ACIT, New Delhi V. Sh. Sanjay Passi, New Delhi

ITA 1450/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7172 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 12-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: V K AGARWAL
• Keywords: Date of conversion; Deemed dividend
• Section: 143(3); 142(1); 153A; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1450 /DEL/20 15 A.Y. : 2012-13 ACIT, CENTRAL CIRCLE-8, ROOM NO. 333, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI VS. SANJAY PASSI, 57, GOLF LINKS, NEW DELHI 110 003 (PAN: AAGPP7032H) (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 280/DEL/2015 A.Y. : 2012-13 SANJAY PASSI, 57, GOLF LINKS, NEW DELHI 110 003 (PAN: AAGPP7032H) VS. ACIT, CENTRAL CIRCLE-8, ROOM NO. 333, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. S.S. RANA, CIT(DR) ASSESSEE BY : SH. V.K. AGARWAL, A.R. ORDER PER H.S. SIDHU : JM REVENUE HAS FILED THIS APPEAL AND ASSESSEE HAS FI LED THE CROSS OBJECTION WHICH EMANATE FROM THE ORDER DATED 22. 12.2014 FOR A.Y. 2012-13 OF THE LD. CIT(A). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- (I) THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2 (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 13,88, 23,000/- MADE BY THE AO U/S. 2(22)(E) OF THE INCOME TAX ACT, 1961. (III) THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N THE CROSS OBJECTION:- (I) THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS W ELL AS IN LAW IN HOLDING THAT THE AGREEMENT BETWEEN THE APPELLANT A ND M/S ROBIN SOFTWARE (P) LTD. CANNOT BE GENUINE AS IT WAS SUBS EQUENTLY CANCELLED. II) THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WE LL AS IN LAW IN HOLDING THAT PROFIT OF THE BUSINESS ACCRUES FROM DA Y TO DAY AND CURRENT YEARS PROFIT WOULD BE INCLUDIBLE IN THE AC CUMULATED PROFITS. REVENUES APPEAL 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE ACTION WAS CONDUCTED ON PASCO GROUP OF CASES ON 17.2.2012 U/S. 132 OF THE INCOME TAX ACT, 1961. THE CASE OF THE ASSESSEE WAS ALSO CO VERED U/S 132 OF THE INCOME TAX ACT, 1961. THE CASE OF THE ASSESSEE WAS CENTRALIZED BY COMMISSIONER OF INCOME TAX, DELHI-XI, NEW DELHI BY VIRTUE OF ORDER U/S 127 OF THE INCOME TAX ACT, 1961 DATED 22.05.2012. N OTICE U/S. 153A OF 3 THE ACT WAS ISSUED TO THE ASSESSEE ON 25.10.2012. T HE ASSESSEE HAD FILED HIS ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YE AR 2012-13 ON 23.09.2012, DECLARING A TOTAL INCOME OF RS.32,97,04 ,099/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE INCOME TAX A CT AND THE CASE OF THE ASSESSEE WAS SELECTED FOR ASSESSMENT SCRUTINY F OR THE ASSESSMENT YEAR 