TMI Blog2012 (9) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... as business income, the Revenue cannot argue that lending and advancing of money is not the business of the company. Therefore, amount was received as loan from the company in the ordinary course of business of the company and hence cannot be assessed as deemed dividend - Decided in favor of assessee Addition u/s 68 of Rs 16.50 lacs being cash deposited in the bank account of the assessee on the ground that source had not been explained satisfactorily - Held that:- Assessee had explained the source as sale proceeds of land at Madurai, in which the share of assessee was Rs. 14,63,459 and income had been offered as capital gains. There is no dispute about sale of land. Cash received on account of sale was duly reflected in the balance she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10% of the shares in Sunflower Trading Investment (P) Ltd. had received a loan of Rs. 3,00,000, from the said concern. The Assessing Officer, therefore, asked the assessee to explain as to why the said sum should not be treated as deemed dividend under section 2(22)(e). The assessee explained that the provisions of section 2(22)(e) were not applicable as the company had advanced the loan to the assessee in ordinary course of business of granting loans and advances. It was pointed out that as per memorandum of association, the company, as an investment company, engaged in the business of granting loans and advances. The Assessing Officer, however, did not accept the contentions raised. It was observed by him that in the memorandum of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mumbai Bench of the Tribunal in the case of Bharat C. Gandhi v/s ACIT, 178 Taxman 83. The learned Commissioner (Appeals) was, however, not satisfied with the explanation given by the assessee, it was observed by him that the said company had not given loan or advance to any person other than the assessee and the interest of Rs. 81,249, had been received only from the assessee. The learned Commissioner (Appeals), therefore, concluded that the company was not having any business of money lending. Accordingly, he confirmed the order of the Assessing Officer and treated the sum of Rs. 3,00,000, as deemed dividend. Aggrieved by the said decision, the assessee is in appeal before the Tribunal. 5. Before us, the learned Counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as deemed dividend but the said provisions are not applicable in case the loans / advances had been received by the shareholder in ordinary course of business of the company. Therefore, the only dispute in this case is whether the sum of Rs. 3,00,000, received by the assessee can be considered as money received in the ordinary course of business of the company. There is no dispute that lending and advancing of money is one of the objects of the company. The said company had been receiving interest from loans and advances given which had been offered as business income and it was also being accepted by the department under section 143(1). In assessment year 2002 03, the Assessing Officer had accepted the interest income declared by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , did not accept the explanation on the ground that cash received by the assessee on sale of land for assessment year 2005 06 and 2006 07 could not held by him in assessment year 2007 08, as no prudent businessman would keep cash in hand for such a long period. The Assessing Officer observed that the assessee failed to produce cash book. The Assessing Officer, therefore, did not accept the explanation and added Rs. 16,25,000, as cash credit under section 68. 10. The assessee disputed the decision of the Assessing Officer and submitted before the learned Commissioner (Appeals) that cash received from sale of land was being carried forward. The assessee produced cash summary of F.Y. 2004 05 and 2005 06 to point out that the assessee had rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Counsel for the assessee, on the other hand, submitted that there was no dispute that the assessee had sold land and capital gain from sale had been offered to tax. He referred to the details of receipts from sale of land placed at Pages 8 and 9 of the paper book in which the sale consideration had been deposited in the joint account in which the share of the assessee was Rs. 14,63,459. The cash had been withdrawn from the company during the period from July 2005 to June 2006, and the cash had been duly shown by the assessee in the balance sheet of earlier years. The Assessing Officer had no material to show that the cash had been utilised by assessee for some investment. It was, accordingly, urged that the order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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