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TMI Blog2013 (1) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the action of the CIT(A) in deleting such additions made by the assessing officer. The cross objections of the assessees merely support the order of the CIT(A), in the light of the appeal of the Revenue. 3. Brief facts of the case, as taken from the appeal of the Revenue, ITA No. 445/Hyd/2012, concerning Smt. B. Seetaratnam, for the assessment year 2003-04, are that the assessee filed return of income for the assessment year 2003-04 on 30.9.2003 declaring a total income of Rs. 1,00,900, besides agricultural income of Rs. 1,50,000. The said return was initially processed under S. 143(1) of the Act on 22.1.2004. Subsequently, it was noticed that the assessee had taken advances of an amount of Rs. 30,00,000 from M/s. BDR Projects Pvt. Ltd., wherein the assessee was holding 18.69%of shares. The said advances were treated as deemed dividend within the meaning of S. 2(22)(e) of the Act. As the assessee had failed to disclose the said income, being deemed dividend, a notice under S. 148 of the Act dated 16.7.2007 was issued. In the re-assessment proceedings that ensued, the assessing officer noticed from the annual report of BDR Projects Pvt. Ltd. for the year ending 31.3.2003 that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the Revenue, wherein supporting the orders of the CIT(A) assessees filed the cross-objections. 7. The learned Departmental Representative submitted before us, commonly for these appeals that the CIT(A) was totally misconceived in granting relief to the assessee by pl acing reliance on the decision of the Calcutta High Court in the case of Pradip Kumar Malhotra (supra). The learned Departmental Representative submitted that the facts in the case of Pradip Kumar Malhtora (supra) are clearly distinguishable from the facts involved in the present appeals. The learned Departmental Representative submitted that in case of Pradip Kumar Malhotra (supra), the property was mortgaged by the shareholders for enabling the company to avail loans for its business purposes. Subsequently, when the shareholders requested for release of the mortgaged property, the bank refused to release it unless property of similar nature is mortgaged. Since the company was unable to release the mortgaged property, it advanced the money to the shareholders as required by them. However, in the case of the assessees before us, neither the properties of the assessees were mortgaged with the bank, for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Authorised Representative for the assessee further submitted that after construction of the building, the value of the property would further shoot up, and the company would also get benefitted as it would be able to get further finance facility from the bank. The learned Authorised Representative for the assessee relying upon the decision of the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra), submitted that there being no individual benefit passed on to the assessees by virtue of the monies advanced by the company, it cannot be treated as deemed dividend, coming within the ambit of S. 2(22)(e) of the Act. 9. We have heard the rival submissions and perused the materials on record. We have also gone through the case-law relied upon by the parties. After going through the orders of the lower authorities, it is evident that while the Assessing Officer has held that the amounts advanced have to be considered as deemed dividend under S. 2(22)(e) of the Act, the CIT(A) by relying upon the decision of the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra), has held that since the assessees have placed their properties as personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist- (a) It must be a company in which public are not substantially interested; (b) The company must have made payments by way of advance or loan to a share-holder, holding more than 10% of the shares of the company; (c) The company must have accumulated profits during the relevant year; Sub-clause (ii) of S. 2(22)(e) carves out an exception by providing that any loan or advance to a share-holder by a company, which is engaged in money lending business, in the ordinary course of its business, shall not be treated as dividend. 11. In the facts of the present case, it is not disputed that all the conditions attracting the provisions of S. 2(22)(e) exist. It is the case of the assessee that since it has mortgaged its property with the bank to enable the company to avail finance facilities from the bank, the advance by the company is not a gratuitous loan or advance, but in return for an advantage which the company has already availed on account of mortgaging of properties done by the assessees. However, it is a fact on record that the assessees have not produced any documents to prove the fact that the personal properties of the assessees were actually mortgaged ..... X X X X Extracts X X X X X X X X Extracts X X X X
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