TMI Blog2016 (3) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the facts and circumstances of the case since the maximum amount advanced by the company to the assessee which is outstanding at any time during the year is ₹ 3,44,689/-. - Decided against assessee - ITA No.1863/PN/2012, ITA No.1864/PN/2012 - - - Dated:- 19-2-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Nikhil Pathak For The Revenue : Shri Manish Kumar Sinha ORDER PER R.K. PANDA, AM : The above 2 appeals filed by the respective assessees are directed against the separate orders dated 28-06-2012 and 29- 06-2012 respectively of the CIT(A)-II, Pune relating to Assessment Year 2004-05. Since common issues are involved in both these appeals, therefore, these were heard together and are being disposed of by this common order. 2. First we take up ITA No.1863/PN/2012 (A.Y. 2004-05) (Shri Suresh N. Kolhapure) : 2.1 In grounds of appeal No.1 the assessee has challenged the validity of reassessment proceedings u/s.147 of the I.T. Act. 3. The Ld. Counsel for the assessee at the outset did not press ground of appeal No.1 for which the Ld. Departmental Representative has no objection. Accordingly, the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 18-07-2003 and the company agreed to purchase 50 acres for a sum of ₹ 1.50 crores. However, the said MOU was subsequently cancelled on 22-12-2005 as the said land was in a forest zone and the company was unable to get the zone changed from the Government. It was submitted that the payments made to him from 5-11-2003 till 21-10-2005 were the amounts towards the advance for the purchase of the above land. It was accordingly contended that the advances were towards sale of land and thus the said advances were made by the company in the course of its business operations and, therefore, the same could not be considered as deemed dividend. The decision of the Bombay High Court in the case of CIT Vs. Nagindas M. Kapadia (1980) 177 ITR 393 and the decision of the Mumbai Bench of the Tribunal in the case of N.H. Securities Ltd. Vs. DCIT (2007) 11 SOT 302 (Mum) were relied upon for the proposition that advances did not constitute deemed dividend in the hands of the assessee. It was further argued that the intention of the assessee was never to avoid tax on dividend and that the assessee had been handing over temporary interest free loans to the company out of his own funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed appears to be a device to avoid the tax. The MOU in any case could not be completed as the same was cancelled by the company on 22-12-2005 after having not been able to get the zone changed from the existing forest zone. The veracity of the MOU itself is unbelievable that an agreement executed on July 2003, but the possession was to be handed over after more than five years. The said property has not been shown to be appearing in the balance sheet of the company as is evident from the balance sheet filed for the year ending 31-3-2004 for AY. 2004-05. In view of the above mentioned facts the contention raised by the appellant that the advances/ deposits were obtained in the course of business cannot be accepted. Thus the judicial decisions relied upon by the appellant are not applicable to the facts of the present case and hence are distinguishable. In the case of CIT Vs Sunil Chopra (2011) 242 CTR 498 (Del), it was held that the contention, that loan / advances were not taken as loans rather they were business receipts in the ordinary course of business was not sustainable. The AO. recorded that agreement was sham in as much as the agreement was executed on 18.09.2003 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 13,96,057/- and the AO. has taxed the amount of advance to the tune of ₹ 13,96,057/- as income of the appellant u/s 2(22)(e) of the LT. Act. The AO. has not given the credit for the credit balance of the appellant at the beginning of the year before arriving at the taxable deemed dividend u/s 2(22)(e) of ₹ 13,96,057/-. Thus, the amount of advance made by the company to the appellant it is noticed from the ledger account of the appellant in the books of account of the company that the opening balance of the appellant was a credit balance of ₹ 12.70 lacs as on 01.04.2003 and ₹ 7.5 lacs was further advanced by the assessee to the company thus, the credit balance being 20.20 lacs as on 22-4-2003. The company has paid a sum of ₹ 15.70 lacs on 5th May 2003 and, thereafter, upto 3.11.2003 there is a credit balance of the appellant in the ledger account of the company. The AO. has not examined the ledger account which clearly indicated the credit balance of ₹ 20.30 lacs. When a shareholder has a mutual open current account with the company, every debit entry made by the company in that account is not a loan by the company to the shareholder. The cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the balance amount of ₹ 10,51,368/-. The Revenue is not in appeal before us for the relief granted by the CIT(A). We find the CIT(A) had rejected the contention of the assessee that the advance given by the company to the assessee was for the purpose of business in absence of any evidence given by the assessee. Before us also the Ld. Counsel for the assessee could not justify that the advance given by the company to the assessee is for business purposes. Under these circumstances and in absence of any contrary material brought to our notice by the Ld. Counsel for the assessee against the order of the CIT(A), we find no infirmity in the order of the CIT(A). In our opinion, the order of the CIT(A) is justified under the facts and circumstances of the case since the maximum amount advanced by the company to the assessee which is outstanding at any time during the year is ₹ 3,44,689/-. We accordingly uphold the order of the CIT(A) which is well reasoned. The grounds raised by the assessee are dismissed. ITA No.1864/PN/2012 (A.Y. 2004-05) (Smt. Suman Suresh Kolhapure) : 12. The only issue in the grounds raised by the assessee is regarding the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (supra) that this sub-clause is attracted at the point of time when the advance, loan or other payment is made in terms of the clause. It is, however, immaterial that the amount was repaid even before the end of the accounting year and it will make no difference that the loan is for a short period and carried interest. Thus the appellant's contention in view of the above ratio of the decision cannot be considered and is liable to rejected. Thus the disallowance made by the A.O. of ₹ 2,59,094/- on account of deemed dividend u/s.2(22)(e) is liable to be upheld and grounds of appeal No.1 2 raised by the appellant are liable to be dismissed. 15. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 16. After hearing both the sides, we do not find any infirmity in the order of the CIT(A) who has confirmed the addition on the basis of various decisions since the company has accumulated profit and has given loan to the director. The Ld. Counsel for the assessee could not controvert the factual findings given by the CIT(A) nor could controvert the order of CIT(A). Under these circumstances and in absence of any contrary material brought to our n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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