2012-13. NOTICE U/S 142(1) OF THE INCOME TAX A CT, 1961 WAS ISSUED TO THE ASSESSEE ON 07.06.2013 FOR FILING THE COMPLE TE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13. NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 WAS ISSUED TO THE ASSESSEE ON 24.07.2013. DETA ILED QUESTIONNAIRE U/S 142(1) OF THE INCOME TAX ACT, 1961 WAS ISSUED O N 04.10.2013. IN RESPONSE, THE A.R. OF THE ASSESSEE ATTENDED THE PRO CEEDINGS FROM TIME TO TIME, FILED NECESSARY DETAILS / CLARIFICATIONS. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED A LE TTER ON 13.03.2014 ALONGWITH THE COPY OF ACKNOWLEDGEMENT OF REVISED RE TURN OF INCOME AND COMPUTATION OF INCOME. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, FROM THE PERUSAL OF SEIZED / IMPOUNDED MATERIAL, IT WAS NOTICED BY THE AO THAT THE ASSESSEE IS HOLDING 99% OF SHARES IN M/S R OBIN SOFTWARE PVT. LTD. THE SAID COMPANY WAS CONVERTED INTO AN LLP ON 28.3.2012. THE PERUSAL OF THE BALANCE SHEET OF THE COMPANY M/S ROB IN SOFTWARE PVT. LTD. SHOWS THAT THE COMPANY HAS ADVANCED LOANS OF RS.13, 88,23,000/- DURING THE YEAR UNDER CONSIDERATION TILL 28.03.2012. THESE LOANS HAVE BEEN ADVANCED OUT OF THE BUSINESS PROCEEDS/OF THE COMPAN Y. THE COMPANY ON THE DATE OF CONVERSION I.E. ON 28.03.2012 HAS NOT R ECOGNIZED ANY INCOME IN ITS PROFIT AND LOSS A/C. HOWEVER, THE PERUSAL OF THE BALANCE SHEET AND 4 PROFIT AND LOSS A/C OF M/S ROBIN SOFTWARE LLP SHOWS THAT THE FIRM HAS SHOWN PROFIT OF RS.15,67,47,640/- AS ON 31.03.2012. IT IS PERTINENT TO MENTION THAT THE REVENUE HAS BEEN RECOGNIZED OUT OF SALE PROCEEDS RECEIVED. THE MAJORITY OF THE PROCEEDS HAVE BEEN RE CEIVED PRIOR TO 28.03.2012. AN AMOUNT OF RS.15,53,594/- ONLY HAS BEEN RECEIVED AFTER THE CONVERSION OF THE COMPANY INTO LLP OUT OF THE T OTAL PROCEEDS OF RS.14,35,25,546/- RECEIVED DURING THE YEAR. THUS ON LY 1.08% OF THE REVENUE HAS BEEN RECEIVED AFTER THE CONVERSION. WHE N THE COMPANY WAS CONVERTED INTO LLP, REVENUE SHOULD HAVE BEEN RECOGN IZED IN THE PROFIT AND LOSS A/C OF THE COMPANY. THUS APPLYING THE ABOVE PE RCENTAGE OF 1.08%, OUT OF THE TOTAL PROFIT OF RS.15,67,47,640/- RECOG NIZES BY THE LLP, PROFIT OF RS.15,50,50,923/- SHOULD HAVE BEEN RECOGNIZED I N THE HANDS OF THE COMPANY. THE COMPANY DID NOT DO SO TO AVOID THE APP LICABILITY OF THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T ACT, 1961 . THE ASSESSEE WAS CONFRONTED THE ABOVE FACTS VIDE ORDER SHEET ENTRY D ATED 17.02.2014 AND, WAS REQUIRED TO SHOW-CAUSE AS TO WHY THE AMOUNT OF RS.13,88,23,000/- RECEIVED BY THE ASSESSEE AS LOAN FROM M/S ROBIN SOF TWARE PVT. LTD. BE NOT TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T