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2015 (7) TMI 1068 - ITAT CHENNAI

2015 (7) TMI 1068 - ITAT CHENNAI - TMI - Deemed dividend addition u/s 2(22) - Held that:- From the explanation 3(b) to section 2(22)(e),it is very clear that a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern. This explanation clearly mentions about any time during the previous year. It is not as stated by the ld. Counsel fo .....

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names of done. Shares having been gifted to the assessee and found to be genuine and the deemed dividend could not assessed in her hands. The proviso to Explanation 3(b) to section 2(22)(e) was inserted by the Finance Act, 1987. The facts of the case in hand are also different. Keeping in view of the above, we find that section 2(22)(e) of the Act squarely applies to assessee’s case and accordingly, the appeal filed by the assessee is dismissed. - Decided against assessee. - I.T.A. No. 445/Mds/2 .....

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med dividend. In the assessment order, the Assessing Officer has observed that from the balance sheet of M/s. PKPN Spinning Mills (P) Ltd. a sum of ₹ 79,08,532/- was shown as loans and advances to the assessee Shri P.K. Jayagopal. The assessee is a Director of M/s. PKPN Spinning Mills (P) Ltd. and holding substantial interest in the company. Since the transaction hit by the provisions of section 2(22)(e) of the Income Tax Act, the assessee was asked to give explanation with regard to appli .....

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of the Act, has noticed that the unsecured loan given by the company PKPN Spinning Mills (P) Ltd. is a company, where the public are not substantially interested and it had given loan to the assessee P.K. Jayagopal, a shareholder; the assessee, P.K. Jayagopal having shares more than 20% in the company PKPN Spinning Mills (P) Ltd. and the shareholding percentage fulfils the conditions as per section 2(22)(e). Thus, the assessee is having substantial interest in the company; M/s. PKPN Spinning Mil .....

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A) confirmed the order passed by the Assessing Officer. 4. On being aggrieved, the assessee is in appeal before the Tribunal. 5. The ld. Counsel for the assessee has submitted that as per the ledger extract shows that the account of the assessee was debited to the extent of ₹ 34,01,550/- as on 31.03.2011, which represents contra entries relating to Shri J. Lakshmidharan and Shri J. Thiruvadhanan and the corresponding entries find place in the ledger extracts. He further submitted that as t .....

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Spinning Mills (P) Ltd. from 01.04.2010 to 11.11.2010 are not to be considered for the purpose of section 2(22)(e) of the Act. 6. On the other hand, the ld. DR has submitted that the assessee has accepted before the Assessing Officer that he has received the amount of 79,08,532/- as loans and advances and now the assessee submits a contrary plea that the amount of .34,01,550/- did not involve outgoing or flow of money from the company. In so far as transaction between the assessee and M/s. PKPN .....

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rials on record and gone through the orders of authorities below. The assessee is a Director of M/s. PKPN Spinning Mills (P) Ltd. and he has received a sum of ₹ 79,08,532/-. In the accounts of the company, it has shown as loans and advances to the assessee Shri P.K. Jayagopal. Before the Assessing Officer, the CA of the assessee has certified that the amount of ₹ 79,08,532/- received as loans and advances and the company has not charged any interest. The only submission of the assess .....

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.34,01,550/- did not involve outgoing or flow of money from the company to the assessee. This argument of the ld. Counsel for the assessee is an afterthought and it cannot be accepted for the reason that in the balance sheet of M/s. PKPN Spinning Mills (P) Ltd., a sum of ₹ 79,08,532/- was shown as loans and advances to Shri Jayagopal and this fact was not disputed by the assessee neither before the Assessing Officer nor before the ld. CIT(A) or even before us. Moreover, the ld. counsel fo .....

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