| The Tax Publishers2020 TaxPub(DT) 1774 (Del-Trib) INCOME TAX ACT, 1961
Section 2(22)(e)
Assessee failed to bring any material to support the contention that advance was received from closely held company in regular course of business not only during the assessment proceedings before AO but also during appellate proceedings before CIT(A) and ITAT. Therefore, section 2(22)(e) was attracted. However, in line with alternate contention of assessee, addition on account of deemed dividend was to be restricted to accumulated profits. For limited purpose of computation of accumulated profits issue was remanded to AO.
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Dividend - Deemed dividend under section 2(22)(e) - Receipt of money by assessee-director from closely held company - Assessee has failed to substantiate the claim, that the transction was made in the normal course of business
Assessee shareholder-director lent money to M/s. MCR (P) Ltd.. As per books of M/s. Mittal Construction and Real Estate (P) Ltd. closing balance as on 31-3-2010 was Rs. 6,58,000. Also, M/s. MCR (P) Ltd. had given Rs. 25,00,000 to assessee on 9-2-2010, for a specific purpose. Since said specific purpose could not be acheived, assessee returned such money within next few days, by 30-3-2010. AO made addition under section 2(22)(e) of Rs. 18,42,000 being the difference of Rs. 25,00,000 and Rs. 6,58,000. Assessee argued that the section 2(22)(e) was not attracted to transactions carried out in regular course of business, while stating that money of Rs. 25,00,000 was given by M/s. Mittal Construction and Real Estate (P) Ltd. to him for a specific purpose, in regular course of its business. Assessee also argued that even otherwise addition under section 2(22)(e) made at Rs. 18,42,000 was not justified because as on 9-2-2010. M/s. MCR (P) Ltd. was not having any accumulated profit.Held: Assessee failed to bring any material to support the contention that transaction of Rs. 18,42,000 was made in regular course of business not only during the assessment proceedings before AO but also during appellate proceeidngs before CIT(A) and ITAT. Therefore, section 2(22)(e) was attracted. However, in line with alternate contention of assessee, addition on account of deemed dividend was to be restricted to accumulated profits. For limited purpose of computation of accumulated profits issue was remanded to AO.
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 2(22)(e)
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