ACT, 1961 AND ADDED TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CO NSIDERATION. ASSESSEE FILED ITS REPLY DATED 21.3.2014 AND RAISED OBJECTIO NS. AFTER CONSIDERING THE SAME, THE AO OBSERVED THAT THE COMPANY OF M/S ROBI N SOFTWARE PVT. LTD. HAD CEASED TO EXIST ON 28.03.2012. THE COMPANY WAS BOUND TO RECOGNIZE REVENUE ON THAT DATE I.E. 28.03.2012. HOWEVER THE C OMPANY DID NOT DO SO, SO AS TO AVOID THE APPLICABILITY OF SECTION 2(2 2)(E) OF THE I.T ACT, 1961 5 IN RESPECT OF THE LOAN GIVEN TO THE ASSESSEE. HENCE THE AMOUNT OF RS.13,88,23,000/- WAS TREATED AS DEEMED DIVIDEND I N THE HANDS OF THE ASSESSEE AND ADDED TO HIS TAXABLE INCOME FOR THE YE AR UNDER CONSIDERATION VIDE ORDER DATED 26.3.2014 PASSED U/S . 143(3) OF THE ACT AND ASSESSED THE INCOME OF THE ASSESSEE AT 46,85,27 ,099/- 4.1 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER D ATED 22.12.2014 DELETED THE ADDITION BY HOLDING THAT WHEN AO ASSESS THE INCOME OF M/S ROBIN SOFTWARE PVT. LTD. AS LOSS FOR THE SAME FINAN CIAL YEAR, THERE COULD BE NO GROUND AVAILABLE TO HOLD THAT THE SAID COMPAN Y HAD ACCUMULATED PROFITS AT THE TIME OF MAKING LOANS/ ADVANCES AND A CCORDINGLY VIDE HIS ORDER DATED 22.12.2014 HAS ALLOWED THE APPEAL OF TH E ASSESSEE. 5. AGGRIEVED WITH THE LD. CIT(A)S ORDER, THE REVEN UE IS IN APPEAL AND ASSESSEE HAS FILED CROSS OBJECTION. 6. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. IN SUPPORT OF HIS CONTENTION, HE FILED THE WRITTEN SUBMISSION, WHICH READ AS UNDER:- IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED AS FOLLOW S: 1. DURING THE YEAR, THE ASSESSEE RECEIVED RS.13,88, 23,000 FROM MIS ROBIN SOFTWARE P LTD. IN WHICH THE ASSESSE E WAS 99% SHAREHOLDER. 6 2. MIS ROBIN SOFTWARE P LTD. EARNED THIS AMOUNT DU RING F.Y. 2011-12 & HENCE IT CONSTITUTED RESERVES OF THE COMPANY AS ON 28.03.2012 I.E. THE DATE ON WHICH IT WAS CONV ERTED FROM COMPANY TO LLP. 3. THE ASSESSEE HAS CLAIMED THAT THIS AMOUNT WAS RE CEIVED ON ACCOUNT OF SALE OF HIS HOUSE PROPERTY. HOWEVER, ONLY SALE AGREEMENT HAS BEEN PRODUCED. NO SALE DEED HAS BEEN PRODUCED WHICH SHOWS THAT IT WAS MERELY AN EYE-WASH AGREEMENT. 4. HAD THIS MONEY BEEN TRANSFERRED TO LLP, THE ASSE SSEE GOULD NOT HAVE WITHDRAWN THIS AMOUNT FOR THE NEXT 5 YEARS. 5. SINCE THE ASSESSEE HAS RECEIVED THIS MONEY FROM A COMPANY IN WHICH HE WAS A SUBSTANTIAL SHAREHOLDER A ND THE COMPANY HAD ACCUMULATED RESERVES DURING THE CURRENT FINANCIAL YEAR, THE ASSESSEE WAS LIABLE FOR TAX U/S 2(22)(E) OF I.T ACT. