Case Law Details
V. Sriram (HUF) Vs ACIT (OSD) (ITAT Chennai)
ITAT Chennai held that amount paid by company on behalf of shareholder which has been subsequently re-paid by the shareholder or his family members either on the same day or within a short period cannot be considered as loan or advance which can be treated as deemed dividend u/s.2(22)(e) of the Act.
Facts- AO noticed that the assessee along with Smt.V.Padma (mother of assessee), purchased a flat in Chennai for a total consideration of Rs.7,19,44,048/-. It was further noticed that the assessee’s share of investment works out to Rs.3,59,72,024/-. The assessee was called upon to explain source for investment in the property, for which, the assessee submitted that source for purchase of property was sale of 5,00,000 equity shares of M/s.City Union Bank Ltd., (M/s.CUBL) by his mother amounting to Rs.3,69,84,352/-.
AO on the basis of information furnished by the assessee noticed that a sum of Rs.2.75 Crs. has been paid out of sale proceeds of M/s.CUBL shares by Smt.V.Padma. AO further noted that a sum of Rs.3,64,45,648/- has been paid to M/s.Chaitanya Builders by M/s.Integrated Enterprise India Ltd. (M/s.IEIL), where the assessee is one of the shareholders having 29.17% shares in the company. Since, M/s.IEIL has paid amount to M/s.Chaitanya Builders, on behalf of the assessee, the AO opined that provisions of Sec.2(22)(e) of the Act, would apply, and thus, rejected arguments of the assessee and made addition of Rs.3,10,22,424/- as deemed dividend u/s.2(22)(e) of the Act.
CIT(A) sustained the addition. Accordingly, the present appeal is filed.
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