TMI Blog2021 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 483/AHD/2015 - - - Dated:- 2-3-2021 - Shri Waseem Ahmed, Accountant Member And Ms Madhumita Roy, Judicial Member For the Assessee : Shri Tushar Hemani, Sr. Advocate with Shri P.B. Parmar, A.R For the Revenue : Shri L.P. Jain, Sr.D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax(Appeals)-9, Ahmedabad, dated 24/12/2014 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2011-2012. 2. The Revenue has raised the following grounds of appeal: 1. The CIT(A) has erred in law and on facts in deleting the addition of ₹ 2,28,02,530/- made u/s.2(22)e of the Act not considering the findings of the Assessing Officer especially in view of the amendment made by the Finance Act, 1987. 2. On the facts and in the circumstances of the case, the Ld. Commissioner of Income tax(A) ought to have upheld the order of the Assessing Officer. 3. It is therefore, prayed that the order of the Ld. Commissioner of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot apply to it. 4.4 The assessee further claimed that transactions with above mentioned party is in the nature of Current Accommodation Adjustment Entry which was carried out in the ordinary course of business. As such both the parties (the assessee Planet Automotive Pvt. ltd.) used to provide fund to each other in the course of business whenever needed and this fact can be established from the ledger copy. The assessee accordingly contended that the provisions of section 2(22)(e) of the Act are not applicable in its case on this count also. The assessee in support of above contention relied on various judgment. 5. The learned CIT (A) after considering the assessee s submission and the finding of the AO deleted the addition by the AO by observing as under: 2.2 I have carefully considered the rival contentions. I am inclined to agree with the contention of appellant partially. There is force in the argument of appellant that the appellant company was not the shareholder of Planet Automotive Pvt. Ltd. in the facts and circumstances of the case, the provisions of sec.2(22)(e) does not apply. A close perusal of facts of case rightly suggests that the shareholders of appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.19/2017 dated 12.06.2017 (Annexure D trade advances in the nature of commercial transactions would not fall within the ambit of advance as contemplated u/s.2(22)(e). In any case, transactions between the assessee and the payer-company were in the nature of current accommodation adjustment entries showing movement of funds both ways on need basis: Ledger of the prayer-company is placed at page 26 of P/B from which it is apparent that there are large numbers of transactions (both, debit and credit) showing movement of funds both ways on need basis. Transactions in the nature of loans and advances are usually very few in number whereas in the present case, transactions between assessee and payercompany are large in numbers indicating that such transactions are in the form of current accommodation adjustment entries . It is a settled law that when there are large number of adjustment entries in accounts between two entities, amounts reflected therein are not in the nature of loans/advances but merely adjustments and hence, provisions of S.2(22)(e) would not apply. Reliance is placed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits ; 10.2 On perusal of above provision what is inferred is that the provisions of section 2(22)(e) of the Act can only be invoked in case of a shareholder who is holding substantial interest. The provision of section 2(22)(e) of the Act nowhere talks about taxing an entity/company which is not a shareholder holder in lender company but to shareholder of such company holding substantial share in lender company. In this regard we find support and guidance from the judgment of Hon ble Jurisdictional High Court in Tax appeal no- 891 of 2016 in case of PCIT vs. Mahavir Inductomelt Pvt Ltd where in similar facts, the Hon ble court held as under: 50. Identical question came to be considered by the Division Bench of this Court in Tax Appeal No. 253 of 2015. After considering the decision of the Bombay High Court in the case of CIT vs. Impact Containers Private Limited ors rendered in I TA No. 114 of 2012 and the decision of the Delhi High Court in thecase of CIT vs. Ankitech Pvt Lt d reported in 340 ITR 14 (Del) and on interpreting Section 2(22)(e), in para ..... X X X X Extracts X X X X X X X X Extracts X X X X
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