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TMI Blog2016 (9) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ", as a proprietor. The assessee is also receiving remuneration from M/s. Chaitanya Packagings (P) Ltd. and filed a return of income by declaring total income of Rs. 6,30,576/-. The return filed by the assessee was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') thereafter notice u/s 143(2) of the Act was issued and assessment was completed u/s 143(3) of the Act. In the assessment order, the A.O. has observed that on perusal of the accompanying statements to the return of income, it is found that M/s. Tulasi Digital Studio, has received an amount to the tune of Rs. 25,24,796/- as a loan from M/s. Chaitanya Packagings (P) Ltd. during the relevant assessment year 2008-09. The assessee is the proprietor of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the financial year 2007-08. It is further observed that the accumulated profits as on 31.3.2008 in the hands of M/s. Chaitanya Packagings (P) Ltd., which advanced loan to the assessee is having an accumulated profits shown under the head "reserves and surplus" in balance sheet of M/s. Chaitanya Packagings (P) Ltd. was of Rs. 48,03,137/- as on 1.4.2007. Further, the transactions in the ledger folio account of M/s. Chaitanya Packagings (P) Ltd. , in the books of the assessee found to be pure money borrowed by the assessee either directly or through payment made by M/s. Chaitanya Packagings (P) Ltd. to a third party on behalf of the assessee, duly debited by the lending concern in the account of the assessee as an advance given. Thus, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a very short duration is deemed dividend and shall be treated as such even it is repaid before the end of the previous year. The appellant has made payments to M/s. CPPL towards repayment of an earlier outstanding loan. However, these repayments do not materially change the fact that fresh loans amounting to Rs. 25.25 lakhs were received during the year. In the case of ITO Vs. Kalyan Gupta (293 ITR 249) it has been held that "for the purpose of determination of deemed dividend u/s 2(22)(e), repayment of an earlier loan cannot be adjusted against advancement of fresh loan so as to reduce liability which has fastened itself on the earlier loan. Repayment does not reduce liability". Keeping the above in view, I do not see any merit in the arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tulasi Digital Studios" and Manufacturing of files in the name of "Tulasi Filing Systems", as a proprietor. The assessee company having a shares of 25,500 out of total shareholdings of M/s. Chaitanya Packagings (P) Ltd. 1,95,000 which comes to 13%. M/s. Chaitanya Packagings (P) Ltd. has advanced an amount of Rs. 25,24,796/- from the accumulated profits of Rs. 48,03,137/- as on 1.4.2007. From the above it is clear that as on the date of loan advanced by M/s. Chaitanya Packagings (P) Ltd. to M/s. Tulasi Digital Studio is having accumulated profit. It is also fact that the assessee is having shareholding of more than 10% in the creditor company M/s. Chaitanya Packagings (P) Ltd. and creditor company is having accumulated profit of Rs. 48,03,13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, it is not clear whether M/s. Chaitanya Packagings (P) Ltd. has obtained any loan from the Indian Bank or not. If so, what is the amount? Whether Mr. Tulasi Yogish Chandra, assessee has actually stood guarantee on behalf of M/s. Chaitanya Packagings (P) Ltd. is not clear. Therefore, this argument of the Ld. Counsel for the assessee cannot be accepted. 9. So far as alternative ground raised by the assessee, though it is an additional ground, it was submitted that as on 1.4.2007 the assessee company is having a loan of Rs. 56,34,464/- and the accumulated profit of Rs. 48,03,137/- made in this scenario the loan/advance of Rs. 56,34,464/- would get upset against the accumulated profit of Rs. 48,03,137/-. This should be assessed as much as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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