TMI Blog2022 (7) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... at the issue may be remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the judgment of the Hon'ble Supreme Court as and when will be passed by the Hon'ble Supreme Court. - Decided in favour of assessee for statistical purposes. Nature of expenses - Addition of ROC (Registrar of company) expenses for increasing in authorized share capital - CIT-A and AO rejected the contention of the assessee and made disallowance holding that ROC expenses are in the nature of capital - HELD THAT:- Considering the law of the land as settled on this issue by the Hon' Supreme Court of India in the case of Punjab State Industrial Development Corporation [ 1996 (12) TMI 6 - SUPREME COURT ] and later decision of General Insurance Corporation Ltd. [ 2006 (9) TMI 116 - SUPREME COURT ] finding of the Assessing Officer to disallow the expenses towards increase in authorized share capital and treating the same as capital expenditure is confirmed and the disallowance so made is sustained. - Decided against assessee. - ITA No. 729/AHD/2019 - - - Dated:- 29-6-2022 - DR. ARJUN LAL SAINI , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. has Profit Reserve (Accumulated Profits) of Rs. 96,47,569/- as on 31.03.2014. It was further observed by AO that advance of Rs. 4.23 crore is purely financial advance. The assessee company(RYMPC) is also having one more account in the books of PMCIPL showing credit balance of Rs. 2,12,64,649/- which is on account of advance received from customers. The assessing officer thus noted that even if this credit balance of Rs. 2,12,64,649/- is set off from the advance of Rs. 4,23,25,000/-, then also the resultant net advance of Rs. 2,10,60,351/- (Rs. 4,23,25,000 - Rs. 2,12,64,649) given by PMCIP to RYMAPL is more than the accumulated profits of Rs. 96,47,569/-. Therefore, Assessing Officer noted the amount received by the assessee company apparently gets covered by the definition of deemed dividend as defined in section 2(22)(e) of the Act to the extent of the accumulated profits of Rs. 96,47,569/- in the hand of the assessee company. Therefore, assessing officer issued a show cause notice to explain the transaction. In response, the assessee submitted that these transactions are on account of trading activities, as current account, therefore does not fall in the definition of deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are being done by the assessee during the course of doing business. Therefore, we find merit in the submissions of the Ld. Counsel that transactions under consideration are in the nature of current account transactions, which are squarely covered by the judgment of the Hon'ble jurisdictional High Court of Gujarat in the case of Shripad Concrete Pvt. Ltd. (supra), in Tax Appeal No. 208 of 2013, order dated 03.04.2013 wherein it was held as follows: Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal ('the Tribunal' for short) dated 24.08.2012, raising following question for our consideration: Whether on the facts and in the circumstances of the case, and in law, the ITAT was justified in holding that the amount of Rs. 35,50,000/- received from Shripad Conchem Pvt. Ltd. and Shripad Construction, and Rs. 1,02,830/- accumulated profit from Eco System Management Service (P.) Ltd., are not taxable in the hands of assessee company as deemed dividend u/s. 2(22)(e)? 2. For the assessment year 2006-07, the Assessing Officer taxed a sum of Rs. 35.50 lacs as deemed dividend within the meaning of section 2(22)(e) of the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. It is not a loan as envisaged in section 2(22)(e) of the IT Act. We respectfully follow the findings given by the Co-ordinate Bench as discussed above as are squarely applicable on the assessee's case. There is no merit in the department's appeal. Accordingly, the same is dismissed. Having heard the learned counsel Shri Manav Mehta for the Revenue and having perused the documents on record, we find that the Tribunal has committed no error. As a matter of fact, it was found by CIT(Appeals) which was upheld by the Tribunal that the appellant had sold goods and had established that the amounts involved business transactions. Such amounts, therefore, cannot be categorized as loan as envisaged under section 2(22)(3) of the Act. Section 2(22)(e) of the Act, as is well known, treats certain loan or advance made by the company to a person who is the beneficial owner of the shares holding not less than ten per cent of the voting power under certain circumstances to be the deemed dividend. In the present case, when the authorities found that the amount in question cannot be categorized as loan or advance, question of application of section 2(22)(e) would not arise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such, such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees' account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. 9. Consequently, all these appeals are allowed and the impugned judgement and orders passed by the tribunal in deleting the disallowances made by the AO are hereby quashed and set aside and the disallowances of the respective sums with respect to the Provident Fund/ESI Fund made by the AO is hereby restored. The questions raised in present appeal are answered in favour of the revenue. With this, all these appeals are allowed. 13. However, Co-ordinate Bench of ITAT in the case of M/s. Zinitex and other, in ITA Nos. 147 234/SRT/2021, order dated 31.03.2022, has remitted the issue back to the file of ld. CIT(A). We note that against the order of the Hon'ble Gujarat High Court, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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