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY KINDLY BE CONSIDERED WITH R EGARD TO DEEMED DIVIDEND ULS 2(22)(E) OF I.T. ACT: 1. CIT V SUNIL CHOPRA [2011] 12 TAXMANN.COM 496 (DELHI)/[2011] 201 TAXMAN 316 (DELHI)/[2011] 242 CT R 498 (DELHI) 7 TRIBUNAL DELETED ADDITION ACCEPTING ASSESSEE'S CONT ENTION THAT SAID ADVANCES WERE RECEIVED AGAINST SALE OF PROPERT Y UNDER TERMS OF AGREEMENT DATED 18-9-2003 AND, THEREFORE, MONEY WAS TAKEN BY ASSESSEE IN LINE OF HIS BUSINESS OF RE AL ESTATE. HON'BLE DELHI HIGH COURT HELD THAT THERE WAS GREAT PERVERSITY AND INFIRMITY IN FINDINGS AND OBSERVATIONS OF TRIBU NAL AND, THERE}FORE, IMPUGNED ORDER WAS TO BE SET ASIDE. 2. CIT VS PRASIDH LEASING LTD. [2018] 90 TAXMANN.CO M 385 (DELHI)/[2018] 254 TAXMAN 142 (DELHI)/[2018] 40 3 ITR 129 (DELHI)/[2018] 301 CTR 526 (DELHI) (COPY ENCLOS ED) WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE 'G' ADVANCED CERTAIN SUMS TO ASSESSEE TO PROCURE IMPORT LICENSES , HOWEVER, REAL INTENT OF 'G' IN ADVANCING SUMS WAS TO SHARE I TS PROFIT, SUMS SO ADVANCED CLEARLY FELL WITHIN DESCRIPTION OF 'DEEMED DIVIDEND' UNDER SECTION 2(22). WHERE GUARANTEE COMM ISSION FEE HAD NOT BEEN MADE FOR PURPOSE OF BUSINESS, DISA LLOWANCE OF GUARANTEE COMMISSION WAS JUSTIFIED 3. CIT VS MUKUNDRAY K. SHAH [2007] 160 TAXMAN 276 (SC)/[2007] 290 ITR 433 (SC)/[2007] 209 CTR 97 (SC) (COPY ENCLOSED) A SEARCH CONDUCTED AT ASSESSEE'S PREMISES LED TO SE IZURE OF A DIARY, WHICH CONTAINED PURCHASING OF NINE PER CENT RBI RELIEF BONDS BY ASSESSEE FROM FUNDS RECEIVED FROM TWO FIRM S 'B' AND 8 'C' IN WHICH HE WAS A PARTNER. TRIBUNAL AFTER EXAMI NATION OF CASH FLOW STATEMENT HELD THAT TWO FIRMS WERE USED A S CONDUITS BY ASSESSEE; THAT 'A' HAD MADE PAYMENTS TO 'B' AND 'C' FOR BENEFIT OF' ASSESSEE, WHICH ENABLED HIM TO BUY NIN E PER CENT RBI RELIEF BONDS AND UPHELD FINDING OF ASSESSING OF FICER. UPHELD ADDITION U/S 2(22(E) OF I.T. ACT 4. PUNEET BHAGAT V. ITO (157 ITD 353) WHERE HON'BLE IT AT DELHI HELD THAT DEEMED DIVIDEND -LOANS AND ADVANCES TO SHARE HOLDERS- LOANS RECEIVED BY TH E COMPANY WOULD BE TREATED AS DEEMED DIVIDEND IN HAND S OF P AND S IN PROPORTION TO THEIR SHAREHOLDINGS. 5. SUNIL KAPOOR VS CIT [2015] 63 TAXMANN.COM 97 (MADRAS)/[2015] 235 TAXMAN 279 (MADRAS) WHERE HON'BLE MADRAS HIGH COURT HELD THAT WHERE ASS ESSEE, HOLDING 60 PER CENT SHARES OF A COMPANY, TOOK PERSO NAL LOAN FROM ACCUMULATED SURPLUS OF SAID COMPANY, SAID AMOU NT WOULD BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2 (?2)(E), AFTER REDUCING THEREFROM AMOUNT REPAID BY ASSESSEE DURING YEAR 6. SHASHI PAL AGARWAL VS CIT [2015] 54 TAXMANN.COM 289 (ALLAHABAD) [2015] 229 TAXMAN 307 (ALIAHABAD}/[2015 ] 370 ITR 720 (ALLAHABAD) WHERE HON'BLE ALLAHABAD HIGH CO URT HELD 9 THAT WHERE LENDING OF MONEY WAS NOT PART OF BUSINES S OF LENDING COMPANIES, LOAN/ADVANCE GIVEN TO ASSESSEE- SHAREHOLDER WOULD BE TREATED AS DEEMED DIVIDEND UND ER SECTION 2(22)(E). 