TMI Blog2014 (11) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 from M/s Veteran Properties Pvt. Ltd.. It is also not disputed that assessee is a director in the said company and holds more than 10% of the shares. It is also not in a dispute that the company M/s Veteran Properties Pvt. Ltd. from which assessee received loan is a company in which public are not substantially interested. As company has shown profit during the year. It is the claim of assessee that profit shown by the company is notional and not real, hence, provisions of section 2(22(e) is not applicable. However, we are unable to accept assessee s claim. On a perusal of the P L a/c for AY 2004-05 it is seen that assessee has shown profit of Rs. 1,79,959.11 before expenditure and tax. It is also evident after claiming deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken place and if assessee s claim is found to be correct, then, delete the addition made. Having perused the findings of ld. CIT(A), we do not find any serious infirmity in the order of CIT(A). Accordingly, we direct the AO to verify the fact as to whether assessee has actually purchased the car from the company as claimed and whether outstanding liability shown represents the outstanding sale consideration to be paid to company towards purchase of car. If assessee s claim is found to be correct, no addition can be made u/s 2(22)(e) - Decided in favour of assessee. - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER For the Assessee : Shri S. Rama Rao For the Revenue : Shri Rajat Mitra OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO treated the loan advanced by M/s Veteran Properties Pvt. Ltd. as deemed dividend at the hands of assessee. Accordingly, he made addition of Rs. 2,59,000. Being aggrieved of the addition so made, assessee preferred appeal before ld. CIT(A). 4. Though ld. CIT(A) agreed with AO that the loan received from the company should be treated as deemed dividend at the hands of assessee, but, he directed AO to restrict the addition to the extent of accumulated profit of the company at Rs. 1,72,959. Being aggrieved of the aforesaid decision of ld. CIT(A), assessee is before us. 5. The learned AR submitted before us that though there is no dispute to the fact that assessee is director of the company from which advance was received and was holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eteran Properties Pvt. Ltd. from which assessee received loan is a company in which public are not substantially interested. It is also a fact on record that company has shown profit during the year. It is the claim of assessee that profit shown by the company is notional and not real, hence, provisions of section 2(22(e) is not applicable. However, we are unable to accept assessee s claim. On a perusal of the P L a/c for AY 2004-05 it is seen that assessee has shown profit of Rs. 1,79,959.11 before expenditure and tax. It is also evident after claiming deduction towards expenditure, provision for income-tax etc., net surplus available to the assessee is Rs. 98,907.61. Therefore, company has accumulated profit of Rs. 98,907.61. Thus, all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) on considering submissions of assessee held as under: 6.4 The submissions of the appellant have been considered and it is noted from the ledger account (vehicles sold) that Scoda Laura has been sold to the appellant for Rs. 12,50,000 for which the appellant paid vide cheques amounts Rs. 1,40,000, Rs. 4,50,000 and Rs. 2,00,000 totalling Rs. 7,90,000 during the year under consideration and balance amount of Rs. 4,60,000 has been shown as paid vide cheque No. 706823 dt. 17/07/2008 and cheque no. 706851 dt. 05/12/2008 drawn on Syndicate Bank of amounts Rs. 1,60,000 and Rs. 3,00,000 respectively. However, the appellant did not file any documentary evidences in support of the transfer of the vehicle from the company to the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so referred to balance sheet of assessee as on 31/03/08 wherein purchase value of the car and depreciation claim on it was mentioned. Thus, it was submitted by ld. AR as it is a purely business transaction and not in the nature of loan or advance, the outstanding liability cannot be treated as loan or advance. In support of such contention, he relied on the following decisions: 1. CIT Vs. Raj Kumar, 318 ITR 462 (Del.) 2. CIT Vs. Creative Dying Printing Pvt. Ltd., 318 ITR 476 (Del.) 3. Smt. Nissan Chawla Vs. CIT, 28 SOT 503 11. The learned DR, on the other hand, submitted that as ld. CIT(A) has simply directed the AO to verify assessee s claim, there should not be any grievance on the part of assessee. 12. We have considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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