Case Law Details
CIT Vs. M/s Associated Metals Co. Ltd. (Allahabad High Court)
From the plain reading of Section 2(22)(e) it transpires the legislature seeks to tax certain payments made by specified persons as deemed dividend by treating such payments to be dividend payment on notional basis. Mere issuance of a cheque that was subsequently cancelled and returned without ever being ever presented for encashment and without any money having been paid against the same to the assessee it could never constitute payment of any sum. The assessee never came gained receipt of any amount of money against the aforesaid cheque from GIL. No money passed through from GIL to the assessee.
Notwithstanding the fact the cheque was subsequently cancelled and returned, the provision of Section 2(22)(e) never got attracted to the facts of the case for a simple reason that no amount of money was ever received by the assessee. To apply a notional provision of the statute the revenue should have shown to exist actual fact of payment and it could not have inferred notional or deemed dividend on a notional payment in absence of express intention to that effect expressed by the legislature.
Full Text of the High Court Judgment / Order is as follows:-
This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act), against the order of the Income Tax Appellate Tribunal, Lucknow Bench dated 30. 11.2005 for the Assessment Year 1995-96 on the following questions of law:-
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