International Management Technologies Pvt. Ltd. Vs ACIT (ITAT Delhi)
The Delhi Income Tax Appellate Tribunal (ITAT) dismissed the assessee’s appeal and upheld the addition of Rs. 1.50 crore as deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961. The dispute arose from a loan advanced by a closely held company to the assessee company during AY 2015-16. The lending company held 49.30% shares in the assessee, while the assessee held 50.01% shares in the lending company. During the original assessment, the Assessing Officer treated the amount as deemed dividend and made an addition under Section 2(22)(e).
The assessee had initially admitted the taxability of the amount and deposited the corresponding tax, stating that the omission was due to a lack of understanding of the law. The Commissioner (Appeals) in the first round upheld the addition, observing that once the assessee had accepted the liability and paid tax, the issue stood concluded. However, when the matter reached the ITAT, the Tribunal remanded the issue to the Assessing Officer with directions to examine the applicability of a Calcutta High Court judgment concerning non-gratuitous advances.
In the second round, the Assessing Officer held that the facts of the cited High Court judgment were not applicable and again treated the amount as deemed dividend. The Commissioner (Appeals) affirmed this view, observing that the assessee failed to establish circumstances similar to those considered in the cited precedent and did not produce evidence to show that the lending company was engaged in money-lending business so as to qualify for the statutory exception.
