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2016 (7) TMI 756 - ITAT MUMBAI

2016 (7) TMI 756 - ITAT MUMBAI - TMI - Deemed dividend addition u/s 2(22)(e) - assessee is a share holder holding more than 10% stake in some private limited companies - Held that:- 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 .....

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nt 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 direct the AO to compute the loan amount by ex .....

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ssee - I.T.A. No. 3365/Mum/2013, I.T.A. No. 3366/Mum/2013 - Dated:- 13-7-2016 - Shri B.R. Baskaran (AM) and Shri Ram Lal Negi, JJ. For The Assessee : Shri Hari Raheja For The Department : Smt. Vinita Menon ORDER Per B.R. Baskaran (AM) :- Both the appeals filed by the assessee are directed against the separate orders dated 31-01-2013 passed by Ld CIT(A)-12, Mumbai for assessment years 2008-09. The issues urged in both the appeals relate to the assessment of deemed dividend u/s 2(22)(e) of the Act .....

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7; 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 ACCUMULATED .....

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ee s mother named Pinky Kamboj had also received loan from the very same companies and the AO had also assessed the same as deemed dividend in the like manner. The assessee contended before the Ld CIT(A) that the accumulated profits should be distributed between the assessee and her mother in the ratio of share holdings held by them and the deemed dividend should be assessed accordingly. The Ld CIT(A) was convinced with the same and issued direction to the AO accordingly. In respect of accumulat .....

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luded 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 de .....

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rofits upto the date of receipt of loan. (c) to exclude the deemed dividend already assessed in the earlier year from the amount of accumulated profit. (d) to distribute the accumulated profits proportionate to the share holding of the assessee and his mother and accordingly compute the deemed dividend. Still aggrieved, the assessee has filed these appeals before us. 6. The Ld A.R invited our attention to the Ledger account copy of the assessee and submitted that the remuneration and rent payabl .....

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e opening balance available 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 .....

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acts, 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 assesse .....

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