SUDESH GUPTA,NEW DELHI vs. ACIT, CIRCLE- 5(1), NEW DELHI

We next note that the sole substantive issue between the parties herein is that of correctness of the learned lower authorities’ action making section 2(22)(e) deemed dividend addition amounting to Rs. 1,29,53,126/-; in the course of assessment framed on 24.11.2016 and upheld in the lower appellate discussion. 4. It is in this factual backdrop that we note that the assessee is admittedly a shareholder holding 34.67% stake in M/s. Biggesto Technologies and 21.08% share in M/s. Kushang Technologies Pvt. Ltd. And that, the above latter entity had made inter-corporate deposits of Rs.2.34 crores in the former which stand treated as covered under the deeming fiction of dividends in the assessee’s hands. 5. That being the case, we are of the considered view that once the assessee’s stand from the day one is that the impugned sum represents inter-corporate deposits, which has neither been rebutted by the Assessing Officer nor in the lower appellate discussions, case law CIT Vs. Subhkam Monetary Services (P.) Ltd., (2015) 54 taxmann.com 226 (Bombay) holds that such intercorporate deposits do not attract section 2(22)(e) of the Act. All 3 | P a g e this is indeed coupled with the fact that the above former entity had also charged interest as well. We thus conclude in light of the CBDT’s circular no. 19/2017 as well as PCIT Vs. Dwarka Prasad Aggarwal, (2024) 161 taxmann.com 813(SC) that such commercial transactions are very well out of the ambit of the impugned deeming fiction. We accordingly reject the Revenue’s vehement contention supporting the impugned addition which is hereby deleted in very terms. 6. This assessee’s appeal is allowed. Order pronounced in the open court on 25th April, 2025 (M. BALAGANESH) JUDICIAL MEMBER