TMI Blog2019 (5) TMI 1926X X X X Extracts X X X X X X X X Extracts X X X X ..... not called for. Interest was paid by the assessee on the loan amount received from M/s. Vijayshree Industries Pvt. Limited and as held by the Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] the loan given to the assessee by M/s. Vijayshree Industries Pvt. Limited as a consequence of further consideration, which was beneficial to the said company, cannot be treated as deemed dividend under section 2(22)(e). Assessee-company was not the shareholder in M/s. Vijayshree Industries Pvt. Limited during the year under consideration and the amount of loan in question thus could not be treated as deemed dividend under section 2(22)(e) even on this ground as rightly contended by the ld. Counsel for the assessee. D.R. has not disputed this legal position cited by the ld. Counsel for the assessee in support of the assessee s case that section 2(22)(e) was not applicable to the loan amount received from M/s. Vijayshree Industries Pvt. Limited. He, however, has contended that there is nothing on record to show that this legal position was specifically considered by the Assessing Officer while completing the assessment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 51.06% shares. He also found that M/s. Vijayshree Industries Pvt. Limited had sufficient accumulated profit which was more than the loan of ₹ 40,00,000/- given to the assessee-company. According to the ld. Principal CIT, the amount of ₹ 40,00,000/- received by the assessee as loan from M/s. Vijayshree Industries Pvt. Limited thus should have been assessed by the Assessing Officer in the hands of the assessee-company as deemed dividend under section 2(22)(e) of the Act and there was an error in the order of the Assessing Officer passed under section 153A/143(3) in not making any enquiries/verification in respect of the said loan so as to consider the applicability of section 2(22)(e). He accordingly issued a notice under section 263 requiring the assessee to show-cause as to why remedial action should not be taken by exercising the powers under section 263 to revise the order passed by the Assessing Officer under section 153A/143(3). 3. In reply to the show-cause notice issued by the ld. Principal CIT under section 263, a written submission was filed by the assessee vide letter dated 22.11.2017 stating, inter alia, as under:- With respect to your query regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the Assessing Officer to make the assessment afresh after making proper enquiry and verification on the issue and after affording reasonable opportunity of being heard to the assessee. Aggrieved by the order of the ld. Principal CIT passed under section 263, the assessee has preferred this appeal before the Tribunal. 4. The ld. Counsel for the assessee submitted that the ld. Principal CIT vide his impugned order passed under section 263 has set aside the order passed by the Assessing Officer under section 153A/143(3) of the Act dated 30.03.2016 on the ground that the necessary enquiry or verification regarding applicability of the provision of section 2(22)(e) to the loan of ₹ 40,00,000/- taken by the assessee-company from another group company M/s. Vijayshree Industries Pvt. Limited was not made by the Assessing Officer. In this regard, he invited our attention to the copy of notice issued by the Assessing Officer under section 142(1) on 17.08.2015 placed at page no. 50 of the paper book to point out that the details of all the loans and advances were called for by the Assessing Officer during the course of assessment proceedings. He also invited our attention to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by him that the provisions of section 2(22)(e) were not applicable. He contended that there was thus no error in the order of the Assessing Officer passed under section 153A/143(3) as alleged by the ld. Principal CIT and the revision under section 263 by the ld. Principal CIT was not called for. He urged that the impugned order passed by the ld. Principal CIT under section 263 may be set aside and that of the Assessing Officer passed under section 153A/143(3) be restored back. 5. The ld. D.R., on the other hand, strongly supported the impugned order passed by the ld. Principal CIT under section 263. He contended that even though the relevant details were available on record, the Assessing Officer ought to have made the necessary enquiry to ascertain the applicability of section 2(22)(e) to the loan amount of ₹ 40,00,000/- received by the assessee from the other group company M/s. Vijayshree Industries Pvt. Limited. He submitted that the query raised by the Assessing Officer and details furnished by the assessee as highlighted by the ld. Counsel for the assessee were general in nature and there was no specific enquiry or verification made by the Assessing Officer reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m during the course of assessment proceedings by raising specific queries and after applying his mind to the said details, a conscious decision was taken by him as regards the non-applicability of section 2(22)(e) to the loan amount in question while completing the assessment under section 153A/143(3) of the Act. In our opinion, it, therefore, cannot be said that there was an error in the order of the Assessing Officer in not making any enquiry or verification on the issue of applicability of section 2(22)(e) to the loan amount in question as alleged by the ld. Principal CIT and the revision under section 263 by the ld. Principal was not called for. 7. It is also observed that interest was paid by the assessee on the loan amount of ₹ 40,00,000/- received from M/s. Vijayshree Industries Pvt. Limited and as held by the Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra), the loan of ₹ 40,00,000/- given to the assessee by M/s. Vijayshree Industries Pvt. Limited as a consequence of further consideration, which was beneficial to the said company, cannot be treated as deemed dividend under section 2(22)(e). It is also relevant to note here that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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