ADITYA VIKRAM LAKHOTIA,KOLKATA vs. ACIT, CIR-47(3), KOLKATA, KOLKATA

“In the case of Pradip Kumar Malhotra reported in 338 ITR 538 cited by the ld. counsel for the assessee, it was held by the Hon’ble Calcutta High Court that the phrase “by way of advance or loan” appearing in section 2(22)(e) must be construed to mean those advances or loans, which a shareholder enjoys for simply on account of being a partner, who is the beneficial owner of shares, but if such loan or advance is given to such shareholder as a consequence of any further consideration, which is beneficial to the Company, received from such shareholder, in such case, such advance or loan cannot be said to be deemed dividend within the meaning of the Act. It was held that gratuitous loan or advance given by a Company to those classes of shareholders thus would come within the purview of section 2(22)(e) but not the cases where the loan or advance is given in return to an advantage conferred upon the Company by such shareholder. In the case of ACIT –vs.- M/s. Zenon (India) Pvt. Limited, a loan taken by the assessee was treated by the Assessing Officer as deemed dividend under section 2(22)(e), but the ld. CIT(Appeals) did not approve the action of the Assessing Officer after having noticed that interest at the rate of 9% per annum was paid by the assessee on such loan, which, according to him, was a consideration received from her shareholders, which was beneficial to the Company and the order of the ld. CIT(Appeals) giving relief to the assessee was upheld by the Tribunal vide its order dated 29.06.2015 passed in ITA No. 1124/KOL/2012 by relying on the decision of the Hon’ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra). Keeping in view the said decision of the Hon’ble Calcutta High Court which has been followed by the Coordinate Bench of this Tribunal in the case of M/s. Zenon (India) Pvt. Limited (supra), we hold that the addition made by the Assessing Officer and sustained by the ld. CIT(Appeals) under section 2(22)(e) on account of loan received by the assessee from M/s. Surya Business Pvt. Limited on which consideration in the form of interest was paid by the assessee to the benefit of the Company is not sustainable. We, therefore, delete the same and allow Grounds No. 1 & 2 of the assessee’s appeal.”

In view of the above, we set aside the order of CIT(A) and the addition made by the AO as confirmed by the CIT(A) is deleted. Ground No.1 is allowed.

Ground No.2 is relating to confirming the addition of Rs.15,00000/- made on account of cash credit u/s 68 of the Act.

Heard both parties and perused the material available on record. The contention of the Ld.AR was that the assessee received Rs.15,00,000/- from M/s. National Traders through RTGS and same was confirmed by the loan creditors by submitting their bank statements, income tax returns and balance sheet. Further, Ld.AR submitted that the assessee repaid the said amount. Ld.DR argued that no evidence whatsoever produced before the AO nor before the CIT(A) and the submissions of Ld.AR are far from truth. Therefore, taking into consideration the facts and the submissions of Ld. DR & Ld.AR and in the interest of justice, we deem it proper to remand the matter to the AO for verification of evidences whether the assessee paid the said amount to its creditors. The assessee shall liberty to file all evidences, if any in respect of his claim. Thus, Ground No.2 raised by the assessee is allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed.