TMI Blog2016 (4) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... these findings. Whether these advances were to help the assessee in overcoming temporary liquidity crises or not is wholly irrelevant because as long as it is in nature of loans or advances, and other pre-conditions for applicability of Section 2(22)(e) are satisfied, such loans and advances are required to be taxed as deemed dividend. We uphold very well reasoned stand of the authorities below, and decline to interfere in the matter. The order of the CIT(A) thus stands confirmed. - Decided against assessee. - IT APPEAL NOS. 455 & 456 (AHD.) OF 2011 - - - Dated:- 28-12-2015 - PRAMOD KUMAR, ACCOUNTANT MEMBER AND S.S. GODARA JUDICIAL MEMBER JJ For the Appellant : Rasesh Shah For the Respondent : Sanjay Agarwal ORDER Pramod Kumar, Accountant Member - These two appeals pertain to the same assessee in respect of two consecutive assessment years, i.e. 2008-09 and 2009-10 , challenge correctness of a common order dated 23rd May 2011 passed by the CIT(A) dealing with an issue common to both of these years, and were heard together. As a matter of convenience, therefore, both of these appeals are being disposed of by way of this consolidated order. 2. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment in the case of CIT v. Creative Dyeing Printing (P.) Ltd. [2009] 318 ITR 476 in support of the proposition that when advances are given during the ordinary course of business, the same cannot be treated as deemed dividend. It was then also submitted that the amount received by the assessee from company are in the nature of deposits and that the deposits are not covered by the definition of deemed dividend under section 2(22)( e ). Reliance was placed on the decision of a coordinate bench of this Tribunal, in the case of Seamist Properties (P.) Ltd v. ITO[2005] 1 SOT 142 (Mum) , and it was contended that Section 2(22)( e ) creates a legal fiction and a deeming provision, and deeming provisions are t be interpreted strictly and cannot be extended beyond its scope. None of these submissions, however, impressed the Assessing Officer. 5. The Assessing Officer noted that in the books of account maintained by Vishal Fashions Pvt Ltd, the company from which the proprietorship concern had received the loans, two accounts are maintained in respect of Vishal Overseas, the assessee's proprietorship concern- first, titled as 'Vishal Overseas (Loan)' which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter in appeal before the CIT(A) but without any success. He upheld the action of the Assessing Officer in principle but restricted the addition for the assessment year 2009-10 to ₹ 60,80,000 as that was the maximum outstanding amount in the loan account. The assessee is not satisfied and is in further appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. Learned counsel has taken pains to take us through a large number of judicial precedents in support of his case. It is his contention that the assessee had given personal guarantee and also collateral for the loans being raised by Vishal Fashions Pvt Ltd, and these advances are required to be treated as in consideration of this assistance. He then takes us through a recent judgment of Hon'ble Karnataka High Court, in the case of Bagmane Constructions Pvt Ltd Vs Commissioner of Income Tax (Tax Appeal No. 473 of 2013), to emphasize the point that loan or advance given to the shareholders or to a concern, under normal circumstances, would not qualify as dividend if such loan or advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees were actually mortgaged with the bank for the sake of availing loans by the company. The letter dated 31.5.2008 of the Andhra Bank, submitted in the paper-book does not establish the fact that the properties were mortgaged with the bank. The assessees have also not produced any correspondence made either with the bank or with the company towards release of the properties mortgaged, as was the fact in the case of Pradip Kumar Malhotra ( supra ) before the Hon'ble Calcutta High Court. In the absence of conclusive evidence to prove the fact of mortgage and also the fact that the assessee has not requested the bank for release of the mortgage, the ratio of the decision in the case of Pradip Kumar Malhotra ( supra ) will not apply to the facts of the present case. 12. It will be pertinent to mention here that long after the hearing of the appeal was closed, the assessees, on 5.11.2002, has submitted a copy of the letter of the Andhra Bank dated 27.9.2012, indicating that a property of the director, Smt. B.Seetaratnam, was given as a security towards credit facility availed by the company. However, in the absence of any petition by the assessee seeking acceptance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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