TMI Blog2016 (6) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... es Deemed dividend addition u/s 2(22)(e) - companies controlled by the assessee through the shareholding of his minor son - advance rent received - Held that:- Merely because the shares are held by the minor son of the assessee and the loan is received by the assessee it cannot be established that assessee is the beneficial shareholder of 10% or more and therefore such loan amount is not chargeable to tax in the hands of the assessee. Furthermore the submission of the assessee before the lower authorities that it is in the nature of advance rent as whenever the rent is payable by the company to the assessee same is deductible from this amount therefore it partakes the character of advance rent. AO has not categorically stated that this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 2010 showing total income of ₹ 1947282/-. The Ld. assessing officer framed assessment under section 143 (3) of the income tax act by making 2 additions one on account of deemed dividend of ₹ 11.23 Lacs and another of 52.33 Lacs under the head income from house property. Both these additions were challenged by the assessee before the Ld. CIT (A) who in turn confirmed those additions and therefore assessee is in appeal before us. 4. The 1st ground of appeal divided into three parts is against the addition of ₹ 52.33 Lacs in respect of rented property at 267, Masjid Moth , and Adhichini in New Delhi. Assessee has let out these properties to one of the company where assessee has made some investment. The rental incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nately large sum as interest-free deposit compared to agreed monthly rent but the addition of notional interest thereon is not proper and fair rent must be determined. Therefore he submitted that this ground of appeal is squarely covered in favour of the assessee. 6. The Ld. departmental representative relied on the orders of lower authorities and submitted that this decision has not been accepted by the revenue. 7. We have carefully considered the rival contentions and we have also perused the order of the Hon ble Delhi high court full bench reported at 333 ITR 38 (Del) dealing with the identical issue with respect to the same properties where issues have been decided by the Hon ble high court in favour of the assessee. Therefore r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deemed dividend. The matter was carried before the Ld. CIT (A) who confirmed the addition as according to him the companies controlled by the assessee through the shareholding of his minor son. 9. Before us, the Ld. authorized representative repeated the same arguments which were made by assessee before the lower authorities. Ld Departmental Representative submitted that minor is not a shareholder but the real shareholder is the assessee who controls the company by holding of the minor son of the assessee. Therefore his contention was that the Ld. AO has rightly made the addition. 10. We have carefully considered the rival contentions and also perused the decisions of lower authorities. According to the facts recorded by the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount therefore it partakes the character of advance rent. The Ld. AO has also not categorically stated that this amount is not advance rent and not adjusted subsequently against the rent payable by the company to the assessee. According to us if it is an advance rent then it becomes a business transaction and the provisions of deemed dividend cannot apply to such transactions. In view of this we reverse the finding of lower authorities in confirming an addition of ₹ 11.23 Lacs on account of advance rent received by the assessee from the Suba Microsystems private limited. In the result ground No. 2 of the appeal of the assessee is allowed. 11. In the result appeal of the assessee is allowed Order pronounced in the open court on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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