TMI Blog2021 (10) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed appeal before ITAT challenging the decision rendered by Ld CIT(A) and further the said company has opted to settle the issue under DTVSV Scheme. The assessee has filed copy of Form No.3 given 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 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 by the assessee. - ITA No.69/Bang/2018 - - - Dated:- 25-10-2021 - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER Appellant by : Ms. Neera Malhotra, D.R. Respondent by : Shri V. Srinivasan, A.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: The appeal filed by the revenue is directed against the order dated 30-10-2017 passed by Ld CIT(A)-11, Bangalore and it relates to the assessment year 2007-08. 2. The grounds urged by the revenue relates to the following two issues:- (a) Deemed dividend assessed u/s 2(22)(e) of the Act ₹ 1,00,00,000/- (b) Add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the lender company were more than the amount of loan. Accordingly, the AO assessed the loan amount of ₹ 1.00 crore as deemed dividend in the hands of the assessee. 6. The Ld. CIT(A), however, accepted the explanations of the assessee that these transactions are business transactions and accordingly, deleted the addition made u/s 2(22)(e) of the Act ina common order passed for assessment years 2007-08 to 2013-14. The revenue is aggrieved. 7. The Ld D.R submitted that M/s CAPL has given loans to BBPL in various years and the aggregate amount of loans so given from AY 2007-08 to 2013-14 was ₹ 13.84 crores. The assessee had placed reliance on assignment agreements dated 28-03-2015 for sale of undivided interest in land and built up space, as per which properties worth ₹ 13.64 crores were assigned in favour of CAPL by BBPL. Accordingly, the Ld CIT(A) has granted relief to the assessee. The Ld D.R submitted that a close perusal of the assignment agreements would show that the facts are not as claimed by the assessee before Ld CIT(A). She submitted that the CAPL got following properties as per assignment agreements:- Construction Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs). As per the above said agreement, BBPL has assigned property value of ₹ 13.64 crores to CAPL. Hence, M/s. CAPL has obtained properties almost equal to the amount advanced by it from assessment years 2007-08 to 2013- 14. These facts prove that both the companies have joined together to carrying business activities of making investment in real estate activities. Finally, CAPL was given properties almost equal to the investments made. Accordingly, the Ld A.R submitted that the AO was not correct in considering these transactions as loan transactions. He submitted that the Ld CIT(A) has correctly appreciated these transactions as business transactions. Accordingly, he submitted that the order passed by Ld CIT(A) on this issue does not call for any interference in all the three years. 10. The Ld. A.R. further submitted that the A.O., in the grounds of appeal filed by the revenue, has taken a contention that there is no distinction between an advance and business advance . He submitted this contention is contrary to the provisions of section 2(22)(e) of the Act and also the decisions rendered by jurisdictional Karnataka High Court. 11. We heard the parties and perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfronted with the AO, would prove that the transactions entered between the parties are business transactions. The Ld A.R also submitted that both the companies are maintaining accounts as running accounts only and real estate investment activity was agreed to be a continuous activity. Hence the question of making one to one reconciliation, as contended by Ld DR. would not arise in these types of transactions. 14. At this juncture, we feel it pertinent to extract the order passed by Ld. CIT(A) in this regard:- 7.4 I considered the submissions made and materials on record. The contention of the appellant is that the deemed dividend cannot be assessed for the assessment years 2007-08, 2008-09, 2010-11 2011-12 because it was not based on any materials found at the time of search and these assessments had not abated on the date of search. The second contention of the appellant is that the advance paid by M/s. Cauvery Aqua Pvt. Ltd., to M/s. Brindavan Beverages Pvt. Ltd., is not a loan or advance since it was given in connection with property investments to be made after termination of the distribution business between the 2 companies when an amount of ₹ 1,97,11,809/-wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness transaction to a loan advanced very convincing. 7.7 The appellant has produced before me two assignment agreements dated 28.03.2015 by which M/s. Brindavan Beverages Pvt. Ltd., has assigned its rights in the purchase agreement with Embassy Group in respect of undivided interest in land as well as construction of the apartment no. 5211 in the project of Embassy Group called Embassy Lake Terraces . This assignment agreement is also endorsed by M/s. Embassy Group who has signed as consenting witness. This document was produced to substantiate the claim that there was an agreement between the companies to acquire real estate properties as per the agreement dated 14.11.2005 entered earlier. Since the said document has been executed on 28.03.2015 and very close to the assessment order dated 30.03.2015, the prayer of the appellant for admission of the same under Rule 46A of the I.T. Rules is considered. No specific objection has also been raised by the A.O. for admission of this additional evidence. 7.8 Taking into consideration the materials on record, I hold that the appellant has been able to establish that the amounts advanced by M/s. Cauvery Aqua Pvt. Ltd., to M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r words the loan advanced generally on payment of interest. In otherwords the loan advance has to be repaid with interest. In the case of an advance also, the element of repayment is there but such a repayment may be with interest or without interest. Therefore, when the said two words are used in the aforesaid provision with the purpose of levying tax, if the intention of such advance or loan is to avoid payment of dividend distribution tax under s. 115-0 of the Act, such a payment by a company certainly constitutes a deemed dividend But if such a payment is made firstly not out of accumulated profits and secondly even if it is out of accumulated profits but as trade advance as a consideration for the goods received or for purchase of a capital asset which indirectly would benefit the company advancing the loan, such advance cannot be brought within the word 'advance used in the aforesaid provisions. The trade advance which is in the nature of money transacted to give effect to commercial transactions would not fall within the ambit of the provisions of s.2(22)(e) of the Act . 7.10 Respectfully following the judgment of the Hon'ble Jurisdictional High Court [supra] I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order dated 26-09-2016 passed in 91/DCIT,CC-2(3)/CIT(A)-11/2015-16. Accordingly, the Ld CIT(A) deleted the protective addition made in the hands of the assessee. The revenue is aggrieved. 19. The Ld A.R submitted that the company, M/s Brindavan Beverages P Ltd 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 1989/Bang/2016. Thereafter, the above said company has opted to settled the issue under Direct Taxes Vivad Se Vishwas Act and accordingly filed relevant forms. He submitted that the assessee has since received Form No.3 from PCIT. Accordingly, he submitted that the impugned issue has since been settled by M/s Brindavan Beverages P Ltd accepting the additions made in its hands on substantive basis. Accordingly, he contended that the protective addition made in the hands of the assessee has rightly been deleted by Ld CIT(A). 20. Since the addition made on substantive basis in the hands of Brindavan Beverages P Ltd has been upheld by Ld CIT(A), the protective addition made in the hands of the assessee of the very same amount is liable to be deleted. It was further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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