7. ON THE CONTRARY, LD. A.R. OF THE ASSESSEE RELIE D UPON THE ORDER OF THE LD. CIT(A) AND FILED THE WRITTEN SUBMI SSIONS, WHICH READ AS UNDER:- 1. IN THIS GROUP, SEARCH U/S 132 WAS CONDUCTED ON 17/02/2012. THE ASSESSMENT WAS COMPLETED BY THE LD. AO U/S 143(3) ON 26/03/2014 AT AN INCOME OF RS. 46,85,27,099/- AGAINST THE RETURNED INCOME OF RS. 32,97,04,099/- BY ADDING RS. 13,88,23,000/- U/S 2(22)(E). THIS AMOUNT OF RS. 13,88,23,000/- WAS RECEIVED BY THE ASSESSEE FROM M/S ROBIN SOFTWARE PV T. LTD. AGAINST THE SALE CONSIDERATION OF RS. 78,25,00,000/- IN RESPECT OF HOUSE PROPERTY LOCATED AT 57-58, GOLF LINKS, NEW DELHI AS PER AGREEMENT TO SE LL DATED 02/04/2010. M/S ROBIN SOFTWARE PVT. LTD. WAS CONVERTED TO LLP ON 29/03/2012. 'SINCE THE COMPANY DID NOT EXIST W.E.F. 29/3/2012, THE AGREEMENT TO SE LL WAS ALSO TERMINATED BY THE LLP BY MUTUAL CONSENT VI DE' TERMINATION AGREEMENT DATED 29/3/2012. NATURE OF RECEIPT 10 2. THE APPELLANT OWNS A HOUSE PROPERTY LOCATED AT 5 7- 58, GOLF LINKS, NEW DELHI. THE APPELLANT ENTERED IN TO AN AGREEMENT WITH M/S ROBIN SOFTWARE PVT. LTD. ON 02/04/2010 TO SELL THIS PROPERTY FOR A CONSIDERATIO N OF RS. 78,25,00,000/-. IN COMPLIANCE TO THIS AGREEMENT , THE COMPANY PAID RS. 13,88,23,000/- TO THE APPELLAN T DURING THE F.Y. 2011-12. THEREFORE, THE AMOUNT RECEIVED BY THE APPELLANT WAS NEITHER A LOAN NOR AN ADVANCE BUT THE AMOUNT IN RESPECT OF THE TRANSACTIO N RELATING TO SALE OF HOUSE PROPERTY AND HENCE SECTIO N 2(22)(E) CANNOT BE INVOKED. BY NOW IT IS JUDICIALLY SETTLED THAT MONEY RECEIVED FOR A TRANSACTION RELAT ING TO SALE OF PROPERTY CANNOT BE COVERED U/S 2(22)(E). THEREFORE, LD. CIT (A)'S WAS JUSTIFIED IN DELETING THE ADDITION. RELIANCE IS PLACED ON THE FOLLOWING: - DCIT VS. SMT. VAISHNAVI TEKUMALLA, ITA NO. 493/BANG/2011, DATE OF ORDER, 13/06/2012 '11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE HELD 97.83% SHARES IN THE COMPANY FROM WHICH ADVANCE OF Q 1 CRORE WAS RECEIVE D 11 BY THE ASSESSEE AGAINST THE SALE OF PROPERTY BELONG ING TO HER. THE ASSESSEE FURNISHED A COPY OF THE AGREEM ENT TO SELL BEFORE THE AO, WHO DID NOT ACCEPT THAT AGREEMENT AS GENUINE FOR THE REASON THAT IT WAS NOT REGISTERED AND WAS ALSO NOT ON THE STAMP PAPER, HOWEVER, NOTHING WAS BROUGHT ON RECORD TO SUBSTANTI ATE THAT THERE WAS NOT AN AGREEMENT BETWEEN THE ASSESSE E AND THE COMPANY M/S. MC CREADE SOFTWARE (ASIA) PVT. LTD. FOR THE SALE OF PROPERTY BELONGING TO THE ASSE SSEE. WHEN THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND