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Shri Kaushik B. Patel, C/o B. Patel Infrastructure Pvt Ltd Versus The Dy. Commissioner of Income Tax, Mehsana Circle, Mehsana

2015 (10) TMI 1605 - ITAT AHMEDABAD

Deemed dividend addition u/s.2(22)(e) - Held that:- The assessee has filed a paperbook on record which reveals that he gets a monthly salary of ₹ 50,000/- and also tractor rental income of ₹ 1,01,000/- in May-2005 and ₹ 1,40,000/- from June-2005 upto March-2006. It is further seen that the assessee has also received Qualish car rental income of ₹ 1,44,000/-. His books record tractor rental income as ₹ 15,01,000/-. The Revenue does not dispute the assessee's fixed as .....

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this section stipulates addition of a deemed income statute liable to be strictly interpreted. The case file indicates that the impugned sums are routine business transactions/salary payments made between the company and the assessee-appellant not coming within the purview of deemed dividends u/s. 2(22)(e) of the Act. The assessee has filed a catena of case-laws. See DCIT vs. Chariot International Pvt.Ltd. [2013 (12) TMI 596 - ITAT BANGALORE] holding that routine commercial transactions involvi .....

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;s appeal for assessment year 2006-07 arises from order of the CIT(A)-Gandhinagar, Ahmedabad dated 01/09/2011 in case No.118/2010-11 upholding deemed dividend addition of ₹ 11,24,237/- u/s.2(22)(e) of the Income Tax Act, 1961 (in short "the Act"). 2. Facts of the case are in a narrow campus. The assessee is a director in M/s.B.Patel Infrastructure Pvt.Ltd. He holds more than 10% of its shares. The Assessing Officer noticed him to have withdrawn excess amount of ₹ 11,24,237/ .....

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to the tune of ₹ 9,81,400/- from 01/04/2005 onwards. Accordingly, he treated the impugned sum of ₹ 11,24,237/- as deemed dividends and made the consequential addition. 3. The CIT(A) has upheld the Assessing Officer's action as under:- "4.2 1 have gone through the rectification order and the submissions of the appellant. The following pertinent observations are made on the issue: a) the assessee is one of the Director holding more than 10% of share holding of B. Patel Infras .....

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ng is for the purpose of business. d) However, the account proves otherwise from the face of it. The assessee has shown outstanding as on 1/4/2005 at ₹ 880519/-. Against the outstanding of ₹ 880519/- assessee has repaid ₹ 595000/- till 30/4/2005. The assessee had not received any advance of ₹ 12,50,000/- against the vehicles as claimed although the vehicles were given on rent during the period. In the month of May, 2005 from 1/4/2005 to 31/5/2005, assessee had withdrawn & .....

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mp; machinery rent. From 1/1/2006 to 28/2/2006 assessee has received ₹ 249077. In the month of March, assessee has received ₹ 981400/-. Not only is the claim of the appellant is proved wrong from the accounts but also it is clearly an afterthought and a story when viewed from the angle of probabilities of human behavior and business practices. It is seen that the total value of these assets i.e. car and tractors rented out to the company is only ₹ 41,00,000/- on which the asses .....

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resent case, it is not even the claim of the appellant that any amount was advanced towards purchases. The Hon'ble Supreme Court in the case of Tarulata Shyam & Ors 108 ITR 345 has held that once the income is taxable within the law, the hardship caused to the appellant ceases to be an issue. In that case, the amount was loaned / advanced for a very short time, but still it was held taxable. The ground of appeal is therefore dismissed. 4. We have heard both the parties and gone through t .....

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