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2015 (6) TMI 881 - ITAT HYDERABAD

2015 (6) TMI 881 - ITAT HYDERABAD - TMI - Applicability of TDS provisions in respect of the advances held as deemed dividends by the AO u/s 2(22)(e) - whether future adjustment of advances for trade and processing charges does not alter the character of the advances so as to treat the same as deemed dividend? - Held that:- As decided in assessee's own case [2012 (8) TMI 708 - ITAT, HYDERABAD] as far as trade advances are concerned, there is no question of applicability of the provisions of S.194 .....

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favor of assessee. - ITA.No.154/Hyd/2015 - Dated:- 1-5-2015 - SHRI G.C. GUPTA AND SHRI P.M. JAGTAP, JJ. For The Revenue : Mr. Rajat Mitra For The Assessee : Mr. M.S. Dayakar ORDER PER P.M. JAGTAP, A.M. This appeal is preferred by the Revenue against the order of the Ld. CIT(A)-8, Hyderabad dated 24.11.2014 on the following grounds : 1. The CIT(A) erred in facts as well as in law. 2. The CIT(A) ought to have appreciated that section 2(22)(e) contemplates all kinds of advances so as to treat as .....

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ngaged in the business of manufacture and export of polished granites. A survey in its case was carried out on 19.09.2008 to verify the compliance of provisions of TDS. As found during the course of survey, the assessee company had paid total advance of ₹ 96,20,000 to one M/s. Odlings Memorials P. Ltd. Since there were common shareholders in the assessee company and M/s. Odlings Memorials P. Ltd. and one shareholder of the assessee company was having substantial interest of more than 20% i .....

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mounting to ₹ 3,68,094 being 22.44% and ₹ 16,40,348 under section 201(1) and also levied interest of ₹ 1,03,400 under section 201(1A). The assessee company thus was treated by the A.O. as in default for a sum of ₹ 4,71,494 vide his order dated 06.11.2009 passed under section 201(1)/201(1A) of the Act. 3. Against the order passed by the A.O. under section 201(1)/201(1A), an appeal was preferred by the assessee before the Ld. CIT(A) who, following the decision of the Tribun .....

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. At the time of hearing before us, the learned Representatives of both the parties have agreed that the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the order of the Tribunal dated 08.06.2012 for A.Ys. 2005-06 and 2006-07 (supra) read with M.P.No.125 & 126/Hyd/2012 dated 03.08.2012. The copies of the said orders of the Tribunal are also placed on record before us and a perusal of the same shows that a similar issue has been decided by the Tri .....

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as trade advances are concerned, there is no question of applicability of the provisions of S.194 of the Act, and consequently, applicability of provisions of S.201(1) and S.201(1)(1A) does not arises. As for the other advances as well, We have perused para 6 of the said order of the Tribunal. For the sake of completeness of this order, we reproduce the said para hereunder- 6. We have heard the rival contentions and perused the facts of the case. The arguments made by Shri Rajeev Sogani, learne .....

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t and Shri Tehsin Rafi Bagdia - 50 per cent. The complete picture is depicted in the chart placed on record. The legislature have rightly restricted the TDS requirement only when payment is made to shareholders. Under the provisions of the Companies Act, 1965, every company is expected to maintain a register of shareholders under s.150 of the Companies Act, 1956. Company is not obliged to maintain any register when details of such concerns may be maintained to which provisions of s.2(22)(a) appl .....

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to a shareholder. Payment to shareholder will cover both types of dividends i.e. normal dividend as well as deemed dividend. Otherwise also, deemed dividend will be taxed in the hands of the shareholder and not in the hands of non-share-holder payee. Therefore, s.194 does not require TDS when payment is made to a non-shareholder. Also, under s.206 of the Companies Act, 1956, the dividend can be paid to a registered shareholder only. Therefore, s.194 of the IT Act, 1961 is synchronized with the r .....

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y basing on the status of the assessee, in our opinion, are totally artificial and not valid. In this view of the matter, the ratio of the said decision of the Jaipur Bench of the Tribunal in the case of ANZ Reality (supra), applies to the facts of the present case. Hence, in so far as the aspect of deemed divided involved in cash advances is concerned, assessee is entitled for relief in this regard. We accordingly allow the grounds of the assessee in this appeal. 15. During the proceedings befo .....

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