THE COMPANY FOR SALE OF PROPERTY BELONGING TO T HE ASSESSEE, IT CANNOT BE SAID THAT THE AGREEMENT WAS NOT GENUINE ONLY FOR THE REASON THAT IT WAS NOT REGISTE RED, PARTICULARLY WHEN THE AO DID NOT BRING ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE SAID AGREEMENT WAS NOT A GENUINE AGREEMENT. IN THE INSTANT CASE, THE ASSES SEE RECEIVED THE ADVANCE AGAINST THE SALE OF PROPERTY LOCATED AT NO.795, 12TH B CROSS, 23RD MAIN, J.P. NA GAR 2ND PHASE, BANGALORE AND THE AGREED PRICE FOR SALE WAS Q 1,20,00,000 AGAINST WHICH THE ASSESSEE RECEIVED A N ADVANCE OF Q 1 CRORE. IN OUR OPINION, WHEN THE ADVA NCE RECEIVED BY THE ASSESSEE FROM THE COMPANY IN WHICH SHE IS A SUBSTANTIAL SHAREHOLDER, WAS FOR A TRANSAC TION 12 RELATING TO SALE OF PROPERTY, THE DEEMING PROVISION S OF SECTION 2(22)(E) OF THE ACT WERE NOT APPLICABLE ... .. ' ACIT VS. C. V. REDDY, TS-924-ITAT-2012 (BANG), 8. WE FIND THAT THE TRIBUNAL IN THE CASE OF SMT. T. VAISHNAVI TEKUMALLA, THE GRAND-DAUGHTER OF THE ASSESSEE HEREIN, [IN ITA NO.493/BANG/2011, ORDER DATED 13.06.2011] HAS HELD THAT WHEN THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND THE COMPANY FOR SALE OF PROPERTY BELONGING TO THE ASSESSEE, IT CANN OT BE SAID THAT THE AGREEMENT WAS NOT GENUINE ONLY FOR TH E REASON THAT' IT WAS NOT REGISTERED, PARTICULARLY WH EN THE AO DID NOT BRING ANY MATERIAL ON RECORD TO SUBSTANT IATE THAT THE SAID AGREEMENT WAS NOT A GENUINE' AGREEMEN T. IT WAS FURTHER HELD THAT WHERE ADVANCE RECEIVED BY THE ASSESSEE FROM THE COMPANY IN WHICH HE OR SHE IS A SUBSTANTIAL SHAREHOLDER WAS FOR A TRANSACTION RELAT ING TO SALE OF PROPERTY, THE DEEMING PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT APPLICABLE. AS THE FACT S AND CIRCUMSTANCES IN THE PRESENT CASE ARE ALSO SIMILAR, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH IN THE CASE OF SMT. T. VAISHNAVI TEKUMALLA (SUPRA), WE SEE NO REASON TO INTERFERE WITH THE ORD ER OF THE CIT(APPEALS)' 13 MR MOHANLAL PILLAI VS. ITO, 2011-TIOL-90-ITAT- MUM '12 WHEREAS, IN THE CASE BEFORE US, ON 1ST APRIL, 1999 ITSELF ASSESSEE HAS SOLD VARIOUS ASSETS TO M/S. MEC H MARINE ENGINEERS (P) LTD. AND, THEREFORE, ON THAT D ATE THERE WAS A DEBIT BALANCE AGAINST THE COMPANY IN TH E BOOKS OF THE ASSESSEE AND THERE WOULD BE CORRESPOND ING CREDIT BALANCE IN THE BOOKS OF THE COMPANY IN THE N AME OF THE ASSESSEE ON ACCOUNT OF SUCH TRADING TRANSACT IONS. ONLY AFTER THESE TRANSACTIONS, THE ASSESSEE COMPANY HAS MADE CERTAIN PAYMENTS BUT IN TURN ASSESSEE HAS ALSO TRANSFERRED CERTAIN MONEY THROUGH OTHER TRANSACTIONS AND THE NET RESULT OF THE ACCOUNT IS T HAT THE OUTSTANDING LOAN AT