TMI Blog2021 (10) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the above said scheme. Under the above said scheme, the above said company is required to pay tax shown in Form no.3 and final certificate in Form no.5 is required to be issued in proof of settlement of dispute. Since these matters are pending, we restore this issue to the file of AO with the direction to delete this protective addition upon furnishing of Form no.5 issued to Shri Prakash Ladhani in settlement of this dispute. - ITA No.58/Bang/2018, C.O. No.59/Bang/2018 (Arising out of ITA No.58/Bang/2018) - - - Dated:- 25-10-2021 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member For the Appellant : Ms. Neera Malhotra, D.R. For the Respondent : Shri V. Srinivasan, A.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: The appeal filed by the revenue and the cross objection filed by the assessee are directed against the order dated 30-10-2017 passed by ld CIT(A)-11, Bangalore and they relate to the assessment year 2007-08. 2. The revenue has filed this appeal on the following two issues:- (a) Deemed dividend assessed u/s 2(22)(e) of the Act ₹ 1.00 crore (b) Unexplained investment of ₹ 53,69,040/- ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssable u/s 2(22)(e) of the Act. Under the provisions of sec.2(22)(e) of the Act, the loan amount is assessable to the extent of accumulated profits available with lender company as deemed dividend u/s 2(22)(e) of the Act. In the instant year, the accumulated profits available with the lender company was more than the amount of loan. Accordingly, the AO held that the loan amount of ₹ 1.00 crore is assessable as deemed dividend. Since the AO had assessed the above said amount of ₹ 1.00 crore as deemed dividend in the hands of another share holder named Shri Prakash Ladhani, he assessed the above said amount on protective basis in the hands of the assessee. 7. The Ld. CIT(A) noticed that he has accepted the explanations furnished by Shri Prakash Ladhani in his appeal that these transactions are business transactions and accordingly he had deleted the addition of ₹ 1.00 crore made u/s 2(22)(e) of the Act in AY 2007-08. Accordingly, the Ld CIT(A) held in the appeal filed by the assessee that there is no case for assessment of deemed dividend on merits. Accordingly, the ld CIT(A) deleted the protective addition. The revenue is aggrieved. 8. We heard the parties on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the loans given by CAPL to BBPL were separate transactions and hence the assessment of deemed dividend made u/s 2(22)(e) of the Act should be upheld. 9. The Ld. A.R., however, submitted that there were trading transactions between CAPL BBPL in the past. The trading operations were suspended and from the year 2002 onwards BBPL owed a sum of ₹ 1.97 crores to M/s. CAPL. At that point of time, an agreement dated 14.11.2005 was entered between both the companies with the objective of making investment in property development activities. As per the agreement, CAPL shall give further money to BBPL for business purposes of making investments in real estate activities. Accordingly, CAPL has given money to BBPL in connection with the above said business activities over the years. Both the companies have kept the account of other company as running account only in connection with the business activities. From assessment years 2007-08 to 2013-14, CAPL has given an aggregate sum of ₹ 13.85 crores. The assignment agreements were entered on 28-03-2015 by BBPL in favour of M/s. CAPL which was also endorsed by Embassy group (the developers). As per the above said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to support the real estate investment activities It has also been mentioned that the amount invested by CAPL shall be adjusted against the properties. 12. It is an undisputed fact that the amounts invested by CAPL has been adjusted against the properties assigned to CAPL by BBPL, vide assignment agreements dated 28.03.2015. Thus the original agreement dated 14.11.2005 stands corroborated by the assignment agreements dated 28-03- 2015. These uncontroverted documents support the submissions of the assessee that the amounts given by CAPL to BBPL are not loans or advances contemplated in sec.2(22)(e) of the Act. 13. The Ld DR contended that the assignment agreements do not mention about adjustment of loan and advances given earlier by CAPL to BBPL. She also stated that the agreements mention about further payments, which was actually not necessary, when the amounts already given by CAPL to BBPL were in excess of the assigned value of properties. However, we are of the view that what is required to be seen is whether CAPL has advanced moneys as pure loan amounts or for business purposes. The agreements produced by the assessee before Ld CIT(A), which were also confronted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Aqua Pvt. Ltd., need not have made investments through M/s. Brindavan Beverages Pvt. Ltd., and could have directly gone to Embassy Group. The A.O. has also mentioned that there was no acknowledgment from Embassy Group showing payments from Mi.s. Cauvery Aqua Pvt. Ltd., for any project and A.O. regarded the explanation of the appellant as giving a colour of business transactions to loans that were advanced. 7.6 I find the above basis stated by the A.O. to disbelieve the explanation of the appellant in the assessment order is not correct. The fact that M/s. Brindavan Beverages had already made substantial investments with Embassy Group and that M/s. Cauvery Aqua Pvt. Ltd., had expressed its desire to join is very clear from the agreement dated 14.11.2005, the veracity of which has not been impeached in the assessment proceedings. Merely because the A.O. is of the view that the investments could have been made directly and not through M/s. Brindavan Beverages Pvt. Ltd., cannot be a reason to discard the business arrangement between the parties. Hence, I do not find the reasons mentioned by the A.O. in the assessment order that the appellant has tried to give a colour of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision, it is clear that any payment made by a company by way of advance or loan has to be understood in the context of the object with which the said provision is introduced Though the legislature has introduced `advance' as well as 'loan' which are two different works, the meaning of each of those works have to be understood in the context in which they are used Each work takes its colour from the other. The meaning of the word 'advance ' is to be understood by the meaning of the word loan which is used immediately thereafter. Associated words taken their meaning from one another under the doctrine of noscitur a socits, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it. This rule, according to Maxwell means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. In the case of a loan, money is advanced generally on payment of interest. In other words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal on the reasoning that the transactions of advancing money by CAPL to BBPL are business transactions. Accordingly, we confirm the decision of ld CIT(A) in holding that there is no case for assessment of deemed dividend on merits and hence the protective addition made in the hands of the assessee herein is liable to be deleted. 10. The next issue urged by the revenue relates to the addition of ₹ 53,69,040/- relating to unexplained investment made on protective basis in the hands of the assessee. The substantial addition was made in the hands of Shri Prakash Ladhani and this addition was confirmed in his hands by Ld CIT(A). Accordingly, in the instant case, the Ld CIT(A) deleted the protective addition. The revenue is aggrieved. 11. The Ld A.R submitted that the assessee Shri Prakash Ladhani had challenged the decision rendered by Ld CIT(A) in respect of the above said addition by filing appeal before ITAT and the same was numbered as ITA 2856/Bang/2017. Thereafter, Shri Prakash Ladhani has opted to settle the issue under Direct Taxes Vivad Se Vishwas Act and accordingly filed relevant forms. Accordingly, he submitted that the impugned issue has since been settle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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