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Commissioner of Income Tax, Bhopal (M.P.) Versus Mr. Arun Sahlot

2017 (5) TMI 212 - MADHYA PRADESH HIGH COURT

Deemed dividend addition - Held that:- ITAT was justified in setting aside the addition under Section 2(22)(e) made by the AO on account of payments by Raj Homes Pvt. Ltd to Shri Arun Sahlot and his proprietary concerns Arun Associates and Raj Industries, with the direction to examine such aspects as commercial exigency of the loan and terms of loan even though these aspects are not relevant u/s 2(22)(e). Apart from this, the tribunal has only made remand to the Assessing Officer. It is well set .....

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Assessing Officer to verify the information received from the sources, if the information and the facts are not correct in accordance with law. We answer the second substantial question of law accordingly that the ITAT has not committed any error of law in remanding the matter to the Assessing Officer. We do not find any merit in this appeal, it is hereby dismissed - ITA No. 56/2013. - Dated:- 2-5-2017 - Hon'ble Shri Justice S.K. Gangele And Hon'ble Shri Justice Anurag Shrivastava, JJ. S .....

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ession 153A dated 07.01.2010 for filing the return of Income Tax for Assessment Years 2003-04 to 2008-09. In response to that the assessee filed income tax returns. 3. Besides the residential premises of assessee search was also conducted at the business premises of M/s. Raj Express. On the basis of search and seizure and the reply filed by the assessee, the Assessing Officer computed income of the assessee for the assessment year 2003-04 to ₹ 82,17840/-. The Assessing Officer also levied .....

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essment Year 2003-04 to 2009-10, I.T.(SS) A. Nos. 261 to 267/Ind/2012 Assessment Year 2003-04 to 2009-10 & I.T.(SS) A. Nos. 193 to 199/Ind/2012 Assessment Year 2003-04 to 2009-10. The Appellate Tribunal vide common order dated 30/04/2013 allowed the appeals of the assessee partly. The Appellate Tribunal in regard to addition made under Section 2(22)(e) of the Income Tax Act remitted the matter back to the Assessing Officer to decide afresh. The Tribunal dismissed the appeals filed by the rev .....

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ments by Raj Homes Pvt. Ltd to Shri Arun Sahlot and his proprietary concerns Arun Associates and Raj Industries, with the direction to examine such aspects as commercial exigency of the loan and terms of loan even though aspects are not relevant u/s 2(22)(e)?. 2. Whether on the facts and in the circumstances of the case, the ITAT was justified in law in setting aside the additions on account of deemed dividend in A.Ys. 2003-04 to 2006-07 with directions to the Assessing Officer to verify if info .....

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ded as addition under Section 2(22)(e) of the Income Tax Act treating it as deemed dividend because the shareholding of the assessee in three companies i.e. Raj Homes Pvt. Ltd., M/s. Raj Events and Entertainment Pvt. Ltd and M/s Minal Builders Ltd. Bhopal was more than 10%. The Commissioner Income Tax (Appeal) affirmed the above. The aforesaid contention has been considered by the Tribunal in paras 85 to 93 of the impugned order. The tribunal recorded following findings:- 85. With regard to the .....

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nd the assessee is in further appeal before us. 86. We have considered rival contentions and found that the addition was made u/s 2(22)(e) on account of deemed dividend in respect of alleged loan given by Raj Homes Private Limited to Mrs. Sandhya Sahlot in the assessment year 2004-05, 2007-08, 2008-09 and 2009-10. In the assessment framed u/s 153A, the Assessing Officer observed as under:- During the course of assessment it was noticed that the assessee was holding equity shareholding in various .....

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, entertainment and media. 87. The Assessing Officer further observed that the assessee's holdings in these companies were more than 10% and that the assessee has a net debit balance in the books of RHPL to the assessee u/s 2(22)(e). By the impugned order, the Id. CIT (A) confirmed the addition. However, while confirming the addition, the CIT(A) observed as under:- The information that RHPL has given loan to appellant's proprietary concern, came to the knowledge of the authorized officer .....

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that assessment for assessment year 2004-05 was completed and time period for issue of notice u/s 143(2) has also been expired. Accordingly, in respect of assessments, which are not abated, no addition is warranted while making assessment u/s 143A when no incriminating material was found during course of search. 89. This issue has been examined in the case of Arun Sahlot in para 28 to 31 hereinabove. Relevant observation were as under:- 90. As the facts and circumstances during the assessment ye .....

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hands of assessee. Relying on the decision in the Alpex Export (Del.I.T.A.T.) in I.T.A. No. 2858/Del/2012, order dated 28.08.2012, it was contended that share application money is outside the provisions of Section 2(22)(e), our attention was also invited to the decision of Hon'ble Delhi High Court in the case of Sunil Chopra in I.T.A. No. 106/Del/2011 order dated 27.4.2010, wherein it was held that receipt of share application money for allotment of shares could not be treated as receipt of .....

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Sandhya Sahlot who has transferred the shares to RHPL. By observing that the shares were allotted by REEPL in the name of assessee, the Assessing Officer added the amount of loan in assessee's hands u/s 2(22)(e). While deciding the issue, the Assessing Officer has brushed aside the fact that the cheque was given directly by RHPL to REEPL and that these shares were transferred by assessee to RHPL. It is also matter of record that assessee has neither withdrawn the amount for the personal use .....

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corded by the Tribunal in this regard are in accordance with law. Section 2(22)(e) of the Income Tax Act reads as under:- e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) 5 made after the 31st day of May, 1987 , by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend .....

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s not include- (i) a distribution made in accordance with subclause (c) or sub- clause (d) in respect of any share issued for full cash consideration, where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets; (ia) 1 a distribution made in accordance with subclause (c) or sub- clause (d) in so far as such distribution is attributable to the capitalised profits of the company representing bonus shares allotted to its equity shareholders after t .....

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is so set off. Explanation 1- The expression" accumulated profits", wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946 , or after the 31st day of March, 1948 , and before the 1st day of April, 1956 . Explanation 2.- The expression" accumulated profits" in sub- clauses (a), (b), (d) and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub- clauses, and in subcl .....

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,- (a) " concern" means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company; (b) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern;] 10. Explanantion of (e) i.e. as mentioned in Section which reads as above that dividend does not include any advance or loan made t .....

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bstantial question of law while holding the ITAT was justified in setting aside the addition under Section 2(22)(e) made by the AO on account of payments by Raj Homes Pvt. Ltd to Shri Arun Sahlot and his proprietary concerns Arun Associates and Raj Industries, with the direction to examine such aspects as commercial exigency of the loan and terms of loan even though these aspects are not relevant u/s 2(22)(e). Apart from this, the tribunal has only made remand to the Assessing Officer. It is wel .....

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