TMI Blog2015 (4) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... ena, A. M. These are the appeals filed by the department against the order dated 30/03/2012 passed by the learned CIT(A), Central, Jaipur for A.Y. 2007-08 2008-09. The respective grounds of both the appeals are as under:- Grounds in revenue s appeal ITA No. 610/JP/2012 1(i) Whether on the facts and circumstances of the case of CIT(A) (Central), Jaipur has erred in law and on facts in holding that the amount of ₹ 25,25,000/- paid by M/s Mistry Meadows Pvt. Ltd. to M/s Benchmark Infotech Pvt. Ltd. where the assessee was holding 18.8% and 50% shares respectively, do not fall within the purview of section 2(22)(e) and thereby deleting the addition of ₹ 25,25,000/- made by the A.O. by invoking provisions of sec 2(22)(e) of the Act. 1(ii) Whether on the facts and circumstances of the case the CIT(A) (Central), Jaipur has erred in law and on facts in holding that the amount advanced by M/s Manglam Multiplex Pvt. Ltd., to M/s Benchmark Infotech Pvt. Ltd., where the assessee was one of the directors holding more than 10% shares respectively do not fall within the purview of section 2(22)(e) and thereby deleting the addition of ₹ 7,85,559/- representing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the loan and held more than 20% shares of M/s Benchmark Infotech Pvt. Ltd., which had received the advance. Accumulated profit on the M/s Misty Meadows (P) Ltd. as on 31/3/2007 was ₹ 1,85,91,329.39. Therefore, the amount of ₹ 25.25 lacs paid by M/s Misty Meadows (P) Ltd. to M/s Benchmark Infotech Pvt. Ltd. was considered to be dividend paid to Shri Basant Bansal in view of the provisions of Section 2(22)(e) of the Act. The ld Assessing Officer gave show cause notice on it, which was replied by the assessee and considered by him during the course of assessment proceedings. It was submitted before him that M/s Misty Meadows (P) Ltd. had share premium account, which was not available for any distribution to the company. The ld Assessing Officer found that accumulated profit as on 31/3/2007 under the head share premium account at ₹ 99,50,000/- and P L account at ₹ 86,41,329.39. The share premium account remained constant, therefore, there was no question of advancing any amount from this account. During the year, the assessee held sufficient profit of M/s Misty Meadows (P) Ltd. and from which it had advanced ₹ 25.25 lacs to M/s Benchmark Infotech Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identical reply was also submitted against this query by the assessee before the Assessing Officer. The assessee submitted that these are business transactions between the companies and cannot be treated as deemed dividend U/s 2(22)(e) of the Act. The assessee relied on the following case laws:- (i) CIT Vs. Badiani P.K. (Bom) 076 ITR 369 (ii) CIT vs. Rajkumar (Delhi High Court) 318 ITR 426 After considering the assessee s reply, the ld Assessing Officer held that accumulated profit was ₹ 15,71,118.50/- considered to be advanced by M/s Manglam Multiplex Pvt. Ltd. to M/s Benchmark Infotech Pvt. Ltd., which has been considered by the Assessing Officer for deemed dividend in the hands of the assessee and Shri Roop Bansal equally. Accordingly he made addition of ₹ 7,85,559/- U/s 2(22)(e) of the Act. In A.Y. 2008-09, it was noticed by the Assessing Officer that in case of M/s Martial Buildcon Pvt. Ltd. that M/s Misty Meadows Pvt. Ltd had paid ₹ 8 crores to M/s Martial Buildcon Pvt. Ltd. on 08/3/2008, which has been paid back by M/s Martial Buildcon Pvt. Ltd. on 26/03/2008. Shri Basant Bansal held 34% of M/s Martial Buildcon Pvt. Ltd. and 18.80% shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r noticed that in case of M/s Martial Buildcon Pvt. Ltd. that M/s B B Mercantile Pvt. Ltd. had paid ₹ 80,46,100/- to M/s Martial Buildcon Pvt. Ltd. as on 04/02/2008, which has been paid back by M/s Martial Buildcon Pvt. Ltd. on 25/03/2008. Shri Basant Bansal and Shri Roop Bansal held 34% and 33% shares of M/s Martial Buildcon Pvt. Ltd. respectively and 50% each of M/s B B Mercantile Pvt. Ltd. during the year 2007-08. As such Shri Basant Bansal and Shri Roop Bansal held more than 10% shares in M/s B B Mercantile Pvt. Ltd. which has given the loan and held more than 20% shares of M/s Martial Buildcon Pvt. Ltd., which had received the advance. Therefore, the Assessing Officer held that the amount of ₹ 80,46,100/- paid by M/s B B Mercantile Pvt. Ltd. to M/s Martial Buildcon Pvt. Ltd. was considered to be dividend paid to Shri Basant Bansal and Shri Roop Bansal in equal proportion in view of the provisions of section 2(22)(e) of the Act. The Assessing Officer gave reasonable opportunity of being heard and assessee also replied in response to notice. After considering the assessee s reply, the ld Assessing Officer held that the assessee had relied upon the decision of ITAT, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been added in the income of the assessee. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had allowed the appeal for A.Y. 2007-08 by observing that the assessee has filed additional evidence before him, the same has been remanded back and report has been called for and the ld Assessing Officer has not rebutted the submission made by the assessee, therefore, the additional evidence was considered for disposal of appeal before the ld CIT(A). As regards addition of ₹ 25.25 lacs made U/s 2(22)(e) of the Act on the ground that M/s Misty Meadows Pvt. Ltd. had made payment of ₹ 25.25 lacs to M/s Benchmark Infotech Pvt. Ltd. during the year under consideration, which has been received back on 22/3/2007. It is undisputed that Shri Basant Bansal, the appellant is holding more than 10% of share in M/s Misty Meadows Pvt. Ltd. and is also holding more than 20% shares if M/s Benchmark Infotech Pvt. Ltd.. As per decision of Hon ble Jurisdictional High Court in the case of CIT Vs. Hotel Hiltop (supra), deemed dividend would be added in the hands of beneficial owner and not in the hands of the concern. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.10 I have considered the submission of ld. A.R., remand report of present A.O., counter comments of A.R. and further submissions as well as material available on record. In the remand report, after examination of the additional evidences, the A.O. has not made any adverse comments on the argument of the A.R. that the transactions between (i) M/s Misty M/s Martial, (ii) M/s Mangalam and M/s Martial and (iii) M/s B.B. Mercantile and M/s Martial are not of lender and borrower which are covered u/s 2(22)(e) and are rather commercial business transactions. In brief, A.O. has not objected to the argument of A.R. that M/s Misty entered into agreement with M/s Martial for purchase of 100 kanals of land at agreed consideration of ₹ 40 crores against which a sum of ₹ 8 crore was given as intial payment by m/s Misty to M/s Martial and thus it was not an advance within the meaning of section 2(22)9e) but was initial payment for purchase of land. Similarly the A.O. has also not made any adverse comments, after considering the additional evidence in the form of agreement, on the argument of the A.R. that M/s Mangalam made initial payment of ₹ 8.4 crore for purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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