TMI Blog2016 (5) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... re the entries of mutual current account transactions, which are also not deemed dividend in view of above judicial precedents and hence, total addition confirmed of ₹ 11,23,551/- by the ld CIT(A) is deleted - Appeal of the assessee is allowed. - ITA No. 1714/Del/2013 - - - Dated:- 6-5-2016 - SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Mr. Kapil Goel, Adv For The Revenue : Sh. T. Vasenthan, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is appeal filed by the assessee against the order of the ld CIT (A)-XVI, Delhi dated 28.01.2013 for the Assessment Year 2009-10. 2. The assessee has raised the following grounds of the appeal:- 1. The assessing officer CIT(Appeals) have rejected the claim of the assessee that out of the total amount received, a sum of ₹ 15,00,000/- has been received as security deposit against the property let out to the Company. 2. That while ascertaining the amount of, accumulated profits of the Company for the purposes of section 2(22)(e), the following two adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business transactions the provision of section 2(22)(e) cannot be applied. He further stated that there are large transactions on both the sides and the funds are moving on needs basis to and from the parties. Therefore, they are not in the nature of advances in the nature of loan. For this he relied on the decision of Hon ble Gujarat High Court in CIT Vs. SCHUTZ Dishman Biotech Pvt. Ltd. in Tax Appeal No. 958, 959/2015 dated 21.12.201. He further relied on the decision of the Kolkata Bench of ITAT in ITA No.151/Kol/2015 wherein it is held that where there is running mutual current account it cannot be charged to tax u/s 2(22)(e) as it is a current account and not loan. He further relied on the decision of Hon ble Kolkata High Court in case of Pradeep Kr. Malhotra Vs. CIT, in ITA No. 219/2003 dated 2nd August 2011. Therefore, he submitted that the addition confirmed by the ld CIT(A) is erroneous and may be deleted. 5. Ld DR relied on the orders of the lower authorities vehemently and submitted that assessee is the 97 shareholder of the company and therefore the transaction of security deposit is shown to subvert the provision of section 2(22)(e) of the Act. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration to the rival submissions. A copy of the ledger of the Assessee in the books of BAPL is placed at pages 41 to 46 of the Assessee's paper book. A copy of the statement showing the balance after every transaction in the Assessee's ledger in the books of BAPL is placed at page 47 to 52 of the Assessee's paper book. The same is given as annexure to this order for better appreciation of facts. 12. A perusal of the statement of balances of transactions between the Assessee and BAPL shows that as on 2.4.2008 BAPL owed Assessee a sum of 1,95,000. BAPL paid the Assessee a sum of ₹ 2.4.2008 a sum of ₹ 21,05,000 and the Assessee owed BAPL a sum of ₹ 19,10,000. The amounts given in the bracket in the last column of the enclosed balances in the running current account is the amount which BAPL owed the Assessee. Mutual transactions go on in this fashion throughout the previous year ITA No.151/Kol/2013 Smt.Gayatri Chakraborty A.Yr.2009-10 and as on the last date of the previous year the account is squared i.e., neither the Assessee owes BAPL nor BAPL owes Assessee any sum. The Assessee was beneficiary of the sums given by BAPL at some p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there were several shifting of balance and the resultant debit balance was ₹ 5,00,833/-. For A.Y. 2007-08, in respect of Mima Flour Mills, opening balance was ₹ 5,00,833/- and after shifting balance, the debit balance came to nil. In respect of Ganesh Wheat Products, opening balance was ₹ 18,87,522/- and after shifting balance the credit balance came to ₹ 9 lakhs. On perusal of the ledger account of the assessee in the books of M/s. Mima Flour Mills (P) Ltd. it is seen that on several dates there were shifting balances. On many occasions the balance was in favour of the ITA No.151/Kol/2013 Smt.Gayatri Chakraborty A.Yr.2009-10 assessee and on some other occasions the balance was in favour of Ganesh Wheat Products (P) Ltd. It is thus evident that there were reciprocal demands between the parties and thus mutual in characteristic. The account so maintained in respect of such mutual transfer of amount by way of giving and taking financial assistance is, therefore, a current account and this current account is different from a loan account for the sole reason that feature of mutuality is not present in a loan transaction. 5. Here in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73-76/Kol/2011 A.Ys.06-07 to 08-09 and 02-03 to 05-06Mr. Purushottam Das Mimani. v. DCIT, CC-V, Kol Page 5 transactions and dividend attributable to the shareholder is nothing to do with such business transaction. From the above discussions it can be said that sec. 2(22)(e) of the Act covers only those transactions which benefit the shareholder alone and results in no benefit to the company. On the other hand, if the transaction is mutual by which both sides are benefited, it is undoubtedly outside the purview of provisions of sec. 2(22)(e) of the Act. From the above, it is clear that the loan account differs from current account and the provisions of section 2(22)(e) of the Act, being a deeming section, cannot be applied to current account. In such circumstances, we delete the addition and this common issue of assessee's appeals is allowed. 14. We are of the view that in the present case also the transactions in question does not benefit the shareholder i.e., the Assessee alone and the results in no benefit to the Company BAPL. The loan account is different from a current account with a shareholder and the transactions between the Assessee and BAPL are in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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