TMI Blog2012 (8) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from KMPTL as share application money, we are not inclined to interfere with the findings of the ld. CIT(A). As regards advance of ₹ 3,96,888/- against order, the AO did not record any reasons to tax the amount by way of deemed dividend. On appeal, the ld. CIT(A) concluded that commercial advance was outside the purview of the deeming provisions of section 2(22)(e) of the Act. Hon’ble jurisdictional High Court in Raj Kumar (2009 (5) TMI 17 - DELHI HIGH COURT) following the view in CIT vs. Nagindas M Kapadia(1988 (12) TMI 89 - BOMBAY High Court) held that the trade advance which is in the nature of money transacted to give effect to a commercial transaction does not fall within the ambit of the provisions of sec. 2(22)(e) of the Act - ITA No.2858/Del/2012 - - - Dated:- 28-8-2012 - SHRI R.K. GUPTA , JM SHRI A.N. PAHUJA, AM For the Petitioner : Shri Tarun Kumar, AR For the Respondent : Shri Neeraj Kumar,DR ORDER A.N.Pahuja:- This appeal filed on 08th June, 2012 by the Revenue against an order dated 30th March, 2012 of the ld. CIT(A)-IV, New Delhi, raises the following grounds:- 1 The ld. CIT(A) has erred on facts and in law in delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act nor the aforesaid two advances. However, the AO did not accept the submissions of the assessee in view of decision in the case of Balotia Engg. Works Pvt. Ltd. vs. CIT, 275 ITR 399 (Jharkhand),holding that share application money parttook the character of deposit. Since the share application money was deposited with the assessee on 20-12-2007 while shares were allotted only in July, 2010 i.e. after a period of more than 30 months in pursuance to the board resolution dated 22nd July, 2010, the AO concluded that the amount of Rs. ₹ 1 crore was, in fact, advance and explanation regarding share application money was an afterthought, query having been raised much earlier regarding taxation of amount as deemed dividend . Accordingly, the AO brought to tax the amount of ₹ 1 crore and advance of ₹ 3,96,888/- as deemed dividend within the meaning of provisions of sec. 2(22)(e) of the Act while accepting the contentions of the assessee in respect of the amount of Rs. ₹ 63,58,573/-. 4. On appeal, the assessee contended before the ld. CIT(A) that the aforesaid amounts were not covered within the definition of deemed dividend u/s 2(22)(e) of the Act and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , while he has rejected the other two amounts on account of share application money and advance against orders under similar facts and circumstances without assigning any valid reason. In view of the above, the impugned addition of Rs. ₹ 1,03,96,888/- cannot be sustained either on facts or in law. The same is, therefore, deleted. 5. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A) . The ld. DR supported the order of the AO while the ld. AR on behalf of the assessee relied upon the findings in the impugned order. 6. We have heard both the parties and gone through the facts of the case. The issue before us is as to whether the amount of ₹ 1 crore on account of share application money and ₹ 3,96,888/- by way of advance against order received by the assessee from M/s Karishma Machine Tools Pvt. Ltd., could be taxed in the hands of the assessee, by way of deemed dividend in terms of provisions of sec. 2(22)(e) of the Act. The AO brought to tax the amount of ₹ 1 crore in the hands of the assessee in the light of decision in Balotia Engg. Works Pvt. Ltd. (supra) and did not adduce any reason in support of the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Additional CIT took the trouble to examine this aspect while imposing the penalty and merely relied on the judgment of the Hon ble Jharkhand High Court (supra). Similar is the situation in the instant case. The AO did not even attempt to examine as to whether or not the share application money can be treated as loan or advance within the meaning of provisions of sec. 2(22)(e) of the Act. There is nothing on record to show that these transact ions were at tached with certain condit ions or st ipulat ion as to period of repayment , rate of interest , manner of repayment , etc. so as to t reat the said t ransact ions as loans or advances. Moreover, the Revenue have not placed before us any material, suggest ing that the transact ions were actually in the nature of loans or advances. In these ci rcumstances, the reliance on the decision in M/s Bhalotia Engineering Works Pvt. Ltd. (supra),in our opinion, is totally misplaced. Hon ble Madras High Court in CIT Vs. Rugmini Ram Ragav Spinners Private Ltd. (2008), 304 ITR 417 held that the money in cash by a company towards allotment of shares, was neither a loan nor a deposit. In Baidya Nath Plastic Industries (P) Ltd. and Ors vs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
