TMI Blog2012 (7) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... in Rule 46A of the ITR - decided against revenue. Addition on account of deemed dividend u/s 2(22)(e) - the assessee company has taken loan from A.P. Projects Ltd. - Held that:- Shri Pankaj Bajaj was director of the assessee company and he was also a director in the lender AP Projects Private Limited during the year under consideration. In view of the exception as per sub-clause (ii) of Section 2(22)(e, the provisions of deemed dividend are not applicable as the appellant assessee company was not a shareholder in lender A.P. Projects Private Limited and Section 2(22)(e) of the Act is not applicable to a non shareholder - against revenue. - ITA No. 2354/Del/2011 - - - Dated:- 11-6-2012 - SHRI J.S. REDDY, AND SHRI CHANDRA MOHAN GARG, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet and the same was added to the income of the assessee as income from other sources. Being aggrieved by the above additions, the assessee invoked the CIT(A) who deleted both the additions by the impugned order. Hence, this appeal by the Revenue before this Tribunal. 4. On bare reading of the impugned order, the ld. CIT(A) considered the assessment order and the written submissions of the appellant with remand report submitted by the AO and rebuttal of the assessee appellant to the remand report. 5. Ld. CIT(A) observed that the AO disallowed business promotion expenses only on cryptic reason stating that no details and purpose was given or offered by the assessee. Ld. CIT(A) admitted the invoice which reveals the purpose that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not fall within the exception provided in the section 2(22)(e). After having seen the Profit Loss a/c and its relevant schedule of AP Projects Ltd which was also before the AO and the case laws relied on by the appellant, I am of the view that the case of the appellant is covered by the exception as per sub clause (ii) of sec 2(22)(e). 6.3 Further to the contention of the appellants case being covered by the exception, it was also submitted that the provisions of deemed dividends are not applicable as the appellant is not shareholder in A.P. Projects Ltd. and that Sec. 2(22)(e) is not applicable to a non shareholder. For this proposition reliance was placed in the cases of CIT vs Hilltop 313 ITR 116 (Raj) 27 SOT 270 (MUM)(SB)/118 ITD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The ld. CIT(A) finally held that the purpose of above payment as business promotion expenses was properly explained by the assessee as the fresh evidence submitted by the assessee and admitted after due procedure as provided in Rule 46A of the Income Tax Rules 1962, it reveals that the payment was made to the above firm as commissioning advance for value assessment of commercial plot in Noida. In view of above, we observe that the reasons recorded by the AO for this disallowance and addition were not based on well accepted principles of natural justice as he did not afford opportunity to the assessee for explanation of purpose of this payment to the said firm. On the other hand, ld. CIT(A) after adopting due procedure considered addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding on the High Court. 10. In the case in hand, it is undisputed that Shri Pankaj Bajaj was director of the assessee company and he was also a director in the lender AP Projects Private Limited during the year under consideration. In view of the exception as per sub-clause (ii) of Section 2(22)(e) of the Act, the provisions of deemed dividend are not applicable as the appellant assessee company was not a shareholder in lender A.P. Projects Private Limited and Section 2(22)(e) of the Act is not applicable to a non shareholder. Ld. CIT(A) placed his reliance on the judgment of CIT vs Hilltop 313 ITR 116 (Raj) and judgement of ITAT Delhi Bench in the case of A.R. Chaddha and Co. India (P) Ltd. 133 TTJ 490 and also followed the judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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