TMI Blog2011 (4) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax. - 99 and 16 of 2003 - - - Dated:- 1-4-2011 - SUNIL AMBWANI, PANDEY K. N. JJ. JUDGMENT We have heard Shri R. P. Agarwal, learned counsel for the appellant. Shri A. N. Mahajan appears for the Department. 1. These two income-tax appeals under section 260A of the Income-tax Act, 1961, arise out of the orders passed by the Income-tax Appellate Tri-bunal dated March 24, 2003, relating to the assessment years 1992-93 and 1993-94. 2. The assessee was the managing director of M/s. Shyam Biri Works Pvt. Ltd. In the relevant assessment years 1992-93 and 1993-94, he was entitled to both salary and commission of profits. The assessing authority found that he has drawn advances both of salary and commission on profits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed dividend in the hands of the assessee after adjusting the salary. 4. Shri R. P. Agarwal, learned counsel for the appellant submits that any amount, which is due to the appellant and on which he has paid tax could not be deemed to be dividend under section 2(22)(e) of the Act. If tax has been paid on income, it cannot be paid again treating it to be deemed dividend. 5. In the grounds of appeal the following question has been framed to be decided as substantial question of law : Substantial question of law in Income-tax Appeal No. 99 of 2003 "1. Whether, on the facts and in the circumstances, the Income-tax Appellate Tribunal is correct in law in holding that the amount of Rs.1,61,250 less the amount of advance against sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of business of the company engaged in money-lending. The proviso under section 2(22)(e) of the Act is basically in the nature of Explanation. The business transactions of trade advances do not fall within section 2(22)(e). Relying upon CIT v. Nagin Das M. Kapadia [1989] 177 ITR 393 (Bom) and Navnit Lal C. Javeri v. K. K. Sen, AAC [1965] 56 ITR 198 (SC) in which similar provision of the Indian Income-tax Act, 1922, section 2(22)(e) was in issue, it was held that the amount advanced for business transaction between the parties were not such, which will fall within the meaning of deemed dividend under section 2(22)(e) of the Act. 7. We find that both these cases relied upon by the petitioner were in respect of trade advances, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The statement of fact in the order of the Assistant Commissioner of Income-tax dated March 1, 1995 (AO) does not support the argument. 12. We do not find any error in the findings recorded by the Tribunal that the advance towards salary, which was due to the petitioner and was credited to his account every month could not be treated as deemed dividend, but that the advance of commission on profits over and above that amount drawn during the course of the year before the profits was determined and accrued to the petitioner, would be treated as deemed dividend subject to tax. The amount was not treated as separate addition in the personal hands of the assessee. 13. Both the appeals are accordingly dismissed. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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