TMI Blog2020 (3) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... - SUPREME COURT ] the Hon ble Apex court held that even though the loan is repaid at the end of the year, will attract the provision of section 2(22)(e) of the act. Even though assessee claims it as inter corporate deposit, the literal meaning will remain same as the short term loan enjoyed by the assessee, hence in our considered view, the provision of section 2(22)(e) is attracted in the present case. With regard to payment by M/s ABM Steels Pvt. Ltd. on behalf of the assessee for the purchase of machinery, it is brought on record that M/s ABM Steels Pvt. Ltd. has purchased the similar machinery from the assessee in the subsequent assessment year and it is a back to back purchase of machinery. Therefore, in our considered view, it is a business transaction and we are inclined to agree with the findings of Ld. CIT(A). With regard to issue of debentures, since assessee has issued redeemable debentures and M/s Jasubhai Business Services Pvt. Ltd has subscribed for the debentures and during this year, they have also exercised the options and assessee has redeemed the debentures and current outstanding amount is of ₹ 2,02,25,000/.This transaction involving issue of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly interested and assessee is holding beneficial interest and voting right and M/s ABM Steels Pvt. Ltd. is having accumulated reserves, therefore he invoked the provision of section 2(22)(e) of the Act by relying on various case law. He further observed that assessee in his reply submitted that inter corporate loan of ₹ 9 lakhs was repaid during the year and with regard to other portion of amount, it is for the purchase of machinery, therefore these addition will not fall under section 2(22)(e) of the Act. However, AO rejected the contention of the assessee and proceeded to make addition u/s 2(22)(e) of the Act. 4. Similarly, AO observed that assessee has received ₹ 4,16,25,000/- from M/s Jasubhai Business Services Pvt. Ltd. and even in this case, assessee is having beneficial shareholding and also other company is not a company in which public are not substantial interested, therefore the provisions of section 2(22)(e) is attracted. On enquiry, the assessee submitted that it has received the above amount for issue of redeemable debentures and it issued redeemable double options debentures to M/s Jasubhai Business Services Pvt. Ltd, which is redeemed during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding Ltd vrs. DCIT, which is relating to international taxation, whereas we are dealing with section 2(22)(e), he reiterated that the charging section of 271 is different and cannot be applied in deeming provision. He submitted that during this assessment year, assessee has taken 9 lakhs as inter corporate loan and assessee has repaid the same before the end of the year, therefore the inter corporate loan cannot be equated with loans and advances. For that purpose, he relied on page 111 of the paper book in the case of Bombay Oil Industries Ltd. Vrs. DCIT and further relied on page 84 of the paper book in the case of IFB Agro Industries Ltd. vrs. JCIT. 11. With regard to other transaction involving ₹ 17.29 lakhs, Ld. AR submitted that it is a business transaction and assessee has purchased a machinery and sister concern has made the payment on behalf of the assessee and subsequent assessment year, the similar machinery was transferred to the sister concern, therefore it will fall under business transaction and cannot be termed different as loan and advance. 12. With regard to debentures, Ld. AR submitted that assessee has received payment from M/s Jasubhai Business Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the current assessment year. However, we notice that since the assessee is having substantial interest in M/s ABM Steels Pvt. Ltd. and M/s ABM Steels Pvt. Ltd. is having substantial accumulative profit in its balance sheet and M/s ABM Steels Pvt. Ltd. is a company in which public are not substantial interested, therefore the provisions of section 2(22)(e) are very much attracted. Therefore, any credit or advantage taken by the persons having substantial interest will attract the provision of section 2(22)(e) of the Act. Even though, assesse has repaid the deposit within the same year, it does not mean that the loan or benefit is not taken. We can call any name but ultimately assessee has taken a credit/ benefit, the assessee should have known that it is surpassing the deeming provisions particularly when it has holding beneficial interest. It is settled law that deemed dividend provisions get attracted as soon as it takes benefit and it does not matter whether it is repaid within the same year. It is similar to the case of Miss P. Sarda vrs. CIT (1986) 29 ITR 444(SC), the Hon ble Apex court held that even though the loan is repaid at the end of the year, will attract the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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