TMI Blog2022 (10) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant s proprietary concern, in which the appellant has credit balance of Rs. 5,36,20,634/-. The details of both the accounts were furnished to the Range head during the proceedings under section 144A and to the CIT(A) at the time of first appellate stage. We find that Hon'ble Punjab High Court in the case of CIT Vs Suraj Devi Dada [ 2014 (5) TMI 625 - PUNJAB HARYANA HIGH COURT] held that where assessee had running current account with a company and it had been advancing money to it for business purposes, and had not gained any benefit from funds of company, and there was credit period only for 55 days, said credit in account could not be treated as deemed dividend under Section 2(22)(e) in the hands of assessee. Hon'ble Andhra Pradesh High Court in India Fruits [ 2014 (10) TMI 749 - ANDHRA PRADESH HIGH COURT] held where subsidiary company was advancing money to assessee company for purchase of raw material and to make payments to a company to meet their business liabilities, said amount could not be considered as deemed dividend income of assessee company within purview of Section 2(22)(e). Tribunal in Iswar Chand Jindal [ 2015 (8) TMI 119 - ITAT DELHI] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded share premium account from the accumulated profits as it has different character and is not available for distribution of dividend. 4. Without prejudice to the above, the appellant submits that even otherwise instead of making addition of balance in Profit Loss Account of Rs. 13,52,095/- such addition should have been restricted to Rs. 3,00,435/- being 22.22% of Rs. 13,52,095/- as the appellant s shareholding was only 22.22%. (II) Miscellaneous The appellant craves to add, alter or vary any of the grounds of appeal. 3. Brief facts of the case are that the assessee is an individual, filed his return of income for assessment year (A.Y) 2013-14 on 24.02.2013 declaring total income of Rs. 25,67,380/-. The case was selected for scrutiny and the assessment was completed under section 143(3) on 11.03.2016. The Assessing Officer while passing the assessment order made addition of Rs. 1,12,52,528/- under section 2(22)(e) of the Income Tax Act. The Assessing Officer on perusal of audit report he noticed that assessee has taken loan of Rs. 1,58,20,000/- from the company Shubham Buildmart Pvt. Ltd. Further, the assessee has given loan of Rs. 5,36,20,634/- to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Crore should not be treated as deemed dividend under section 2(22)(e). The contents of show cause notice is recorded in para 4.3 of assessment order. The Assessing Officer in the said show cause notice mentioned that as per provision of section 2(22)(e) of the Act, the payment made by a company can be treated to be deemed dividend only to the extent of accumulated profits/reserved and surpluses possessed by the company. The accumulated profits up to the date of loan i.e. on 28.03.2013 worked out to Rs. 40,52,528/- on pro-rata basis and balance of securities premium of Rs. 72,00,000/-. Therefore, the assessee was asked as to show cause as to why the accumulated/reserved and surpluses profit of Rs. 1,12,52,528/- (Rs. 40,52,528/ + Rs. 72,00,000/-) on the date of loan should not be treated as deemed dividend under section 2(22)(e) of the Act. 7. The assessee filed her reply dated 10.03.2016. In the reply the assessee stated that the proposal to add security premium, the issue is already stated that it is not part of accumulated profits. In fact, share premium gets boosted by capital receipts and that is nothing to do with profits at all. Therefore, it has to be excluded. As per de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clubbed with loan account. He rejected the request of the appellant that a consolidated view of both accounts should be taken. The Jt. Commissioner further directed the ld. Assessing Officer to limit the addition to the accumulated profit of the company. The ld. Assessing Officer in compliance to this directions, made the said addition, however, while calculating accumulated profits, the ld. Assessing Officer calculated accumulated profit of the company by including share premium account, as well. 10. The assessee in sum and substance submitted that the assessee holds shares at 22.22% in the share holding in case of Shubham Buildmart P. Ltd. The assessee is having a current account of its proprietary business Subham Associate with the company and there are several debits and credits in that account. The Assessing Officer works out the maximum debit of Rs. 1,13,69,998/- and held it to be advanced under section 2(22)(e) of the Act. During the year, there has been credit balance for various periods. Besides peak balance in this accounts is only Rs. 39,95,000/- How figure of Rs. 11,52,528/- is worked out is not clear. The assessee has also another account with the company which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits for the purposes of Section 2(22)(e). The accumulated profit as on the starting of the year i.e. 01.04.2012 needs to be considered for the purpose of section 2(22)(e). The ld. CIT(A) find it accumulated profit of the assessee as on 01.04.2012 is at Rs. 13,52,095/-. The Assessing Officer is directed to restrict the addition to the extent of Rs. 13,52,095/- thereby granted partly relief. Further aggrieved, the assessee has filed present appeal before this tribunal. 12. We have heard both the submissions of Learned Authorized Representative (ld. AR) for the assessee and Learned Senior Departmental Representative (ld. Sr DR) for the Revenue and have gone through the order of lower authorities. At the outset of hearing, the ld. AR of the assessee submits that he is not pressing ground No. 3 has dismissed as not pressed. Considering the submissions of ld AR for the assessee, ground No.3 of the appeal is dismissed as not pressed. 13. Ground No. 1 to 2 relate to addition of Rs.13,52,095/- under section 2(22)(e) of the Act. The ld AR for the assessee submits that the assessing officer made addition of Rs. 1.22 Crore under section 2(22)(e) of the Act. The addition made by asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has claimed computation of consolidated balances shows a credit balance with the company and therefore claimed that there is no addition of deemed dividend can be made. And claimed that there is debit balance. The ld DR for the revenue submits that from the record of assessment it appears that such trading account with the company was never produced before assessing officer for examination of its genuineness and determination of consolidated balances. 17. The ld DR for the revenue further submits that consolidation of multiple accounts are vague and unsupported assertion. The case laws relied by the assessee are not applicable on the facts of the present case as trading account with the company has not been established in regards to genuineness of the transactions. The sources of item and the purchase require verification. It was further argued that the deemed dividend is a payment of capital account and revenue account cannot be clubbed with capital account. The ld CIT(A) reduced the accumulated profit of Rs. 40,52,528/- on the date of loan as on 28.03.3013 to Rs. 13,52,095/- on whims and fences and without basis. 18. In the rejoinder submissions the ld AR of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ordinary course of business and hence cannot be treated as deemed dividend under section 2(22)(e). We find that the case of the assessee throughout the proceedings is that the appellant was having two accounts with the said company; one is a loan account wherein appellant has received loan to the extent of Rs. 1,58,20,000/- whereas another account is a Trade account of appellant s proprietary concern, in which the appellant has credit balance of Rs. 5,36,20,634/-. The details of both the accounts were furnished to the Range head during the proceedings under section 144A and to the Ld. CIT(A) at the time of first appellate stage. 20. We find that Hon'ble Punjab High Court in the case of CIT Vs Suraj Devi Dada 367 ITR 78 (P H) held that where assessee had running current account with a company and it had been advancing money to it for business purposes, and had not gained any benefit from funds of company, and there was credit period only for 55 days, said credit in account could not be treated as deemed dividend under Section 2(22)(e) in the hands of assessee. 21. We further find that Hon'ble Andhra Pradesh High Court in India Fruits (supra) held where subsidiary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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