TMI Blog2018 (11) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... that all the amounts in question have not been given to the assessee for his personal benefit but these amounts have been given for the benefit of the Company. These were ordinary business transactions and as such, would not attract the provisions of Section 2(22)(e). We, accordingly, set aside the Orders of the authorities below and delete the above additions. Appeal of Assessee is partly allowed. - ITA.No.4126/Del./2014 - - - Dated:- 19-11-2018 - Shri Bhavnesh Saini, J.M. And Shri L.P. Sahu, A.M. For the Assessee : Shri Raj Kumar Gupta, C.A. For the Revenue : Smt. Naina Soin Kapil, Sr.DR ORDER PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-XXVII, New Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., ₹ 26,00,000/- received from M/s. Designarch Consultants Pvt. Ltd. and ₹ 53,633/- from M/s. Jinendra Securities Pvt. Ltd. was added back as deemed dividend under section 2(22)(e) of the Income Tax Act, 1961. The assessee has received ₹ 1,35,000/- from M/s. Jinendra Securities Pvt. Ltd., but since the accumulated profits was only ₹ 53,633/-, the A.O. limited the addition to this amount only. 3. Assessee challenged the additions before the Ld. CIT(A) and it was contended that all above amounts would not attract the provisions of deemed dividend under section 2(22)(e) of the I.T. Act as all the transactions were business transactions. 4. The Ld. CIT(A) noted that assessee during the year had received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer in the assessment order had wrongly mentioned the property as C-62, Preet Vihar, New Delhi. The assessee submitted that it is a genuine business transaction and therefore, it could not be treated as deemed dividend. The Ld. CIT(A) noted that as per the provisions of section 2(22)(e), the advance made to a shareholder can be excluded from being considered as deemed dividend only if lending of money is a substantial part of business of the Company. Since M/s. Designarch Consultants Pvt. Ltd. is not in the business of lending money, the argument that it is a genuine business transaction, was not accepted. This addition under section 2(22)(e) of the Income Tax Act, 1961, was also confirmed. 5. The Ld. CIT(A) also note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT vs. Mukundray K. Shah (2007) 290 ITR 433 (SC) held that the true test is whether the payment by Company was for the benefit of the assessee who was Managing Director. The Hon ble Delhi High Court in the case of CIT vs. Creative Dyeing and Printing P. Ltd., (2009) 318 ITR 476 (Del.) held that business transactions did not attract provisions of Section 2(22)(e) of the I.T. Act . The Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra vs. CIT (2011) 338 ITR 538 (Cal.) held that shareholder permitted to mortgage its property for Company and received loan, therefore, provisions of Section 2(22)(e) of the I.T. Act would not be attracted . PB-22 is rent agreement between assessee, his wife and M/s. Designarch I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll is filed on record, which is not disputed by the authorities below. It appears that while referring to the tenanted property, A.O. has taken the same property in the assessment order and under misconception of facts made the addition on account of deemed dividend. In fact, it is an Agreement to Sell of property bearing 31, Shankar Vihar, Delhi-92, which Ld. CIT(A) has corrected. The Ld. CIT(A) noted that assessee is not in business of lending money. Therefore, the contention of assessee that it was a genuine business transaction is not acceptable. However, it is not the case of the assessee because assessee claimed that the Company agreed to purchase the property from the assessee on certain terms and conditions. The said purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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