TMI Blog2024 (4) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of or for the individual benefit of any such shareholder. From the above definition we infer that the payment made to the concern in which the assessee is having a substantial interest and in turn above such concerns makes a payment to the assessee direct / indirect benefit of the assessee the provisions of Section 2(22)(e) of the Act are attracted. In the given case, the assessee has demonstrated that no doubt the concern in which assessee is having substantial interest has received certain funds from the company and it was utilized by them for their own business purposes and none of the funds received by those companies in which the assessee is having substantial interest has made any payments directly or indirectly to the benefit of the assessee. Therefore, the payment received by RHPL and SSPDPL are utilized by them for the purpose of their own business. Therefore, provisions of Section 2(22)(e) of the Act cannot be invoked in this case. Accordingly, Ground No.2 raised by the assessee is allowed. - Shri Amit Shukla, Hon ble Judicial Member And Shri S. Rifaur Rahman, Hon'ble Accountant Member For the Assessee : Shri. Ketan Vajani For the Department : Shri Manoj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made in the hands of the assessee. The same was confirmed by the Ld.CIT(A). 5. Further, the Assessing Officer observed that MMLPL has given loan to M/s Ritika Hotels Pvt. Ltd. (in short RHPL ), the assessee, who is holding 32.83% equity shares in the company, i.e., MMLPL is also holding 24.35% share in the company RHPL. Assessing Officer observed that the company who has advanced loan has accumulated profits to the tune of ₹.5,25,64,264/- as per its Balance Sheet as on 31.03.2012. The provisions of section 2(22)(e) of the Act provides that any payment by a company, not being a company in which the public are substantially Interested, of any sum by way of advance or loan to any concern in which such shareholder is a member or a partner and in which he has a substantial interest, to the extent to which the company in either case possesses accumulated profits is to be treated as deemed dividend. Since the above said criteria are fulfilled in the case of RHPL and relying on the decision of Hon ble Delhi High Court in the case of CIT v. Ankitech (P) Ltd Others (2011) 242 CTR (Del) 129 and ACIT v. Bhaumik Colour Pvt. Ltd., (2009) 313 ITR (AT) 146 (Mumbai) (S.B.), Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 01.04.2011 is at ₹.2,07,75,186/- as per which assessee owes above said amount to the company and at the same time he also submitted that the above said opening balance was subject matter of deemed dividend in the earlier assessment years. 10. Further, he submitted that during the year assessee has sold motor car for the value of ₹.53,95,566/- and also paid ₹.10,00,000/- and ₹.50,000/- on 06.04.2011 and 15.04.2011 respectively. Further, he submitted that remuneration for the assessee were credited at the end of every month and submitted that the account of the assessee in the above said company are nothing but a running account maintained by the company. Therefore, he submitted that during the year assessee has withdrawn ₹.5,00,000/- on 20.06.2011, ₹.3,00,000/- on 26.06.2011 which is nothing but withdrawal of remuneration from the company. ₹.1,02,000/- on 29.09.2011, ₹. 6,25,000/- on 01.11.2011, ₹.5,50,000/- on 09.03.2012 and finally the company has deducted TDS on salary of ₹.2,50,000/- on 31.03.2012. 11. Broadly speaking, he submitted that to the extent of salary withdrawn by the assessee may be excluded from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments received are adhoc payments and explanation provided by the Ld. AR are not proper explanation. 15. With regard to second issue of payment of RHPL and SSPDPL, he submitted that there is no such requirement in Section 2(22)(e) of the Act that the benefit of the above payment be necessity condition to invoke the provisions of deemed dividend. It is enough that the loan is given to a related concern in which there are common shareholders and the company which gives the loan to the other related concerns having accumulated profits is enough ground to invoke the provisions of Section 2(22)(e) of the Act. Ld. DR relied on the decision of the Coordinate Bench in the case of Apeejay Surrendra Management Services Pvt., Ltd., v. DCIT in ITA No. 987 988/Kol/2023 dated 19.02.2024. 16. Considered the rival submissions and material placed on record, we observe from the record that no doubt assessee owes substantial amount to the MMLPL as a pending balance of ₹.2,07,75,186.27/- which is not an issue before us. During the year assessee has received several payments from the company to the extent of ₹.20.77 lakhs on various dates and on 31.03.2012 the company recovered TDS on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 2006-07 and 2009-10 similar payments were given to RHPL and SSPDPL, the Coordinate Bench has remitted this issue back to the file of the Assessing Officer for verification considering the fact that these are all the regular business transactions. 19. Be that as may be, from the submissions made before us, we observe that the MMLPL has made several payments to RHPL and SSPDPL during the year for the purpose of requirement in the business of RHPL and SSPDPL. After considering the detailed bank statements and ledger accounts submitted by the assessee, we observe that the RHPL and SSPDPL has utilized the funds received from MMLPL for their own business purposes and none of the funds are utilized other than business purpose as per the bank statement submitted before us. We observe that no funds were utilized for directly or indirectly for the benefit of the assessee. 20. As per the provisions of Section 2(22)(e) of the Act any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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