9911796707
TMI Blog2012 (8) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings of the company, it was observed that the assessee had received substantial advances/loans which attracted the provisions of section 2(22)(e) of the Act. Consequently, the proceedings u/s 147 of the Act were initiated. During the re-assessment proceedings, it was observed from the ledger account filed that the assessee had taken an advance/loan of Rs. 22,00,000/- and Rs. 18,00,000/- on 27/05/2005 amounting to Rs. 40,00,000/-. As the AO proposed to invoke the provisions of section 2(22)(e), the assessee filed a petition u/s 144A of the Act before the Addl. CIT, Range-2, Hyderabad, who for the detailed reasoning given in his order held that the sum of Rs. 40,00,000/- was to be taxed as deemed dividend in the hands of the assessee. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the detailed reasoning given in the order passed u/s 144A of the Act. I am in agreement with the AO that the source from which the amount of Rs. 40,00,000/- has been paid to the appellant is immaterial and that the only condition prescribed in section 2(22)(e) is that the company should possess accumulated profits to the extent of the deemed dividend. The explanation, therefore, that the amount was transferred from the cash credit account of the company on 27/05/2005 is of no relevance. Further, there is no dispute over the fact that the amount was initially credited into the savings bank account of the appellant. In such circumstances, there is no merit in the argument that no benefit was availed by the appellant. As stated, the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of facts. Accordingly, no further reduction of the accumulated profit is warranted on account of addition depreciation. The decision of the Hon'ble Delhi ITAT in the case of RK Soni Vs. ITO 6 SOT 292 relied upon by the appellant is inapplicable to the facts of the present case. In that case, certain amounts were due to the company through the arbitration award. The Hon'ble Tribunal held that it could not be said that the amount released was in the nature of income as the very basis was disputed and therefore the amount could not be considered as accumulated profits in the hands of the company. However, in the present case, there is no dispute over the fact that adequate accumulated profits are already available for the purpose of det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the fact that the provisions of section 2(22)(e) have no application to the facts of the case and ought to have deleted the addition made by the AO." 4. The learned counsel for the assessee Shri S. Rama Rao, reiterated the arguments as raised before the CIT(A) and the learned DR Shri B.V. Prasad Reddy supported the order of the CIT(A). 5. We have considered the facts and the submissions of both the parties and perused the record as well as the orders of the authorities below. It is an undisputed fact that a sum of Rs. 40,00,000/- was advanced by M/s Hyderabad Food products (P) Ltd at the instance of the Assessee who holds 10% of voting rights in that company. It is also not in dispute that the company had sufficient accumulated profits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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