TMI Blog2019 (12) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... y the A.O. and sustained by the Ld. CIT(A) is deleted. - Decided in favour of assessee. - ITA No. 386/Chd/2019 - - - Dated:- 11-12-2019 - Shri. N.K. Saini, VP Shri Sanjay Garg, JM For the Assessee : Shri Parikshit Aggarwal, CA. For the Revenue : Shri Arvind Sudarshan, Sr. DR. ORDER PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt. 20/02/2019 of Ld. CIT(A)-1, Chandigarh. 2. Following grounds have been raised in this appeal: 1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) in Appeal No. 10646/17-18 dated 20.02.2019 has erred in passing that order in contravention of the provisions of S.250(6) of the Income Tax Act, 1961. 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 143(1) of the Act, later on the case was selected for scrutiny. 6. During the course of assessment proceedings the A.O. noticed that the assessee had received unsecured loans from M/s Punjab Metallic Pvt. Ltd. and found that Shri Sukhinder Singh Managing Director of the assessee company was holding 72.26% of share and he was also holding 45.39% of shares in M/s Punjab Metallic Pvt. Ltd. The A.O. made the impugned addition by observing in para 4.12 to 4.15 of the assessment order dt. 15/12/2016 as under: 4.12 From the shareholding pattern of M/S Punjab Metallic Pvt. Ltd. it is very clear that Sh. Sukhinder Singh Managing Director of the assessee company is holding 72.26% of shares in the assessee company and also holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd is holding enough accumulated profits to cover the loan given to the assessee company. 5. The company M/S Punjab Metallic Pvt. Ltd has not declared dividend during the financial year 2012-13. 4.15 On the basis of the discussion held above, the amount of Rs.l1,00,000/- which is received by the assessee company as loan is treated as deemed dividend u/s 2(22)(e) of the Act in the hands of the assessee company and the amount is added to the income of the assessee company. I am satisfied that the case of the assessee is fit for initiating penalty u/s 271 (1)(c) for furnishing inaccurate particulars of income. 7. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: Facts Submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company have reduced during the year. The preceding years' accumulated profits have already been considered for taxation of deemed dividend in the preceding year. Hence, the payment during the year have not been made by the payer company out of accumulated profits but have been paid out of other funds as the payer company suffered loss during the year. It is a settled Jaw that deemed dividend cannot exceed accumulated profits. In view of above facts, circumstances, legal position and submission, it is prayed that this ground of the appellant may kindly be allowed, the impugned assessment may please be quashed and the additions made may please be ordered to be deleted. 8. The Ld. CIT(A) however did not find merit in the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition made by the AO is confirmed. The case laws relied by the assessee company do not help him as the facts are distinguishable. The Ground of Appeal No.3 is dismissed. 9. Now the assessee is in appeal. 10. Ld. Counsel for the Assessee reiterated the submissions made before the authorities below and further submitted that the assessee company is not a shareholder of M/s Punjab Metallic Pvt. Ltd. from whom the loan of ₹ 11,00,000/- was received. Therefore deeming provisions of Section 2(22)(e) of the Act were not applicable, as such the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. Reliance was placed on the following case laws: 1. CIT vs. Sharman Woolen Mills Ltd. (2012) 204 Taxman 82 (P H) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the shareholders of the lending company and that of the assessee are the same. Therefore, the unsecured loan advanced by the lending company to the assessee is in fact the loan to its shareholders. 5. We do not find any merit in the said argument. 6. Even if the shareholders are common of two companies but the fact remains that the assessee is a Separate juristic entity. The assessee is assessed to income-tax separately than its shareholders. The |oan has been advanced to a company who is not a shareholder of M/s Ankur Agro (P) Ltd. So respectfully following the ratio laid down by the Hon'ble Jurisdictional High Court, the impugned addition made by the A.O. and sustained by the Ld. CIT(A) is deleted. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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