TMI Blog2013 (1) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 filed by revenue as the lead cases. ITA No.1300/Mds./12 No.1335/Mds./12 3. Few facts of the above said case are noticed. The assessee namely Shri C.Kathirvel, is an individual and a Director of a company by the name of M/s.Shree Velu Builders Private Limited (hereafter company). On 31.07.2006, he had filed his return declaring an income of ₹ 5,96,640/-, which was processed under section 143(1) of the Act on 25.04.2007 3.1. The assessee owns 30% shares of the company. On 25.03.2006 and 31.03.06, the company had transferred flats constructed to the assessee. After noticing the said factual position, the Assessing Officer found that the value of above transactions came to be ₹ 9,44,000/- and ₹ 9,16,506/- respectively i.e. ₹ 18,60,506/- in aggregate. For this reason, he formed an opinion that since the assessee had not declared the above said amount for taxation in the return filed (supra), the same had escaped assessment. Hence, on 04.03.2010 he issued a notice under section 148 for reopening the assessment. In response thereto, the assessee did not file any fresh return and reiterated the one alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, which could attract section 2(22)(e) of the Act. Accordingly, the assessee s appeal stands partly allowed by the CIT(A). In this backdrop of the facts, on the one hand, the assessee is in appeal raising grounds of validity of reopening as well applicability of deemed dividend provision qua the transaction dated 25th March, 2006. On the other hand, the Revenue s grievance is that the CIT(A) has wrongly accepted the assessee s plea qua the transaction dated 31st March, 2006(supra). 4. Before us, the A.R representing the assessee has stated at the bar that he does not press the grounds challenging validity of reopening in question. Qua other grievance of the assessee, he has vehemently argued that the CIT(A) has wrongly confirmed the Assessing Officer s order for applying provisions of deemed dividend under section 2(22)(e) of the Act. In support of the contention, he has placed reliance on following case laws:- CIT Vs. United India Roller Flour Mills Ltd. 155 ITR 358 Bombay Steam Navigation Co.(P) Ltd Vs. CIT (1965) 56 ITR 2(SC) CIT Vs. Nachimuthu Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits A perusal of the above provision makes it clear that the intention of insertion of the above provision is to tax dividend sought to be paid by a privately held company to its directors by way of loan or advance. In order to check the circumvention of the taxing provision imposing tax on dividend, the legislature incorporated this provision of taxing not only dividend but also deemed dividend. In other words, the legislature thought it proper to tax the profits accumulated by a company to its shareholder including a beneficial owner any payment made by way of loan or advance. In our opinion, since it is taxing statute by deeming fiction, it deserves to be construed most strictly, within the four corners of the language and expressions used. On this analogy, we proceed further and find that the said provision contains some specific words like any payment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar that all issues involved except ground No.8 in assessee s appeal stand covered by our findings in ITA Nos.1300/ and 1335/Mds/12(supra) decided herein above. We have given our thoughtful consideration to the matter and observe that the assessee herein, namely, Smt.C.Bhagavathy Velan is also one of the directors of the same very entity, ( M/s.Shree Velu Builders Private Ltd.) and the nature of transaction in question are also alike those involved in the case of Shri C.Kathirvel(supra). Therefore, we accept the assessee s appeal ITA No.1302/Mds./12 on merits (except ground No.8) in view of our findings in ITA No.1300/Mds./12 and dismiss the grounds of appeal. 9. Now, we propose to decide ground No.8 raised by the assessee pertaining to the amount of ₹ 3,80,000/- , which appeared in company s current account as unexplained deposit which has been added in assessee s income by CIT(A) in the impugned order. In support of the said ground, the A.R on behalf of the assessee reiterates the pleadings made in the ground, which are strongly opposed by the Revenue. 9.1. We have given our thoughtful consideration to the matter. Admitted facts qua the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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