THE BEGINNING OF THE YEAR WHICH WAS AT RS.28,24,700/- GOT REDUCED TO RS.25,10,155/-. THEREFORE, IT IS CLEAR THAT ALL THE TRANSACTIONS AR E MAINLY TRADING TRANSACTIONS AND IN OUR VIEW PROVISIONS OF SECTION 2(22)(E) ARE NOT APPLICABLE EVEN IF THE MON EY IS RECEIVED AGAINST THE SALE OF ASSETS OR FROM OTHER T RADING TRANSACTIONS. ACCORDINGLY, WE SET ASIDE THE ORDER O F THE LD. CIT[A] AND DELETE THE ADDITION ON ACCOUNT OF DE EMED DIVIDEND.' ACCUMULATED PROFIT 14 3. THE COMPANY PREPARED ITS ACCOUNT FOR THE PERIOD FROM 01/04/2011 TO 28/03/2012 AND FILED ITS RETURN DECLARING LOSS OF RS. 1,05,460/-. THE COMPANY HAD ACCUMULATED PROFITS OF RS. 1,04,029/- AS ON 31/03/2 011 AND ACCUMULATED LOSSES AMOUNTING TO RS. 1,431/- AS ON 28/03/2012. THE ASSESSMENT OF THE COMPANY WAS COMPLETED AT A LOSS OF RS. 1,0.5,460/-, I.E., THE R ETURNED LOSS. THEREFORE, WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, SINCE THERE WAS NO ACCUMULATED PROFIT, SECTION 2(22)(E) CANNOT BE INVOKED. RELIANCE IS PLA CED ON THE FOLLOWING CASE LAWS: - CIT VS. NITIN SHANTILAL PARIKH, (2009) 319 ITR 437 (GUJ) 'DIVIDEND-DEEMED DIVIDEND UNDER S. 2(22)(E)- CHARGEABILITY-IN THE ABSENCE OF ANY FINDING THAT PAYMENT TO ASSESSEE WAS MADE OUT OF COMPANY'S ACCUMULATED PROFITS OR THAT THE COMPANY POSSESSED ACCUMULATED PROFITS, TRIBUNAL IS RIGHT IN LAW AND O N FACTS IN OBSERVING THAT THE CONDITIONS PRESCRIBED UNDER S . 2(22)(E) WERE NOT SATISFIED AND THEREBY DELETING TH E ADDITION MADE BY THAT AO TREATMENT GIVEN BY REVENUE TO VARIOUS ENTITIES 15 4. A) THE LD. AO HAS HELD THAT REVENUE HAS TO BE RECOGNIZED ON DAY TO DAY BASIS FOR CONSIDERING ACCUMULATED PROFITS ON THE DATE OF DISBURSEMENT. THOUGH THIS OBSERVATION IS NOT CORRECT AS DISCUSSED IN PARA 5 BELOW, YET EVEN IF IT IS PRESUMED TO BE SO, THE FACT REMAINS THAT THE ASSESSMENT OF THE COMPANY HAS BEEN COMPLETED AT A LOSS OF RS. 1,05,460/- U/S 143( 3) BY THE SAME AO AND ON THE SAME DATE AS THAT OF THE APPELLANT. ONCE THE COMPANY HAS BEEN ASSESSED AT A LOSS FOR THE WHOLE YEAR, IT CANNOT BE SAID THAT BY BIFURCATING THIS LOSS, THERE CAN BE ACCUMULATED PRO FIT OF RS. 13,88,23,000/- FOR THE PART PERIOD OF THE YEAR. HENCE, EVEN BY CONSIDERING THE AO'S FORMULA, THERE WERE NO ACCUMULATED PROFIT AT THE TIME OF REIMBURSEMENT. B) FURTHER, THE FACTS IN BRIEF ARE THAT THE COMPAN Y HAS GIVEN ITS LAND TO M/S. EMAAR MGF LAND LTD. FOR DEVELOPMENT. AS PER THE DEVELOPMENT AGREEMENT THE DEVELOPER WAS MAKING PAYMENTS TO THE COMPANY PERIODICALLY. SINCE THE DEVELOPER IS FOLLOWING PERC ENTAGE COMPLETION METHOD AS PER GUIDANCE NOTE ISSUED BY TH E INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ON