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Shri Deven Chachra Versus Deputy Commissioner of Income Tax, Erstwhile Circle-48 (1) , [New Circle 72 (1) ] , New Delhi

2017 (11) TMI 322 - ITAT DELHI

Additions for deemed dividend u/s 2(22)(e) - Held that:- In Circular No.19/2017, paragraph 3, the CBDT has also held that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word ‘advance’ in Section 2(22)(e) of the Act. - The addition u/s 2(22)(e) is made in the case of an assessee who is an individual. Admittedly, no advance or borrowed money is received by the assessee from the concerns in which the assessee is a shareholder. There is .....

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han, CA. Respondent by : Shri F. R. Meena, Senior DR. ORDER Per G. D. Agrawal, President These appeals by the assessee for the assessment year 2011-12 & 2012-13 are directed against the order of learned CIT(A)-21, New Delhi dated 18th April, 2017. 2. In both these appeals, the assessee has challenged disallowance under Section 2(22)(e) of the Income-tax Act, 1961 amounting to ₹ 2,84,87,233/- in assessment year 2011-12 and ₹ 6,37,55,557/- in assessment year 2012-13. 3. At the time .....

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cle sales & service Toyota 49 4. That there were business transactions inter-se between these group companies, the details of which is given at page 1 of the assessment order for assessment year 2012-13. For ready reference, the same is reproduced below :- Sl.No. Name of the company Nature of transaction Percentage share holding of assessee Loan Amount 1 Superior Films (P) Ltd. Lender company 26.9% 2 Superior Clothing (P) Ltd. Borrower Companies 40.9% 23,13,81,230 3 Superior Crafts (P) Ltd. .....

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rest was duly charged by M/s Superior Films (P) Ltd. on the money advanced to these concerns during the normal course of business and such interest income was offered to tax in the hands of M/s Superior Films (P) Ltd. He pointed out that M/s Superior Films (P) Ltd. received interest amounting to ₹ 78,51,725/- from M/s Superior Clothing (P) Ltd. and ₹ 29,650/- from M/s Superior Crafts (P) Ltd. during the assessment year 2011-12 and ₹ 2,62,90,476/- and ₹ 33,11,489/- in asse .....

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(e) either in the case of the borrower company or in the case of the assessee in any other year except these two years under consideration, that too, in the case of the assessee who is an individual and who has not borrowed any money. He stated that Section 2(22)(e) is not applicable in respect of a normal business transaction. In support of this contention, he relied upon the decision of Hon ble High Court of Calcutta in the case of Pradip Kumar Malhotra Vs. CIT - [2011] 338 ITR 538. He also re .....

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on account of deemed dividend. 7. We have carefully considered the contentions of both the sides and perused the material placed before us. We find that at page 4 of the assessee s written submissions, he has given a chart pointing out the interest income received by M/s Superior Films (P) Ltd. in the years under appeal as well as in the preceding and subsequent years. This chart gives the details of interest received from the group concern as well as others. For ready reference, the same is rep .....

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27 22,49,417 143(1) v) 2011- 12 78,51,725 (124,131G) 29,650 (124,131G) 72,65,167 1,51,46,542 (124) 74,05,288 2,23,03,697 (131) 143(3) Pages 188- 190 of paper book for AY 2011-12 vi) 2012- 13 2,62,90,476 (101) 33,11,489 (101) 85,83,797 3,81,85,762 1,18,49,712 5,00,35,474 (91 read with 99) 143(3) Page 104 of paper book for AY 2012-13 vii) 2013- 14 3,91,85,297 2,53,643 88,69,752 4,83,08,692 1,83,37,728 6,66,46,420 143(3) Pages 191- 192 of paper book for AY 2011-12 viii) 2014- 15 3,66,45,585 - 1,09, .....

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s Superior Films (P) Ltd. and other group concerns, from which, it is evident that there were several transactions of the payment and receipt of the money during the years under appeal. Considering the totality of above facts, we have no hesitation to hold that M/s Superior Films (P) Ltd. used to advance the money for earning interest income to various concerns which included group concerns also. The advancing of money was a regular course of business for M/s Superior Films (P) Ltd., not only in .....

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