TMI Blog2006 (8) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... 37.5 per cent or is holding of 17.68 per cent and 8.13 per cent in Nulon Global Ltd. and Nulon Electronics Ltd. respectively will neither after the situation nor such factor will bring the payment by way of advance to the appellant company as deemed dividend u/s 2(22)(e). Since the appellant is not a shareholder holding any share in the Payer Companies the provision of section 2(22)(e) are not attracted. The payment is not given to any other concern or for the benefit of any shareholder. Thus the provision of section 2(22)(e) are not attracted. We accordingly delete the addition made in this regard. In the result, the appeal is partly allowed. - HON'BLE N.K. KARHAIL, JUDICIAL MEMBER AND DEEPAK R. SHAH, ACCOUNTANT MEMBER For the Appellant : K.R. Manjani For the Respondent : L.K.S. Dahiya ORDER Deepak R. Shah, Accountant Member 1. This appeal by assessee arises out of the order of Ld. CIT(A)-XVI, New Delhi, dated 22nd December, 2006. 2. In the ground raised the assessee challenges the validity of the assessment under section 143(3), addition of Rs. 60,22,000 being deemed dividend under section 2(22)( e ) of the Income-tax Act, disallowance of Rs. 2,000 being treated as donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT . When the notice is sent through speed post which is received by the assessee the presumption is that the notice is served in the local area next day. Thus it has to be held that the notice was served within limitation period prescribed in proviso to section 143(2). 6. We have considered the relevant fact, argument advanced and the case laws cited. When the notice is sent by speed post the postal authorities are the agent of Assessing Officer. Such view has been taken by Hon ble Delhi High Court in the case of Lunar Diamonds Ltd. ( supra ). The proviso requires the service of notice and not merely issue of notice. Similar view has been adopted by the Special Bench of the Tribunal in the case of Raj Kumar Chawla v. ITO [2005] 94 ITD 1 (Delhi). However, in the present case it is seen that the notice was issued at the address mentioned in the return of income. The notice was issued on 30th October, 2002 at 11.50 A.M. The same was received at the end of assessee at the address mentioned in the return. Thereafter the notice was redirected at the instance of noticee. In such a situation, the postal authorities acted as an agent of the noticee i.e., the assessee and not the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve any notice from the Income-tax Department. Therefore, there is no clinching proof from the assessee s side for service of notice on 3-11-2001. Since there is proof for sending the notice by speed post on 30-10-2001, the presumption that it would have been delivered to the assessee in the ordinary course of speed post on 31-10-2001 would operate and accordingly we hold that the notice must be presumed to have been served on the assessee on 31-10-2001. This part of the argument of the department succeeds. The result is that though the copy of the notice served on the Accountant on 31-10-2001 does an amount to proper service of the notice, the notice sent by speed post to be presumed to have been served on Shri Satish Pahwa on 31-10-2001 under section 282(1) read with section 27 of the General Clauses Act. Therefore, there is no question of the assessment being struck down as null and void . The first ground is decided against the assessee. 7. In view of the discussion above and in view of the decision of this Tribunal in the case of Shri Balaji Agro Industries ( supra ) it can be held that the notice was served on the assessee on 31-10-2002 and thereafter it was redirected at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee Shri Manjani submitted that assessee is neither a shareholder in M/s. Nulon Global Ltd. nor shareholder in M/s. Nulon Electronics Ltd. The sum of Rs. 59,12,000 was received in earlier year i .e., financial year 2000-01 towards share application money. The amount was not received as loan or advance. Though in the subsequent year the sum was treated as unsecured loan, it is by way of transfer entry and no loan is received during the financial year relevant to assessment year under appeal. The loan is not given to any other person at the behest of the assessee-company. Thus the provision of section 2( 22 )( e ) are not attracted. He also relied upon the decision of Madura Coats (P.) Ltd., In re [2005] 274 ITR 6091 (AAR - New Delhi). Ld. D.R. on the other hand strongly relied upon appellant order. He submitted that if the amount was received in earlier year as share application money, but if the nature change is in subsequent year, to be treated as loan or advance the same has to be treated as advance during the year. Due to change of nature during the year the advance is to be treated as made during the year. For this proposition he relied upon the decision of Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the demerged company (whether or not there is a reduction of capital in the demerged company). Explanation 1. The expression accumulated profits , wherever it occurs in this clause, shall not include capital gains arising before 1st day of April, 1946, or after 31st day of March, 1948, and before 1st day of April, 1956. Explanation 2. The expression accumulated profits in sub-clauses ( a ), ( b ), ( d ) and ( e ), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause ( c ) shall include all profits of the company up to the date of liquidation, [but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the precious year in which such acquisition took place.] Explanation 3. For the purposes of this clause, ( a ) concern means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company; ( b ) a person shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese expenses were made by the directors for hotel stays bills and most of the expenses appeared to be of personal nature. The appellant company vide their letter dated 9-11-2004 contended that all the directors have spacious residences in Delhi and the hotel bills were for outside clients. The expenses related to purchase of gift items have also been scrutinized and found to be totally for personal items as is clear from the domestic transaction details of the credit cards used. Even the hotel charges include late payment charges and other small amounts the appellant has not been able to conclusively justify this expense as being wholly for business purposes. The addition made by the Assessing Officer on this issue stands confirmed. 15. Ld. Counsel for assessee reiterated the arguments placed before Ld. CIT(A). Alternatively it was submitted that the disallowance is on a higher side and may be reduced considerably Ld. DR. on the other hand relied upon appellant order. 16. On careful consideration of relevant fact we do not find any infirmity in the order of Ld. CIT(A). Since the appellant failed to prove that the expenses are incurred wholly and exclusively for the purpose of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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