TMI Blog2020 (5) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... emains no dispute that the assessee has incurred interest expenses on the money borrowed from the company. Accordingly, we hold that there was no benefit derived by the assessee from such company on the money borrowed by him. Provision of the deemed dividend under section 2(22)(e) of the Act, was brought under the statute to curb the practice of diverting the fund of the company for the benefit of the shareholders. However, in the case on hand there was no benefit extended by the company to the assessee. Thus, the impugned transaction is outside of the purview of the deemed dividend as envisaged under the provisions of section 2(22)(e) See assessee own case MOHAN BHAGWATPRASAD AGRAWAL[ 2019 (6) TMI 694 - ITAT AHMEDABAD] - Decided in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) has erred in confirming addition by applying provisions of section 2(22)(e) ignoring the fact that lending of money is substantial part of business of the company. 1.3 On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming addition by applying provisions of section 2(22)(e) of the Act ignoring transaction in the nature of current account. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming addition by applying provisions of section 2(22)(e) of the Act ignoring that the appellant has paid interest on excess credit amount and not had an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee further claimed that the MOA and AOA of SDIPL authorizes money lending business and the same lending business constitute more than 20% of the business of the company which is substantial part of business for the purpose of explanation 3(b) to section 2(22)(e) of the Act. Accordingly the assessee contended that there should not be any addition on account of the advances given in normal business activity under section 2(22)(e) of the Act. 3.3 However the AO disagreed with the contention of the assessee by observing that the MOA of the SDIPL contains that the reserve surplus if any not required immediately for the business should be invested. But the same is neither part of main object and nor the part ancillary or incidental to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is paying interest on such loan and advances. In this respect the assessee placed his reliance on the multiple judgment of Kolkata Tribunal. 5. However the learned CIT (A) confirmed the addition made by the AO by observing a under: Therefore, I decide to confirm the addition u/s. 2(22)(e) for following reasons: i. The appellant is substantial share holder as per provisions of IT Act 1961 in the company involved. ii. There is accumulated profit in the company Shreem Design Infrastructure Pvt. Ltd. of ₹ 1,71,13,533/- iii. There is loan and advances by Shreem Design Infrastructure Pvt. Ltd. to the appellant of ₹ 2,62,31,369/-. iv. There is disallowance worked out by AO with reference to-accumulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year 2015-16 in ITA No. 29/AHD/2019 vide order dated 12/04/2019 has decided the issue in favour of the assessee. 7. On the other hand, the learned DR vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record before us. Admittedly, the assessee has paid interest on the money borrowed from the company namely SDIPL. This fact can be established from the details such as TDS certificate issued by the assessee to the company for the deduction of TDS on the payment of interest to the company which is placed on page 29 of the paper book. 8.1 There is also Ledger account of the assessee in the books of the company showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Zenon (India) Pvt, Ltd, ITA NO 1124/Kol/2012 (Paper Book 38 to 43 and Smt. Sangita Jain vs. ITO ITA No. 1817/Kol/2009 (Paper Book 44 to 51) which supports his contentions. The learned counsel for the assessee placed reliance in the case of Shri Pradip Kumar Malhotra v. CIT [I.T.A.No. 219 of 2013 dated 02.08.2011 of Honvble Calcutta High Court] [PB-24-37]. Wherein it was held by the Honourable Calcutta High Court that phrase by way of advance or loan appearing in section 2(22)(e) must be construed to mean those advances or loans, which is shareholder enjoys for simply on account of being a Partner, who is the beneficial owner of shares, but if such | loan or advance is given to such shareholder as a consequence of any further conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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