Samir Shantilal Doshi Vs DCIT (Mumbai ITAT)
Every Advance to a Shareholder Is Not Deemed Dividend—ITAT Admits Commercial-Use & Repayment Evidence in s.2(22)(e) Dispute
Summary: The assessee, Mr. Samir Shantilal Doshi, was in appeal before the Mumbai ITAT for AY 2008-09 against the order of the CIT(A) dated 23 December 2024.
The principal dispute related to an addition made u/s 2(22)(e) by treating an advance or deposit received by the assessee from Falcon Brokerage Private Limited as deemed dividend. The assessee admittedly held 10% of the share capital of the company.
The AO treated the amount received from the company as a loan or advance falling within the mischief of s.2(22)(e). The additions were sustained by the CIT(A) on the ground that the assessee had failed to substantiate his claims and had not furnished the necessary supporting evidence before the lower authorities.
When the matter reached the ITAT, the assessee sought admission of additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.
Advance or commercial obligation?
The assessee’s case was that the amount received from Falcon Brokerage Private Limited was not an ordinary loan advanced to a shareholder for his personal benefit. It formed part of a commercial arrangement or obligation arising under a Memorandum of Understanding dated 29 January 2007.
