(A) for fresh examination. Therefore, we set aside the order of CIT(A) and remit this issue back to the file of ld. CIT(A) for fresh adjudication in accordance to law. For statistical purposes, the ground raised by the Revenue is allowed. Addition u/s 2(22)(e) being trade advance received from EDP Software Ltd - whether such advance was given by EDP Software Ltd in the ordinary course of business and substantial business of the said company were to deal in loan and advance, as evident from the audited accounts? - HELD THAT:- Section 2(22) (e ) of the Act states that “any payment by a company…….for the individual benefit of any such shareholder, to the extent to which the company in either case possesses accumulated profits’. That is, deemed dividend would be to the extent of accumulated profits of the company and that accumulated profit should be as on 31st March 2012 ( P.Y.2011-12), however, in assessee`s case under consideration the accumulated profit as on 31st March 2012 is in negative, that is,loss to the tune of ₹ 10,60,332/- , therefore, the provisions of section 2(22) (e ) does not apply.That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is therefore, upheld and the grounds of appeal of the Revenue are dismissed. Addition u/s 2(22)(e) on account of advances received from Nathvar Tracon Pvt. Ltd. - main grievance of the assessee is that the CIT(A) has confirmed the addition without appreciating that the assessee is having current account with M/s Nathvar Tracon Pvt. Ltd. (i.e. the company from whom the assessee took the advance and given advance were through current account). - HELD THAT:- As per the ld. Counsel for the assessee mere perusal of the ledger account, it is clear that the said account was for the purpose of doing business which was in the nature of current account wherein one can find debit entry and credit entry on several occasions which needs to be examined by the ld. CIT(A). Therefore, we are of the view that this matter should be remitted back to the file of ld. CIT(A) for fresh examination. We also make it clear that if the ld. CIT(A) having examined the ledger account finds that it is a current account, no addition is warranted as held by the Co-ordinate Bench of this Tribunal in case of M/s Snehapusph Barter Pvt. Ltd [2017 (10) TMI 934 - ITAT KOLKATA] - we set aside the order of ld. CIT(A) and remit this issue back to the file of ld. CIT(A) for fresh examination and adjudicate the issue in accordance to law.
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