TMI Blog2017 (12) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... o money passed through from GIL to the assessee. Notwithstanding the fact the cheque was subsequently cancelled and returned, the provision of Section 2(22)(e) never got attracted to the facts of the case for a simple reason that no amount of money was ever received by the assessee. To apply a notional provision of the statute the revenue should have shown to exist actual fact of payment and it could not have inferred notional or deemed dividend on a notional payment in absence of express intention to that effect expressed by the legislature. Thus in absence of satisfaction of statutory precondition of "payment" of "any sum", to the assessee the provision of Section 2(22)(e) was never attracted. - Decided in favour of the assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said amount treating the same to be deemed dividend under Section 2(22)(e) of the Act. The assessee objected to the said proposal and it submitted that it had shown credit balance of ₹ 3,76,26,009/- of GIL on account of a cheque having been issued by GIL to Vasulinga Sugar General Mill Ltd. That cheque had not been accepted by the said Vasulinga Sugar General Mill Ltd. and returned back to GIL. However, the reversal/rectification entries were made in the next financial year and, therefore, the entries did not represent any real transaction of payment of money. It was only an accounting entry. However, the Assessing Officer had rejected the explanation furnished by the assessee and treated the aforesaid amount as deemed di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no actual out flow of money as the cheque was not presented for payment. Since in the case before us, there is no out flow of fund from the lender to the borrower, the question of repayment of the loan or advance before the end of the accounting year or at any future date does not arise and the mere entry made in the books of account by the assesse showing as credit on the basis of the cheque issued, which was not encashed and was subsequently cancelled, does not being it within the ambit of the provisions of Section 2(22)(e) of the Act. Sri Shubham Agarwal, learned counsel for the revenue submits that the cheque having admittedly been issued by GIL to the assessee, the transaction was covered under Section 2(22)(e) of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the company in either case possesses accumulated profits; (emphasis supplied) From the plain reading of Section 2(22)(e) it transpires the legislature seeks to tax certain payments made by specified persons as deemed dividend by treating such payments to be dividend payment on notional basis. Mere issuance of a cheque that was subsequently cancelled and returned without ever being ever presented for encashment and without any money having been paid against the same to the assessee it could never constitute payment of any sum. The assessee never came gained receipt of any amount of money against the aforesaid cheque from GIL. No money passed through from GIL to the assessee. Notwithstanding the fact the cheque was subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Vs. Pravin Bhimshi Chheda reported in (2014) 48 Taxmann.com 151 (Bombay), has held as below:- The Tribunal, then, analyses this transaction and holds that there is no flow of fund or any benefit from M/s Swati Energy and Projects Pvt. Ltd. to M/s Sujyoti Enterprises or to its partner Mr. Pravin B. Chheda. Mr. Pravin Bhimshi Chheda is the respondent-assessee before us. It is in these circumstances, that the Tribunal concluded that this is not a loan or advance so as to attract section 2(22)(e). We are not required to go into any further controversy or larger question. Thus in absence of satisfaction of statutory precondition of payment of any sum , to the assessee the provision of Section 2(22)(e) was never attracted. The ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
