TMI Blog2017 (8) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... of excess claim of premium paid on the plot. Question No. 1 is answered against the Revenue and in favour of the assessee. Addition under section 2(22)(e)- Held that:- Identical question came to be considered by the Division Bench of this court and considering the decision the Delhi High Court in the case of CIT v. Ankitech P. Ltd. reported in [2011 (5) TMI 325 - DELHI HIGH COURT] the Division Bench has confirmed the deletion made by the learned Tribunal by holding that from whom loan and advance was taken by the assessee must be a shareholder in the assessee-company. - Tax Appeal No. 890 of 2011 - - - Dated:- 13-1-2017 - M. R. Shah And B. N. Karia, JJ. For the Appellant : Mauna M. Bhatt, Advocate For the Respondent : Tushar P. Hemani and Vaibhavi K. Parikh, Advocates JUDGMENT M. R. Shah, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income-tax Appellate Tribunal, Ahmedabad dated December 10, 2010 passed in I. T. A. No. 2349/AHD/2008 for the assessment year 2005-06, the Revenue has preferred the present tax appeal to consider the following substantial questions of law. A. Whether the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,94,54,869 made under section 2(22)(e) of the Act. 2.2. Feeling aggrieved and dissatisfied with the order passed by the learned Commissioner of Income-tax (Appeals), the Revenue preferred an appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal has dismissed the said appeal and confirmed the order passed by the learned Commissioner of Income-tax (Appeals) in deleting the addition of ₹ 16,79,850 made on account excess claim of premium plot as well as deleting the addition of ₹ 1,94,54,869 made under section 2(22)(e) of the Act. 2.3. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Revenue is before this court by way of the present appeal with the following questions of law. A. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 16,79,850 made on account of excess claim of premium paid on the plot ? B. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 1,94,54,869 made under section 2(22)(e) of the Act ? 3. Shri Manish Bhatt, learned counsel for the Revenue has vehem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emium paid on the plot. It is submitted that the said issue is as such covered in favour of the assessee in light of the decision of the Division Bench of this court in the case of Deputy CIT v. Sun Pharmaceuticals Ind. Ltd. reported in [2010] 329 ITR 479 (Guj). 4.2. It is further submitted that so far as question No. 2, i.e., with respect to addition of ₹ 1,94,54,869 made under section 2(22)(e) of the Act is concerned, the same is also required to be answered against the Revenue in the light of the decision of the Division Bench of this court in the case of Principal CIT v. Ram Shipping Industries Pvt. Ltd. rendered in Tax Appeal No. 253 of 2015. Making the above submissions and relying upon the above decisions, it is requested to dismiss the present appeal. 5. Heard the learned advocates for the respective parties at length. Now so far as question No. 1, i.e., whether the learned Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 16,79,850 made on account of excess claim of premium paid on plot is concerned, it is required to be noted that the amount paid by the assessee with respect to the plot allotted by GMB is held allowable as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has observed and held as under : 3.0 We have heard Shri Manish Bhatt, learned counsel appearing on behalf of the revenue at length. We have also considered and gone through the impugned judgment and order passed by the learned Tribunal ; the assessment order as well as the order passed by the learned Commissioner of Income-tax (Appeals) making the addition of ₹ 4,14,71,946 made by the Assessing Officer invoking section 2(22)(e) of the Act. In paras 24 to 27, the Delhi High Court in the case of Ankitech Pvt. Ltd. (supra) has held and observed as under (page 34 of 340 ITR) : The intention behind enacting the provisions of section 2(22)(e) is that closely held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits would not dis tribute such profit as dividend because if so distributed the dividend income would become taxable in the hands of the shareholders. Instead of distributing accumulated profits as dividend, companies distribute them as loan or advances to shareholders or to concern in which such shareholders have substantial interest or make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat if this position is taken, then the income 'is not taxed at the hands of the recipient'. Such an argument based on the scheme of the Act as projected by the learned counsel for the Revenue on the basis of sections 4, 5, 8, 14 and 56 of the Act would be of no avail. Simple answer to this argument is that such loan or advance, in the first place, is not an income. Such a loan or advance has to be returned by the recipient to the company, which has given the loan or advance. Precisely, for this very reason, the courts have held that if the amounts advanced are for business transactions between the parties, such payment would not fall within the deeming dividend under section 2(22)(e) of the Act. Considering the provisions of section 2(22)(e) of the Act, we are in complete agreement with the view taken by the Delhi High Court. 4.0 Shri Bhatt, learned counsel appearing on behalf of the Revenue has as such tried to justify the decision of the Delhi High Court in the case of Ankitech Pvt. Ltd. (supra) and has vehemently submitted that the Delhi High Court has not considered the third category, i.e., shareholder in the assessee-company holding not less than 10 p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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