TMI Blog2016 (12) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... of accumulated profit as on 31-03-2002 was only ₹ 3,26,333/-. The depreciation claimed in the P&L A/c was at ₹ 7,77,416/-. Since there are already judicial pronouncements that the accumulated profits are to be arrived at on the basis of IT computation, the depreciation allowable under IT Act at ₹ 9,31,388/- has to be reduced. Thus, the accumulated profit for the year works out to ₹ 1,72,362/-. The Co-ordinate Bench in the case of Bagamane Leasing and Finance Pvt. Ltd.,(2010 (11) TMI 662 - ITAT, Bangalore) has held that Explanation-2 to Section 2(22)(e) does not have the effect of inclusion of current year’s business profits. It followed the principles laid down in the case of M.V. Murugappan [1965 (11) TMI 144 - MAD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added and matters have come up to ITAT. The Co-ordinate Bench in ITA Nos. 528/Hyd/2007 529/Hyd/2007 dt. 08-01-2010 has set aside the issue to the file of the AO directing as under: 7. We have considered rival submissions on either side and also perused the material available on record. No doubt the assessees admitted accumulated profit at the end of the relevant previous year. For the purpose of computing the deemed dividend, the AO is bound to compute the accumulated profit on the date on which the deemed dividend was paid by the company. Admittedly, the lower authorities have not computed the accumulated profit on the date of payment of money. The assessees also have not brought on record any material for computing the accumulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Madras High Court in the case of M.V. Murugappan [62 ITR 382, 388] (Mad) and also the Co-ordinate Bench decision of Bangalore in the case of Bagamane Leasing and Finance Pvt. Ltd., in ITA Nos. 442 to 444/Bang/2010 dt. 04-11- 2010. AO, however, rejected these contentions and arrived at the accumulated profits at ₹ 7,92,990/- as originally determined and added the amount of ₹ 7,10,282/- in the case in the case of Sri K. Narasimha Rao and ₹ 2,62,708/- in the case of Smt. K. Geetha in the same ratio of amount received at ₹ 73:27 (wrongly typed as 23). Even though, assessee contested the same before the Ld. CIT(A) along with other additions made, Ld. CIT(A) dismissed the appeal on merits, ex-parte as none appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We have considered the rival contentions and perused the documents placed on record. There is no dispute to the application of provisions u/s. 2(22)(e) are concerned. The same was already accepted in the earlier appeal proceedings. The issue was restored to AO for determination of the accumulated profits (as extracted above). The Co-ordinate Bench has already directed the AO to verify the accumulated profits on the date of payment of money by the company to the beneficial shareholders. However, assessee has neither placed on record the dates of receipt nor the accumulated profit of the company on the date of receipt of money. In fact, no details - except the accumulated profit as on 31-03- 2002- were furnished to the AO. AO seems t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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