TMI Blog2023 (1) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... troverted by the Authorities below or Ld. Sr. DR before us. Therefore, as per judgment of Pradip Kumar Malhotra[ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] wherein it was held that the phrase by way of advance or loan appearing in section 2(22)(e) of the Act must constitute to mean impugned advances or loans, which is enjoyed by the shareholder for merely because on account of being a partner or a Director in the company, which the beneficiary owner of shares. A position differs if such loan or advances given to such shareholder as a consequence of any further consideration, which is beneficial to the company received from such shareholder then in such advance or loan cannot be said to be deemed dividend within the ambit of section 2(22)(e) - Identical and similar situation is present in the case in hand. Therefore addition made by the A.O. and confirmed by the Ld. CIT(A) cannot be held as sustainable and thus we direct the A.O. to delete the same. Appeal of the assessee is allowed. - ITA No.3373/Del/2019 - - - Dated:- 19-1-2023 - Shri Chandra Mohan Garg, Judicial Member And Shri Narendra Kumar Billaiya, Accountant Member For the Assessee : Shri Ajay Wadwa, Advocate, Ms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Year. (E) The Assessee craves leave to add, Alter or amend the grounds of appeal at or before the hearing. 3. Learned counsel of the assessee submitted that the initially the loan was taken in BTB Marketing Pvt. Ltd., against residential property of Shri Rahul Singh, who also a Director of BTB Marketing Pvt. Ltd., for an amount of Rs. 2,06,00,000/- on 19.08.2010 and collateral security for said loan was on the property situated at Nirvana Country South City-2, Phase II, Gurgaon and guarantors were BTB Marketing Pvt. Ltd., Mr. Rahul Singh, and Mrs. Bineeta Singh. He further stated that thereafter, loan was taken BTB Retail Pvt. Ltd. against the residential property of Shri Rahul Singh of Rs. 2,99,01,000/- on 10.02.2012 with the same collateral security. The learned counsel further explain that M/s. BTB Retail Pvt. Ltd. has shown income of Rs. 30,55,309/- from BTB Marketing Pvt. Ltd., which was reflected in the books of BTB Marketing Pvt. Ltd., also and rate of interest was 13% per annum on loan taken by BTB Marketing Pvt. Ltd., at the same rate. The learned counsel further submitted that the running account between both the companies shows that the loan of Rs. 94, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as first appellate order and submitted that the A.O. was right invoking the provisions of section 2(22)(e) of the Act, as the day on which BTB Retail Pvt. Ltd., advance Rs. 94,00,000/- to assessee the company was having reserve surplus more than the amount advanced, therefore the A.O. was right in holding that all the conditions stipulated u/s. 2(22)(e) of the Act are fulfilled to the impugned loan/advance given to the assessee. 7. The learned counsel of the assessee placing rejoined to the above submissions contended that as per judgment of Calcutta High court in the case of Pradip Kumar Malhotra vs. Commissioner of Income Tax (supra) held that provisions of section 2(22)(e) would be applicable in respect of gratuitous loans and advances given by the company which were enjoyed on account of shareholding and the said section would not be applicable to cases where the loan or advance was given as a consideration for any other advantage conferred upon the company by such shareholder. The Court held that in the case under consideration, the advance was not a 'gratuitous advance' but was given to protect 'business interest of the company. Hence, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business interest of the company. 11. The view we propose to take finds support from the two decisions, one of the Bombay High Court and the other of the Delhi High Court relied upon by Mr. Khaitan as indicated earlier. 12. We, therefore, find that the authorities below erred in law in treating the advance given by the Company to the assessee by way of compensation to the assessee for keeping his property as mortgage on behalf of the company to reap the benefit of loan as deemed dividend within the meaning of Section 2(22) (e) of the Act. 13. We, consequently, set aside the order of the Tribunal below by directing the Assessing Officer not to treat the advance of Rs. 20,75,000/- as a deemed dividend. 14. The appeal is, thus, allowed by answering the point No. ii in the affirmative and against the Revenue. In the facts and circumstances, there will be, however, no order as to costs. 9. In view of above it is amply clear that the provision of section 2(22)(e) of the Act, would be applicable in respect of gratuities loans advance given by the company which were enjoyed by the beneficiary on account of substantial shareholding. In the present case undisputedl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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