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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI
Before: SHRI R.S. SYAL
ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 29.8.2014 in relation to the assessment year 2010-11.
The only issue raised in this appeal is against the confirmation of addition of Rs.1,60,000/- made by the AO u/s 2(22)(e) of the Act.
Briefly stated, the facts of the case are that the assessee is a substantial shareholder of Surya Hotels Pvt. Ltd. M/s Enkay Travels is a unit of Surya Hotels Pvt. Ltd. The assessee showed a credit balance of Rs.1,60,000/- in the name of M/s Enkay Travels in its books of account.
The AO invoked the provisions of section 2(22)(e) and made addition for a sum of Rs.1,60,000/- by treating it as deemed dividend. The ld. CIT(A) upheld the assessment order on this score.
I have heard the rival submissions and perused the relevant material on record. The assessee is undoubtedly a substantial shareholder in Surya Hotels Pvt. Ltd. and further M/s Enkay Travels is a unit of Surya Hotels Pvt. Ltd. This shows that both Surya Hotels Pvt. Ltd. and M/s Enkay Travels are one and the same things. The assessee in its balance sheet separately indicated the amount payable to M/s Enkay Travels at Rs.1,60,000/- on the liability side and amount receivable from Surya Hotels Pvt. Ltd. at Rs.3,18,249/- on the asset side.
Copies of accounts of Surya Hotels Pvt. Ltd. and M/s Enkay Travels have been placed on record. There was an opening debit balance receivable by the assessee from M/s Surya Hotels Pvt. Ltd. at Rs.27.31 lac, against which the assessee received a sum of Rs.27 lac. On 31st March, there is a debit in the account of M/s Surya Hotels Pvt. Ltd. on account of interest amounting to Rs.2,29,833/-. The assessee also paid a sum of Rs.80,000/- to M/s Surya Hotels Pvt. Ltd. on 31st March, 2010, thereby determining the total amount receivable from Surya Hotels Pvt. Ltd. at Rs.3,18,249/-. When I turn to the account of M/s Enkay Travels, it is noticed that the assessee received a sum of Rs.1,60,000/- from them on 16th March, 2010. As Enkay Travels is a unit of Surya Hotels Pvt. Ltd., both the accounts need to be viewed in a combined manner. Total interest debited by the assessee, being the amount receivable on loans advanced to M/s Surya Hotels Pvt. Ltd., stands at Rs.2,29,833/-, which is for the year 1.4.2009 to 31.3.2010, being the previous year relevant to the assessment year under consideration. This amount of interest relates to the whole of the year and hence accrued also correspondingly. If instead of passing one entry for interest on 31st March, 2010, the assessee had shown interest on monthly basis, then, the debit balance in this account at the time of receipt of Rs.1,60,000/- from M/s Enkay 3 Travels, would have been much more than that. As the interest relates to the whole of the year, its accrual has to be considered accordingly.
When so considered, there does not remain any case of the assessee receiving a loan of Rs.1,60,000/- in cash attracting the provisions of section 2(22)(e) of the Act. I, therefore, order for the deletion of the addition.
In the result, the appeal is allowed.