INCOME TAX ACT, 1961

Section 2(22)(e)

Dividend - Deemed dividend under section 2(22)(e) - Receipt of business advance against booking of commercial place developed by assessee -

Assessee engaged in real estate development revceived certain amount from said company. AO taxed the same as deemed dividend under section 2(22)(e).Held: As evident, assessee had not received any advance in the nature of loan or advances as contemplated in the section 2(22)(e). From M/s. Apra Auto (India) Private Limited rather assesse received advance against sale of commercial space developed by him on his own land in collaboration with M/s Unitch Ltd. as per buyer's agreement. Further, assessee had credit balance during entire financial year in books of M/s. Apra Auto India (P) Ltd. Therefore, it could be said that assessee had not taken any loan from said company, while assessee had actually given loan and received repayment during financial year under consideration of loan given to said company. Therefore, amount received was in the nature of business advance which did not fall within the ambit of section 2(22)(e) and addition made by AO was not sustainable.

REFERRED : Walchand & Co. Ltd. v. CIT (1975) 100 ITR 598(Bom) : 1975 TaxPub(DT) 0221 (Bom-HC), CIT v. K. Shrinavasan (1963) 50 ITR 788 (Mad) : 1963 TaxPub(DT) 299 (Mad-HC), CIT v. P. Sarada (1985) 154 ITR 387 (1985) (Mad) : 1985 TaxPub(DT) 523 (Mad-HC), MD Jindal v. CIT (1987) 164 1TR 028 (Cal) : 1987 TaxPub(DT) 567 (Cal-HC), Tarulata Shyam v. CIT (1977) 108 ITR 345 (SC) : 1977 TaxPub(DT) 899 (SC) and Rajesh P. Ved v. Asstt. C1T (2009) 1 ITR 275 (Mum-Trib) : 2009 TaxPub(DT) 583 (Mum-Trib), s. Sarada P v. CIT (1998) 229 ITR 444 (SC) : 1998 TaxPub(DT) 1048 (SC)

FAVOUR : In assessees favour.

A.Y. :

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