TMI Blog2016 (7) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... said company and hence the above said company is liable to pay those amount to the assessee. Under these set of facts, we find merit in the contentions of the assessee. Accordingly, we are also of the view that the amount withdrawn by the assessee, either by way of advance or as subsequent payment, to the extent of the liability of the company towards Directors Remuneration, Rent, other income items etc. credited to the account, should be considered as payment made towards settlement of those liabilities. Accordingly, in our view, withdrawals to that extent cannot be considered as loan taken by the assessee, which would attract the provisions of sec. 2(22)(e) of the Act. Accordingly, we modify the orders passed by the Ld CIT(A) and dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,99,931/- The accumulated profit held by the above said companies was ₹ 30,22,622/- and ₹ 83,501/- respectively. Accordingly the AO assessed the loan amount of ₹ 27,58,851/- received from M/s KBJ Jewellery Pvt Ltd as deemed dividend u/s 2(22)(e) of the Act. In respect of the loan received from M/s KBJ Motors Pvt Ltd, the AO assessed deemed dividend to the extent of accumulated profit of ₹ 83,501/-. Accordingly a sum of ₹ 28,42,352/- as deemed dividend u/s 2(22)(e) of the Act. 3. In the year relevant to the assessment year 2009-10, the assessee had received loans from the following companies:- NAME OF COMPANY MAXIMUM AMOUNT O/S AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so and accordingly issued necessary directions to the AO. 5. In the year relevant to the AY 2009-10, the assessee submitted that the accumulated profits of ₹ 2,51,66,552/- computed by the AO included Share Premium balance of ₹ 1,66,96,000/-. The assessee submitted that the amounts received by the assessee as Share premium shall not form part of accumulated profits and in this regard, the assessee placed reliance on the decision rendered by the Delhi bench of Tribunal in the case of MAIPO India Limited (2008)(24 SOT 42). By placing reliance on the decision rendered by the Hon ble Supreme Court in the case of P.K.Badani Vs. CIT (1970)(76 ITR 369), the assessee submitted that the deemed dividend, if any, assessed in the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that account. 7. The Ld D.R, on the contrary, submitted that amount withdrawn by the assessee alone should be considered for the purposes of sec. 2(22)(e) of the Act. He submitted that the accumulated profits shall include the profits earned upto the date of withdrawal. 8. We heard the rival contentions and perused the record. A careful perusal of the Ledger account copy of the assessee as available in the books of M/s KBJ Jewellery Pvt. Ltd shows that the same has been operated as a current account, i.e., there has been credit of Director s remuneration; Rent, rates taxes etc., Besides that there has been repeated deposit and withdrawal of cash. When the credits in the nature of income payable to the assessee are credited to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind merit in the said contentions of the also. The following observations made by Hon ble Gujarat High Court in the above said case are relevant here:- 4.1 Having heard Mrs. Bhatt, learned advocate appearing on behalf of the Revenue and considering the provisions of Section 2(22)(e) of the Act, more particularly, Explanation 2 to Section 2(22)(e) of the Act, it cannot be said that the learned Tribunal has committed any error in directing the Assessing Officer not to include the current profit to be part of accumulated profit while determining the amount of deemed dividend under Section 2(22)(e) of the Act. While determining the amount of deemed dividend under Explanation 2 to Section 2(22)(e) of the Act, the current profit was not requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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