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TMI Blog2012 (8) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... utiny and notice under section 143(2) and 142(1) were issued. The assessee is a Managing Director of M/s. Ravindra Services (P) Ltd. (hereinafter referred to as RSPL) having substantial ownership of shareholding and 10% of voting power. The assessee had taken a loan of Rs. 17,65,517/- from RSPL which was subsequently repaid by the assessee. The Assessing Officer treated the said amount as deemed divided and made addition under the head "other sources" invoking the provisions of section 2(22)(e)of the Act. Apart from the above, the Assessing Officer made addition of Rs. 2,62,035 towards the rent received from RSPL under the head 'Income from House Property'. Further, an addition of Rs. 1,20,718/- was made in the total income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the assessee is squarely covered by the judgement of the Hon'ble Supreme Court of India in the case of Sarada P. Vs. CIT., 229 ITR 444(SC) as well as Smt. Tarulata Shyam Vs. CIT reported as 108 ITR 345(SC). He further relied on the judgement of the Hon'ble Madras High Court in the case of CIT Vs. P.K.Abubucker reported as 259 ITR 507(Mad). 5. On the other hand, Dr. Anita Sumanth, counsel appearing on behalf of the assessee submitted that the order passed by the CIT(A) is a well reasoned and detailed order. She submitted that the amount was advanced to the assessee as per her pre-condition of granting bank guarantee and a collateral security for funding of the company. The counsel submitted that the assessee had given personal guaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein below:- "2(22)(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) [made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for the individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital in the demerged company)." The definition laid down by section 2(22) is inclusive and not exhaustive. The following payments of distributions by a company to its shareholder are deemed as dividends to the extent of accumulated profits of the company although these payments may not be dividends under the provisions of Companies Act:- (a) any distribution or release of company's assets; (b) any distribution of debentures, debenture stock, deposit certificates and bonus to preference share- holders; (c) distribution on liquidation of company; (d) distribution on reduction of capital (e) any payment by way of loan or advances by a closely held company to a shareholder holding substantial interest provided the loan should not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had substantial holding in in a private company. The assessee permitted his immovable property to be mortgaged to the bank for enabling the company to take the benefit of loan. The Board of Directors of the company passed a resolution to obtain interest free deposit upto Rs. 50 lakhs as and when required. The assessee obtained from the company a sum of Rs. 20,75,000/- by way of security deposit. Out of this amount, a sum of Rs. 20 lakhs was returned by the assessee to the company. The Assessing Officer added the sum of Rs. 20,75,000/- as deemed dividend. The Hon'ble High Court while allowing the appeal of the assessee held that for retaining the benefit of loan availed of from the bank, if decision was taken to give advance to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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