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TMI Blog2017 (12) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act applies to the facts and circumstances of the case? (2) Whether on the facts and in the circumstances of the case, the amount of Rs. 3,80,00,000/- could be treated as a deemed dividend within the meaning of Section 2(22)(e) of the Act? (3) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition of Rs. 3,80,00,000/- made by the A.O. as deemed dividend u/s 2(22)(e) of the Act?" At the very outset, learned counsel for the revenue states that the question no.2 covers the entire controversy raised by the revenue. For the previous year relevant to the Assessment Year 1995-96 the assessee disclosed a credit balance of Rs. 3,75,26,099/- standing in the name of a sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 1995, on Bank of India. There is no dispute to the fact that the said cheque was cancelled and was never presented for payment as is evidence from page no.4 of the paper book filed by the ld. D.R. Now the question comes as to whether entries made by the assessee in its books of account showing the balance in the name of GIL could be deemed that a loan or advance has been made to the assesse by GIL on the basis of the above cheque. We are of the considered view that the mere issue of cheque does not create any legal right nor any legal obligation and as such no relationship of lender or borrower, debtor or creditor, comes into existence unless and until the cheque is presented to the bank and is honoured. Therefore, the transaction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend includes:- (a)......... (b)........ (c)........ (d)....... (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) [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 whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereinafter in this clause referred to as the said concern)] or any pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 2(22)(e) to be physical/actual payment. It further held as below:- "5. That apart, the provisions of law namely s. 2(22)(e) which we have already extracted above, says that by a fiction dividend is made to include any payment by a company etc. Therefore, it is difficult for us to introduce another fiction in respect of the words "payment. In other words, when s. 2(22)(e) itself introduces a fiction, it is improper for us to introduce another fiction and construe a payment as equivalent to a constructive payment. In this view of the matter, we are not inclined to accept the arguments advanced on behalf of the Revenue and following the decision in G.R. Govindarajulu Naidu vs. CIT (supra), we answer the reference in the affirmative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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