TMI Blog2013 (7) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is individual and partner in various concerns and received salary from M/s. Laxmi diamond Pvt. Ltd. During the year under consideration, the assessee had also derived income from House Property, income from capital gain and income from other source. During the course of assessment proceeding, on verification of balance sheet of the assessee for A.Y. 08-09, it was noticed that the assessee had shown: a) investment of Rs.25,26,00,000/- in shares of Laxmi Diamond Pvt. Ltd. and b) deposit of Rs.13,27,00,000/- in Laxmi Diamond Pvt. Ltd. Further on perusal of the balance-sheet of A.Y. 2007-08 it was noticed that in A.Y. 2007-08 the assessee had shown: a) investment of Rs. 25,26,00,000/- in shares of Laxmi Diamond Pvt. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalyzing all the facts and various case laws, he held that the loan advance to the tune of Rs.13.27 crore is a deemed dividend u/s.2(22)(e) of the IT Act. Thus, he made addition of Rs.13,27,00,000/-. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who has allowed the appeal. The operative portion of the order is as under: 6. I have considered the assessment order as well as submissions of the appellant. I do not agree with the action of the A.O. so far as adding the amount on account of deemed income u/s 2(22)(e) is concerned. The appellant submission is self explanatory and does not require much elaboration. I am of the opinion that just because the amount deposited in the company by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allowed. 4. Now, the Revenue is before us. Ld. CIT D.R. vehemently relied upon the order of the A.O. and argued that the assessee has maintained various accounts of the company and as on 31.03.2008, he had debited balance in the company s book at Rs. 13,27,00,000/-. The condition required for disallowance u/s. 2(22)(e) of the IT Act to satisfy in the case of assessee for making addition u/s. 2(22)(e) of the IT Act. At the outset, ld. Counsel for the appellant vehemently relied upon the order of the CIT(A) and argued that after merging all the accounts, the assessee have zero balance at the end of the year. He further filed the paper book and argued that as per merge account at page nos. 34 to 36, the final credit balance is nil. He fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. Thus, the above exposition would clearly show that debenture is only a loan account. Hence, both the CIT and the learned Assessing Officer fell in error when they consolidated only two accounts of the assessee with M/s. Star Synthetics Pvt. Ltd. ignoring its debenture account therein. We find from paper book page Nos. 18 to 19 that if all those three accounts are taken together, assessee at no point of time vowed any money to the company and therefore, assessee cannot be considered to have loan or taken any advance from the said company. Therefore, there is no question of any deemed dividend arising in its hand. After considering the factual position of the assessee and legal position and respectfully following the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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