TMI Blog2020 (9) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the decision in the case of National Travel Services relied on by the revenue cannot be applied, nor the case of Gopal and Sons, as they are factually distinguishable. The records placed before the assessing officer clearly shows the nature of transaction between the firm and the company and it is neither a loan nor an advance, but a deferred liability. These facts have been noted by the assessing officer. Tribunal rightly reversed the order passed by the CIT(A) affirming the order of the assessing officer. - Decided against revenue. - T.C.A.Nos.512 and 513 of 2018 and C.M.P.No.10632 of 2018 in T.C.A.No.513 of 2018 - - - Dated:- 21-9-2020 - HONOURABLE Mr. JUSTICE T.S. SIVAGNANAM AND HONOURABLE Mrs. JUSTICE V. BHAVANI SUBBAROYAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained from M/s Abdul Wahid Tanneries Pvt., Ltd., [hereinafter referred to as the company ] by the assessee firm; One of the partners of the assessee firm, namely, Mr.T.Rafeeq Ahmed, who holds 35% stake in the assessee partnership firm, is also a share holder in the company holding 26.25% shares. Therefore, it was stated that the share holder of the company had substantial interest in the firm and consequently, the concept of deemed dividend under Section 2(22)(e) of the Act would apply. 4. The assessee objected to the reopening and filed written submissions. However, the assessing officer confirmed the proposal in the notice under Section 148 of the Act and completed the assessment vide order dated 29.12.2016 under Section 143(3) read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal entry is sufficient for creditor or debtor between the share holder and the company is sufficient. 6. It is further submitted such loan or advance has to be treated as dividend to the extent of accumulated profits [excluding capitalized profit]. Further, loan or advance may be given directly to a share holder or it may be given for the benefit of share holder or on behalf of share holder. Thus, it is submitted that the assessing officer rightly treated the loan as deemed dividend under Section 2(22)(e) of the Act. It is further submitted that before the CIT(A), a new ground was canvassed by the assessee stating that the assessee was purchasing finished leather from the company for manufacture of shoe and shoe uppers and during the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sami Khatib and another Vs. Income Tax Officer reported in [2019] 411 ITR 637 (Bombay) and the decision of the Hon ble Division Bench of this Court in Bagawathi Velan Vs. Deputy Commissioner of Income Tax, Corporate Circle-6(1) Chennai reported in (2019) 106 Taxmann.Com Page 67 (Madras). 8. Mr. R. Sivaraman, learned counsel appearing for the respondent submitted that the fundamental error committed by the assessing officer and the CIT(A) is on facts because the amount of ₹ 2 Crores paid to the assesseee firm is neither a loan nor an advance, but a deferred liability. The assessee firm is not a beneficial share holder or a registered share holder. The share holder is a partner of the assessee firm and the shares held by him in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s case. Further, it is submitted that a batch of civil appeals in Civil Appeal No. 3961 of 2013 etc., batch in C.I.T., Delhi-II Vs. Mathur Housing and Development Company was dismissed by the Hon ble Supreme Court by Judgment dated 05.10.2017, wherein the correctness of the Judgment in the case of Ankitech Private Limited was also considered and the Judgments stood affirmed. Further, on facts it is submitted that it is incorrect on the part of the CIT(A) to observe that the assessee had raised the contention that the amount of ₹ 2 Crores was a business transaction, was never raised by the assessee at any earlier point of time, when the fact remains it was raised and it was noted by the assessing officer himself in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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