TMI Blog2011 (5) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2010 whereby the two cross appeals one filed by the assessee and the second by the Revenue against the order of the CIT(A) dated 18th June, 2009 passed for the assessment year 2005-06 were disposed of. The appeal of the assessee was partly allowed, whereas the appeal of the Revenue was dismissed vide impugned order. It is against this order that the Revenue is in appeal before us. 2. The appeal was admitted on the following substantial questions of law : (a) Whether ITAT was correct in law in deleting the additions of Rs.10,20,000/-, Rs.15,40,000/- and of Rs.20,70,000/- being the loans taken from M/s. Sisbro Promoters Pvt. Ltd., M/s. Fitwell Fashion Fabrics Pvt. Ltd. and M/s. National Capital Region Pvt. Ltd., made by the AO, treating the same as deemed dividend under section 2(22)(e) of the Act? (b) Whether ITAT was correct in law in deleting the addition holding that the money was taken by the assessee in the line of his business and therefore, could not be treated as deemed dividend? 3. The facts, in brief, leading to filing of the present appeal are like these : The assessee filed his return for the assessment year 2005-06 declaring total income of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of this amount in the taxable income of the assessee. 4. Dissatisfied with the additions, the assessee preferred appeal against the order of the AO before CIT(A) and contended there that the amount of ₹ 19,00,000.00 and ₹ 3,78,125.00 alleged to have been advanced by M/s Sisbro Promoters Pvt. Ltd. to M/s Sisbro India Pvt. Ltd. had not happened during the year under appeal. In this connection, the CIT(A) arrived at a conclusion that these transactions have taken place in the financial year 2003-04 and financial year 2000-01, and so these amounts cannot be considered as deemed dividend in the present assessment year. He accordingly deleted both these additions. The Revenue accepted this deletion made by the CIT(A) and did not challenge it before the Tribunal. 5. With regard to amount of ₹ 16,00,000.00 taken by M/s M.S. Softpro Pvt. Ltd. from M/s Fitwell Fashion Fabrics Pvt. Ltd., it was contended by the assessee that these transactions also happened in financial year 2001-02 and the amount of share application received by M/s M.S. Softpro Pvt. Ltd. was of only ₹ 1,60,000.00 and not ₹ 16,00,000/-. The CIT(A) accepted the same and deleted this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analytically examining them. Ld. CIT(A) excluded substantial portion from the such deemed dividend and revenue has not challenged the action of the Ld. CIT(A) as discussed in the foregoing paragraphs by us. It indicate that Ld. AO did not deem it fit to consider the contention of assessee. The assessee right from the very beginning contending that he is in the business of brokering of real estate. The companies whenever had any surplus fund they advance it to the assessee for making investment in the real estate. Neither the assessee nor the companies are disputing this conduct. Before Ld. CIT(A) it was pointed out that for M/s National Capital Region even agreement to purchase was executed. The Ld. CIT(A) has disbelieved this claim of the assessee on the ground that agreement was not registered. Hence it is only projected as a colourable device to avoid the mischief of section 2(22) (e) of the Act. The assessee is claiming these advances as advance for investment in his books of accounts. This aspect has not been disputed by the AO. The Ld. CIT(A) also was of the opinion that argument of business advance for taking way the amount from ambit of deemed dividend can be considered onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement was entered on 18th September, 2003. The CIT(A) also disbelieved the claim of the assessee on this count. The Tribunal in this regard has recorded that the assessee was claiming this advance for investment in his books of accounts and the AO has not disputed this. Apparently, this was a perverse recording by the Tribunal inasmuch as it has been seen that AO and CIT(A) have categorically recorded this transaction as colourable device. It is unbelievable that an agreement was executed on 18th September, 2003 and the payment was made, but the possession of the property was to be handed over after more than five years. Even the property continued to be reflected in the balance sheet of the assessee after two years of the agreement. Similarly, in respect of ₹ 27,90,125/- shown as loan/advance from M/s TSM Polymers Pvt. Ltd., the assessee had replied to the AO that this was received against sale of property under the terms of the agreement dated 18th September, 2003. With regard to this entry also, the Tribunal made a sweeping observation that the assessee was claiming these as advance for investment in his books of accounts and this aspect was not disputed by the AO. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
