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TMI Blog2011 (3) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... h less than 10% at the relevant time. M/s Pearey Lall & Sons (EP) Ltd. (hereinafter, referred to as 'the Company') has also been assessed to tax in Rohtak. In respect of his case for the year 2002-03, the Company had filed appeal before the CIT(A), Rohtak. While deciding the said appeal, the CIT(A), Rohtak found that the assessee, herein, had given property No. 27, Aurangezed Road, New Delhi to the Company on lease on 16th March, 1998 at a monthly rent of Rs. 12,000/-. The account of the assessee was also credited with Rs. 75 lakhs as interest free security deposit. This amount was not actually paid to the assessee and instead the assessee was issued 74,560 shares of Rs. 100/- each on 25th March, 1998 and the account of the assessee was deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, the assessee preferred an appeal to the CIT(A). The assessee pressed both the contentions which were raised before the Assessing Officer as well, namely, issuance of notice under Section 148 as barred by limitation, and even on merits, the addition was untenable. The CIT(A) accepted both these contentions of the assessee and deleted the addition made by the Assessing Officer. 3. We may point out, at this stage, that on the question of limitation, the Department had contended that, no doubt, notice was issued after the expiry of six years, since the assessment was reopened on the basis of "directions" given by the Appellate authority i.e. the CIT(A), Rohtak, the limitation period, as prescribed under Section 149 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the case was not covered by the provisions of Section 2(22)(e) because of the following reasons"- 1. Security deposit of Rs. 75 lakhs credited to the assessee in the books of the Company on 16th March, 1998 and on that date the assessee had admittedly shareholding much less than 10% and thus provision of Section 2(22)(e) were not attracted. 2. The assessee had never received any money i.e., the aforesaid amount of Rs.75 lakhs after few days i.e. on 25th March, 1998, he was allotted shares and for this reason also the question of treating the aforesaid amount as deemed dividend would not arise. It was argued by the assessee that Section 2(22)(e) created a legal fiction and such a provision has to be strictly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs as time barred and a very myopic view was taken by the ITAT in not construing the aforesaid ground in its proper prospect. 8. Though, Mr. Satyen Sethi, learned counsel for the assessee joined the issue, he submitted that for going into the issue he was ready to argue the appeal on merits as well. 9. Learned counsels for both the parties agree the issue to be decided on merits. It is because of this reason that we heard learned counsels for the parties on merits on the addition of Rs.75 lakhs made by the Assessing Officer under Section 2(22)(e) of the Act which has been deleted by the CIT(A). Facts demonstrated above would clearly reveal that admittedly as on 16th March, 1998 when the transaction of lease was entered into between the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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