TMI Blog2013 (7) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... in M/s Hanudev Investments P. Ltd. He also observed that M/s M/s Hanudev Investments P. Ltd. has sufficient reserves and surplus as on 31.3.2008. In view of the above, the Assessing Officer held that loan amount of ₹ 1,50,27,847/- received by the assessee was deemed dividend under the provisions of section 2(22)(e) of the Act and added the same to the income of the assessee. 5. On appeal before the ld. CIT(A), the assessee submitted that the Assessing Officer erred in concluding that the balance in the share premium account in the books of account of M/s Hanudev Investments P. Ltd. is also accumulated profit for the purpose of ascertaining the quantum of deemed dividend and that the Assessing Officer failed to appreciate that share premium accounts are neither and nor can ever be part of the profit of the company. The said receipts are capital in nature and restricted in its presentation in the accounts as well as in its use by restriction in the Companies Act, 1956. The assessee relied on the order in the case of its sister concern, M/s R.R. Info Park Pvt. Ltd. in I.T.A.No. 400/2011-12 and submitted that the ld. CIT(A) has decided the issue in favour of the assessee by ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a separate account styled (the share premium account' and further says that the provisions of the 1956 Act relating to the reduction of the share capital of the company shall apply as if the share premium account was mentions five purposes for which alone the share premium account may be applied without attracting the provisions of the 1956 Act relating to the reduction of the share capital. These are: (i) To pay up fully paid bonus shares to be issued to the members; (ii ) To write-off preliminary expenses of the company; (iii) To write-off expenses of issue of shares or debentures or under-writing commission paid or discount allowed on such issues; (iv) To pay premium on the redemption of redeemable shares of debentures issued by the company; (v) Purchase of its own shares or other specified securities in terms of section 77 A. Except in the above five cases, any other application of the proceeds of the share premium account will be treated as a reduction of the company's share capital and the provisions of the 1956 Act dealing with this subject stand attracted. The share premium account cannot be used otherwise than for the specific purposes mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed above, In ITA No. 400/2011-12 (supra), I have held that the balance in the share premium account cannot be taken into account for the purpose of determining the quantum of the dividend under section 2(22)(e) of the Act. In the present set of facts also the AO is directed to exclude the amount of share premium account for the purposes of computing deemed dividend under section 2(22)(e) of the Act and to recompute the deemed dividend, if any, after verification. These grounds of appeal are considered allowed for statistical purposes. 7. The ld. DR very fairly conceded that the issue was covered in favour of the assessee and against the Revenue by the decision of the Tribunal relied upon by the ld. CIT(A) while allowing the appeal of the assessee. 8. That being so, we confirm the order of the ld. CIT(A) and dismiss the ground of appeal of the Revenue. 9. Ground No.3 of the appeal of the Revenue is directed against the order of the ld. CIT(A) in holding that the assessee is eligible to claim deduction u/s 24(b) of the Act to the extent of ₹ 5,05,52,618/- and only penal interest can be disallowed. 10. The brief facts of the case are that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for ING Vysya Bank were in the range of 12.5%-13% p.a from April 2006 and increasing to 13.5% -14.5% from January 2007. Thus far greater part of the year the interest rates were around 13%, per annum. The interest rates at the beginning of the year III April 2008 15.75% reaching 16.25% in March 2009. How the AO can make an allegation that an excess claim has been made by comparing interest paid for FY 2006-07 with that of FY 2008-09 when the appellant had also incurred interest expenditure during the FY 2007-0 ₹ 4,70,40,100/-. The company had taken additional loan of ₹ 7.10 crore (net 6.70 crore) on 02/05/2008. The increasing interest expenditure is only on account of additional loan taken and increasing rates of interest during the year. The company has not made any claim of compound interest not only simple interest on the loans taken. All term loan: statements, interest ledgers, bank statements, sanctions and all relevant information pertaining to payment of interest has been submitted during the assessment proceedings. 7.3 It is seen from the assessment order, relevant extract which has been discussed above, that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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