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TMI Blog2022 (8) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer too. This claim remains uncontroverted by the AO in the assessment: order while invoking the provisions of sec. 2(22)(e) of the Income Tax Act, 1961 The only argument taken by the A.O. against the appellant is that the appellant has tried to camouflage loan/ advances taken/given under the name of Inter Corporate Deposits. A.O. has disputed the claim of the appellant on the ground that period of repayment is quite small and lender Company has charged lower interest compared to Banks and that appellant has also given loan to the lender company on which no interest has been charged. The A.O. may be right to some extent in his observations but the same will not change the character of deposit as there can be no fixed time period for making and accepting deposits as such. This being so, the only question remains to be decided is whether provisions of sec. 2(22)(e) can be invoked in case of "Inter Corporate Deposit". Sec.2(22)(e) clearly mentions the term advance or loan and not deposits. Mumbai Tribunal n the case of Bombay Oil Industries Ltd. Vs. DCIT (2009) - TIOL-297, ITAT,Mum; (2009) 28 SOT 383 (Mum) has held that Inter corporate deposits cannot be treated as a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the lender company ITA No. 1440/PUN/2015 A.Y.2012-13 i.e. M/s. Dhariya Infrastructure Development Pvt. Ltd. and therefore, it is required to be taxed in the hands of the assessee company being deemed dividend. 4.1 There are judicial pronouncements to distinguish deposit from loan. Loans are given at the request of borrower against interest payment. Per contra, deposits are given out of excess fund voluntarily on the proposal of the lender with interest. 4.2 In the present case, the assessee has not placed on record any document or agreement inviting the deposit. Leave alone such invitation, the assessee sister concern is whole depositor and the same is described as „Inter Corporate Deposit‟ in the books of the assessee. There is no document placed before us for deciphering the real intention of the depositor or to find out whether it was deposit or loan and therefore, on the facts of the present case, there is requirement of taking adverse inference against the assessee. 4.3 From perusal of the ledger account of the depositor i.e. M/s. M/s. Dhariya Infrastructure Development Pvt. Ltd., it is noticed that the same appears to be running loan account rather than IC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the assessee company. 4.6 The assessee had filed ledger account of M/s. Dhariya Infrastructure Development Pvt. Ltd. (Inter Corporate Deposit) for the period 1st April, 2011 to 31st March, 2012 wherein various amounts were given by the ITA No. 1440/PUN/2015 A.Y.2012-13 said M/s. Dhariya Infrastructure Development Pvt. Ltd to the assessee company between 5th April, 2011 to 31st March, 2012 and it appears from Page 21 of the Paper book annexed on record that interest paid on the deposit was amounting to Rs. 2,69,260/-. However, looking into the various entries which were done by the M/s. Dhariya Infrastructure Development Pvt. Ltd, it appears that every now and then amount was transferred from M/s. Dhariya Infrastructure Development Pvt. Ltd to the account of M/s. Dhariya Construction Pvt. Ltd. like the amount of Rs. 50 Lakhs was transferred to M/s. Dhariya Construction Pvt. Ltd. on 23.04.2011, Rs. 10 Lakhs on 27.04.2011, another amount of Rs. 10 Lakhs on 02.05.2011, another amount of Rs. 10 Lakhs 05.05.2011 and Rs. 50 Lakhs on 09.05.2011 and also Rs. 20 Lakhs deposited to the M/s. Dhariya Infrastructure Development Pvt. Ltd. on 09.05.2011. The entries of those various amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, then deposits with scheduled banks would also fall within the ambit of section 370 of the Companies Act. Therefore, moneys given by the company to the other bodies corporate is a loan within the meaning of section 370 of the Companies Act must be negatived. Therefore, the petitioners would well be entitled to the relief." 4.9 Further we may also rely upon the coordinate Bench decision in the matter of KIIC Investment Company [2019] 101 taxmann.com 19 ITA No. 1440/PUN/2015 A.Y.2012-13 (Mumbai - Trib.) , wherein the Bench had allowed the claim, as the intention can be gathered from the agreement, board resolution and other circumstances. However in the present case nothing is available to infer the intention of parties to give ICD. Thus, Ground Nos. 2 to 4 raised in appeal by the Revenue are required to be allowed and we order accordingly. Thus, Grounds No. 2 to 4 raised in appeal by the Revenue are allowed." 4. Learned authorities representative vehemently argued that learned coordinate bench has failed to consider sum clinching facts as well as the relevant law qua the impugned deeming fiction of dividend u/s. 2(22)(e) of the Act. Learned CIT has also taken pains to file a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning account rather than inter corporate deposits account. 11. In view of the aforesaid observation, the ITAT is of the opinion that the amount was in the nature of loan / advances only and not deposit. Assessee's objection 12. However, the impugned order of the Hon'ble ITAT has not correctly interpreted the section and is also not consonance with facts and circumstances of the case. 13. It is the assessee's contention that the amount received from lender is a inter- company deposit and not a "Loan". Hence it is not deemed dividend under section 2 (22) (e) of the Income Tax Act since the said section applies and refers to loan or advance and not to deposit. Loan / advance does not cover deposit. 14. The Hon'ble ITAT erred in completely ignoring the ratio laid down by the Hon'ble Bombay High Court and by the Hon'ble Madhya Pradesh High Court in the judgements cited on the premise that the facts of the concerned cases were different from the case in hand without actually discussing as to what was the difference in the facts of those cases which led the Hon'ble ITAT to distinguish those cases from the case at hand. 15. The Hon'ble ITAT erred in coming to a conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount or the depositee may go and collect the amount. But in case of a loan, the debtor has to request the creditor to advance certain amount for meeting his requirement for using the amount. 21. It also needs to be appreciated that it is not necessary that a deposit is always "invited" by a Company, a deposit received without any invitation can also be considered as "deposit" and can-not be considered as a loan in absence of any financial need of the recipient. 22. The lender company approached the assessee and placed deposits from time to time. The assessee paid interest on the said deposit as well @12% p.a. 23. The Hon'ble ITAT failed to appreciate that in absence of any document suggesting otherwise, the version of the Assessee has to be accepted unless circumstantial evidence suggests otherwise, which is not the case in this matter. 24. The Hon'ble ITAT erred in basing its opinion on non-disclosure of availability of funds with the depositor. It is submitted that whether the depositor had funds to deposit in the Assessee Company is a subject matter of scrutiny of the depositor‟s case and will not justify any otherwise inference. 25. The Hon'ble 1TAT fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan. 32. Whether an amount reflected in a "Running Account", can be treated as a Loan and hence a deemed dividend just because the account is not a Inter Corporate Deposit Account in absence of any evidence to support the inference of loan. 33. Whether it is mandatory to have some agreement for treating the amount transferred between the sister concern Companies as "Inter Corporate Deposit". Other issues / error in the assessment order 34. There is an error of considering / treating transaction of recovery of deposit given of Rs 60,00,000/- in / as the transaction of acceptance of deposit while making addition of deemed dividend u/s 2(22)(e) as per assessment order dated 19th Oct 2015. 35. The amount of Rs 60,00,000/- is not the amount of deposit accepted, but it is a transaction of recovery of deposit given / paid. So, this amount should not have been added back and not considered as part of deemed dividend by the AO. Prayer 36. The same issue of deemed dividend has come up for hearing for the AY 2011-12 37. The objections and issues raised as above are applicable to the AY 2011-12 as well. The same needs to be addressed before disposing of the appeal." 5. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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