TMI Blog2019 (1) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Sheila Kaushish Vs. CIT [1981 (8) TMI 1 - SUPREME COURT] and Amolak Ram Khosla Vs. CIT [1981 (8) TMI 3 - SUPREME COURT]. In view whereof, there being a concurrent findings of fact, we perceive no illegality as would give rise to a substantial question of law. Addition u/s 40A - payments made to specified persons on rates more that fair market rates - Held that:- Unless established on facts that the payment for such expenditure was excessive or unreasonable having regard to fair market value, it cannot be disallowed. In the case at hand, no such facts are available, nor commended at. There being pure findings of fact, duly concurred, no substantial question of law arises for consideration. - Revenue appeal dismissed. - I.T.A.No.78/2018 - - - Dated:- 3-1-2019 - Sanjay Yadav And Vivek Agarwal JJ. For the Appellant : Shri D.P.S. Bhadoriya ORDER With the consent of learned counsel for the parties, the matter is finally heard. This appeal under Section 260-A of Income Tax Act, 1961 (for brevity 1961 Act ), is directed against the order dated 16.11.2017 passed by Income Tax Appellate Tribunal, Agra Bench, Agra in I.T.A.No.327/Agra/14. Relevant facts giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld the deletion. As regard to deemed dividend under Section 2(22) (e) of 1961 Act, we, at the outset, observe that the issue as to applicability of said provision to a nonmember/ non-shareholder of the concerned company which has given the loan/advance has been settled by the decision in CIT Vs. M/s Ankitech Pvt. Ltd and others [340 ITR 14 (Del)] (ITR 462/2009) wherein Division Bench of High Court of Delhi held: 24. The intention behind enacting provisions of Section 2(22)(e) is that closely-held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits would not distribute such profit as dividend because if so distributed the dividend income would become taxable in the hands of the shareholders. Instead of distributing accumulated profits as dividend, companies distribute them as loan or advances to shareholders or to concern in which such shareholders have substantial interest or make any payment on behalf of or for the individual benefit of such shareholder. In such an event, by the deeming provisions, such payment by the company is treated as dividend. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue on the basis of Sections 4, 5, 8, 14 and 56 of the Act would be of no avail. Simple answer to this argument is that such loan or advance, in the first place, is not an income. Such a loan or advance has to be returned by the recipient to the company, which has given the loan or advance. 27. Precisely, for this very reason, the Courts have held that if the amounts advanced are for business transactions between the parties, such payment would not fall within the deeming dividend under Section 2(22)(e) of the Act. 28. Insofar as reliance upon Circular No. 495 dated 22nd Sept., 1997 issued by CBDT is concerned, we are inclined to agree with the observations of the Mumbai Bench decision in Bhaumik Colour (P) Ltd. (supra) that such observations are not binding on the Courts. Once it is found that such loan or advance cannot be treated as deemed dividend at the hands of such a concern which is not a shareholder, and that according to us is the correct legal position, such a circular would be of no avail. 29. No doubt, the legal fiction/deemed provision created by the legislature has to be taken to 'logical conclusion' as held in Andaleeb Sehgal (supra). The Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are different. In the various case laws cited by the appellate it has been held that if the appellant has received an actual rent in excess of municipal valuation then such a rent ought to be treated as fair rent in terms of section 23. Following the ratio laid down by the said decisions I find that the actual rent received by the appellant is in excess of fair rent as per the municipal valuation of similar date filed before me by the appellant. In view of the above there is no justification by the AO in making an addition of Rs ₹ 39,12,696.00. Thus the addition of ₹ 39,12,696/- made by the AO under section 23 is hereby deleted. The analysis is after appreciation of facts and has been affirmed by the Tribunal holding that the reasonable rent can only be the standard rent which is in syntax with the municipal valuation (for an authority please see Dewan Daulat Rai Kapoor Vs. NDMC, (1980)122 ITR 700 (SC); Mrs. Sheila Kaushish Vs. CIT (1981) 131 ITR 435 (SC) and Amolak Ram Khosla Vs. CIT (1981) 131 ITR 589 (SC). In view whereof, there being a concurrent findings of fact, we perceive no illegality as would give rise to a substantial question of law. Simil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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