ITAT upholds order of CIT(A) deleting addition made by AO treating the loan amount as deemed dividend

Income Tax Appellant Tribunal (ITAT), Delhi upholds the order of CIT(A) deleting the addition made by the AO treating the loan amount as deemed dividend u/s 2(22)(e) of the Income Tax Act.

Facts:

• The return declaring ‘NIL” income was filed on 26/3/2015.
• The case was selected for scrutiny under CASS and the assessment was framed vide 143(3) of the Income Tax Act, 1961
• The Assessing Officer while framing the assessment notice observed that the assessee had received total unsecured loan expenditure during the year out of which a major amount was received from M/s Telecare Network India (P), a closely held company, New Delhi.
• The Assessing Officer was of the view that as per shareholding pattern profit and loss account and balance sheet of M/s Telecare Network India (P), shows that the assessee company had 37.22% shareholding in the equity shares of M/s Telecare Network India (P), as on 31/3/2013.
• Therefore, the Assessing Officer treated the loan amount as deemed dividend u/s 2(22)(e) of the Act and added the same into the income of the assessee.
• Aggrieved against this, the assessee preferred appeal before the Ld.CIT(A) who after considering the material and examining the documents placed before him deleted the addition.
• Aggrieved against this, the Revenue is in appeal.

Observations and Findings:

The bench observed that the findings by the Ld. CIT(A) needed no interference. The CIT(A) held as follows:

• After examining the material on record the Ld. CIT(A) had noticed that the assessee was having investment in shares of Teleecare Network India Pvt. Ltd. of Rs 9,67,66,000/- as on 01/04/2013 and Rs 19,17,66,000/- as on 31/03/2014.
• The assessee was allotted 4750000 shares @ 20/- each for Rs 9,50,00,000/- during FY 2013-14.
• Vide letter dated 28/11/2016, the appellant filed details regarding unsecured loans raised by it from different parties during FY 2013-14.
• The name of Teleecare Network India Pvt. Ltd. was nowhere mentioned in that list. The AO misunderstood the facts and treated such amount of Rs 9,50,00,000/- as fresh loan given by Teleecare Network India Pvt. Ltd to the respondent during FY 2013-14.
• The AO did not call for information from Teleecare Network India Pvt. Ltd as to whether it had given any fresh loan to the assessee during the FY 2013-14.
• Vide para 20 of the written submissions filed during this proceeding and as reproduced above in this order, the assessee has explained the facts and circumstances relating to the wrong chart filed by the AR of the company alongwith letter dated 13/10/2016 during assessment proceeding, on the basis of which only, the AO formed a view that the assessee received fresh loan of Rs 9,50,00,000/- from Teleecare Network India Pvt. Ltd. during FY 2013-14 ignoring other material evidences as discussed above.
• From investment chart, ledger account of M/s Teleecare Network India Pvt. Ltd., confirmation of account and copy of allotment return submitted during the assessment, it was evident that the Assessee has not received any amount / loan from Teleecare Network India Pvt. Ltd and as such there does not arise any question of any addition on account of deemed dividend u/s 2(22)(e) of the IT Act, 1961.
• Therefore addition of Rs. 9,50,00,000/- made by the A.O was deleted.