TMI Blog2020 (12) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account assessee company has debited substantial expenses related to the office building and its maintenance - AO show cause to assessee why 50% of these expenses should not be disallowed because of sharing of common business premises - HELD THAT:- On perusal of the profit and loss account of M/s. Gaurav Securities Pvt. Ltd it is noticed that during the year under consideration it has shown only indirect income in the form of dividend income and interest income which demonstrate that no major activities was carried out during the year under consideration. The Assessing Officer has also failed to controvert the claim of the assessee with specific finding that its associate concern had not carried out any business activity at the premises. The aforesaid facts demonstrates that no major activities has been carried out in the case of M/s. Gaurav Securities Pvt. Ltd. therefore we consider that disallowance of expenses to the extent of ₹ 25% of the amount is reasonable in this case. We restrict the disallowance to the extent of ₹ 25% of the expenses - Decided partly in favour of assessee. - ITA No. 3499/Ahd/2015 - - - Dated:- 16-12-2020 - Shri Rajpal Yada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. 3. The fact in brief is that assessee has filed return of income on 21st Sep, 2012 declaring total income at ₹ 317460/-. The case was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 6th August, 2013. The remaining facts of the case are discussed while adjudicating the two grounds of appeal filed by the assessee as under. Ground No. 1 (Addition on account of deemed dividend u/s. 2(22)(e) of the Act) 4. During the course of assessment, the Assessing Officer noticed that assessee company has obtained unsecured loan of ₹ 16,28,000/- during the year from Gaurav Securities Pvt. Ltd. On clarification of the detail filed, the Assessing Officer noticed that Shri Umesh Shayamsundar Bhatiya who was the main shareholder of the assessee company was also holding substantial shareholder in the Gaurav Securities Pvt. Ltd. from whom the assessee has obtained the loan. It was also noticed from the annual account of the assessee company that there was accumulated profit of ₹ 13,21,198/- as on 31st March, 2012. In view of the above facts, the Assessing Officer observed that section 2(22)(e) of the Act prohibits advancing of loan to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pronouncements, it is noticed that in the case of ACIT vs. Leela Ship Recycling Pvt. Ltd. supra the Co-ordinate Bench of the ITAT has adjudicated the identical issue on same facts as under:- 4. We have heard the rival contentions, perused the material on record and duly considered facts of the case and the applicable legal position. 5. Learned representatives fairly agree that the issue in appeal is now covered by Hon'ble jurisdictional High Court's judgment in the case of CIT Vs Mahavir Inductomelt Pvt Ltd (TA No. 890 of 2011; judgment dated 13th January 2017) wherein Their Lordships have extensively reproduced from Hon'ble Delhi High Court's judgment in the case of Anitech Pvt Ltd (supra), and concurred with the same. Thus, in a case in which an amount is received from a person other than the shareholder, as is the admitted position in this case, the provisions of Section 2(22)(e) cannot indeed be invoked. The CIT(A) was thus justified in granting the impugned relief in respect of the addition under section 2(22)(e). We, therefore, approve the conclusion arrived at by the learned CIT(A) in this regard, and decline to interfere in the matter on that coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mahavir Rolling Mills Pvt Ltd to whom loan was given, it cannot be said that the learned Tribunal has committed any err or in deleting the addition made by the Assessing Officer on deemed dividend. In view of the findings as supra Hon ble Jurisdictional High Court wherein it is held that for the applicability of section 2(22)(e), it is required that the assessee company must be a shareholder in the company from whom the loan or advance has been taken and it does not provide that any shareholder in the assessee company who had taken any loan or advance from another company in which such shareholder is also a shareholder having substantial interest. Since the facts of the case of the assessee are squarely covered by the aforesaid decisions of Hon ble High Court and Coordinate Bench of the ITAT, the impugned addition is deleted. Accordingly, this ground of the assesse is allowed. Ground No. 2 (Disallowance out of office expenses) 8. During assessment, the Assessing Officer noticed that assessee has shared common business premises with its associate concern M/s. Gaurav Securities Pvt. Ltd. and in the profit and loss account assessee company has debited substantial expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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