Ita/49/2018 Of Mr. Anil Arora v. Pr. Commissioner Of Income Tax

IN THE HIGH COURT OF MADHYA PRADESHAT JABALPUR BEFORE HON'BLE SHRI JUSTICE SHEEL NAGU & HON’BLE SHRI JUSTICE VIRENDER SINGHINCOME TAX APPEAL No. 49 of 2018 BETWEEN:- MR. ANIL ARORA, B-5 SHUBHALAYPEARL,HOSHANGABADROAD,BHOPAL (MADHYA PRADESH) .....APPELLANT (BY SHRI MUKESH AGRAWAL & SHRI AYUSH GUPTA-ADVOCATES) AND PR. COMMISSIONER OF INCOME TAXAAYKAR BHAWAN, HOSHANGABAD ROAD,BHOPAL (MADHYA PRADESH) .....RESPONDENT (RESPONDENT BY SHRI SANJAY LAL - ADVOCATE) -----------------------------------------------------------------------------------------Reserved on :18.01.2023Pronounced on :27.03.2023 ---------------------------------------------------------------------------------------- This appeal having been heard and reserved for orders, comingon for pronouncement this day, Hon’ble Shri Justice Sheel Nagupronounced the following: ORDER Present appeal filed by assessee u/S.260-A of the Income Tax Act,1961 (for brevity “I.T.Act”) assails final order dated 08.09.2017 (AnnexureA/6) passed in ITA.No.772/Ind/2016 by Income Tax Appellate TribunalIndore Bench, Indore qua assessment year 2007-08 to the extent the appealof appellant/assessee was partly dismissed.. 2.Learned counsel for rival parties were heard on the question ofadmission. 3.The substantial question of law proposed by the appellant is asfollows:- “Whether accumulated profits determined u/S.2(22)(e) of I.T.Act would only include the business profits of the company ason 1[st] April of the financial year and not the business profitsaccruing thereafter since the financial year’s business profitsaccrue only on 31[st] March i.e. at the end of the year and do notaccrue day to day and thus the current financial year’s businessprofits are not to be included while calculating accumulatedprofits of the year and only the opening balance as on 1[st] Aprilhas to be considered as accumulated profit ? 4.Facts giving rise to present appeal are that appellant/assessee is anindividual having income from salary and business. The Revenue noticedin the assessment proceeding in the case of M/s. Surewin Marketing Pvt. Ltd. that the assessee company has extended loan of Rs.41,44,109/- toGulmohar Traders. M/s. Surewin Marketing Pvt. Ltd. was having reserveand surplus amount of Rs.22,59,970/- consisting of opening balance ofRs.12,29,565/- and profit during the year amounting to Rs.10,30,404/-.Pertinently, Gulmohar Traders and M/s. Surewin Marketing Pvt. Ltd.which are in the same business, therefore, amounts standing as closingbalance in their account ought not be seen as advance given but asoutstanding against the day to day business transactions. Thus, theRevenue found that transactions are not in the nature of loan. Theappellant/assessee accepted in his reply that Anil Arora is partner ofGulmohar Traders to the extent of 25% and is a shareholder in M/s.Surewin Marketing Pvt. Ltd. to the extent of 50%. In this background theRevenue held that appellant/assessee was having interest in the companyand also in the firm and, therefore, provisions of Section 2(22)(e) of I.T.Act are attracted giving rise to the concept of deemed dividend on advancegiven. The Assessing Officer further found the balance sheet to reflectreserve and surplus amount of Rs. 12,29,565/- whereas an advance amountof Rs.41,44,109/- and, therefore, Assessing Officer restricted the deemeddividend to the tune of reserve surplus only at Rs.12,29,565/- and the samewas added u/S.2(22)(e) of I.T. Act. 5.The Tribunal after evaluating the evidence and material on recordfound that indisputably the provisions of deemed dividend are attracted.However, it was found that the dispute lies with respect to quantumthereof. The Tribunal on the basis of record found that the advances shown 5.The Tribunal after evaluating the evidence and material on recordfound that indisputably the provisions of deemed dividend are attracted.However, it was found that the dispute lies with respect to quantumthereof. The Tribunal on the basis of record found that the advances shown as payments on behalf of assessee towards license fee are also not in thenature of deemed dividend payment made directly to the third party onbehalf of assessee. Therefore, the Tribunal found that addition ofRs.14,60,000/- being deemed dividend being in hand is taxable, qua therelevant assessment year. Conclusively, the Tribunal confirmed theaddition of Rs.14,60,000/- but deleted addition of Rs.7,99,969/-. 5.1On the basis of aforesaid facts, the impugned findings were renderedby the Tribunal by partly allowing the appeal of appellant/assessee. 6.After having gone through the record and having heard learnedcounsel for rival parties, we are of the considered view that entire findingsof the Tribunal are factual in nature, which do not give rise to any questionof law much less substantial. 7.Accordingly, proposed substantial question of law is not made out inthe absence of which this Court declines admission to this appeal.Conclusively, present appeal stands dismissed in limine by decliningadmission. (SHEEL NAGU) (VIRENDER SINGH) JUDGE JUDGE mohsin Digitally signed by MOHAMMED MOHSIN QURESHI Date: 2023.03.31 16:14:51 +05'30'MOHSIN QURESHI Date: 2023.03.31 16:14:51 +05'30'