REVE NUE RECOGNITION BY THE REAL ESTATE DEVELOPER, THE DEVEL OPER RECOGNIZED THE REVENUE ON 31/03/2012. THE IMPUGNED 16 COMPANY WAS ACCORDINGLY BOUND TO RECOGNIZE ITS PROF ITS AS PER THE PERCENTAGE OF COMPLETION METHOD ONLY AFT ER RECEIVING THE CERTIFICATE FROM THE DEVELOPER. THE DEVELOPER HAS BEEN ISSUING A CERTIFICATE FOR EACH FINANCIAL YEAR CLEARLY INDICATING THE PERCENTAGE OF THE PROJECT COMPLETED AND THE PROFITS PERTAINING TO THE COMPANY INCLUDING THE COMPUTATION. ACCORDINGLY, NEITHER THE COMPANY KNEW ITS PROFIT NOR IT HAD ANY RIGHT TO RECEIVE THE PROFITS BEFORE 31/03/2012. THE RIGHT TO RECEIVE THE PROFITS ACCRUE ONLY ON 31/03/2012 AFTER DETERMINATION OF INCOME BY THE DEVELOPER AS PER THE METHOD OF ACCOUNTING BEING FOLLOWED BY IT REGULARLY . SINCE IT WAS THE LLP WHICH EXISTED ON 31/03/2012 AN D NOT THE COMPANY, THE PROFITS ACCRUED TO THE LLP ONL Y WHICH WERE DULY DECLARED IN ITS IT RETURN AND TAXED ON THE RETURNED INCOME BY THE SAME AO ON THE SAME DATE . C) THEREFORE, THE REVENUE, IN FACT THE SAME AO ON THE SAME DATE, HAS TAKEN TOTALLY CONTRADICTORY STAN D IN THE CASE OF THE APPELLANT. HE HAS' ACCEPTED THE INC OME OF RS. 23,47,49,071/- THROUGH DEVELOPMENT AGREEMENT IN THE HANDS OF LLP AFTER DUE DELIBERATIONS U/S 143 (3). HE HAS ALSO ACCEPTED THE LOSS OF RS. 1,05,460/- IN THE HANDS OF THE COMPANY UPTO 28/03/2012, I.E., THE DAT E ON WHICH COMPANY WAS CONVERTED INTO LLP. THAT BEING 17 SO, THE SAME PROFIT WHICH WAS TAXED IN THE HANDS OF THE LLP, CANNOT BE MIGRATED TO THE COMPANY TO DETERMINE THE ACCUMULATED PROFIT. THEREFORE, THE FALLACY IN T HE ASSESSMENT IS OBVIOUS AND HENCE THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. ACCUMULATED PROFIT DO NOT INCLUDE CURRENT YEAR PROF IT 5. BY NOW IT IS ALSO JUDICIALLY HELD THAT THE ACCUMULATED PROFITS DO NOT INCLUDE THE CURRENT YEAR 'S BUSINESS PROFIT AS IT ACCRUES AT THE END OF THE YEA R. PROFIT DOES NOT ACCRUE ON DAY TO DAY BASIS. RELIANC E IS PLACED ON THE FOLLOWING CASE LAWS: - CIT VS. ASHOKBHAI CHIMANBHAI, (1965) 56 ITR 42 (SC) '6. IN THE GROSS RECEIPTS OF A BUSINESS DAY AFTER D AY OR FROM TRANSACTION TO TRANSACTION LIES EMBEDDED OR DORMANT PROFIT OR LOSS; ON SUCH DORMANT PROFIT OR L OSS UNDOUBTEDLY TAXABLE PROFITS, IF ANY, OF THE BUSINES S WILL BE COMPUTED. BUT DORMANT PROFITS CANNOT BE EQUATED WITH PROFITS CHARGED TO TAX UNDER SS. 3 AND 4 OF TH E IT ACT. THE CONCEPT OF ACCRUAL OF PROFITS OF A BUSINES S INVOLVES THE DETERMINATION BY THE METHOD OF ACCOUNT ING AT THE END OF THE ACCOUNTING YEAR OR ANY SHORTER PE RIOD DETERMINED BY LAW. IF PROFITS ACCRUE TO THE ASSESSE E 18 DIRECTLY FROM THE BUSINESS THE QUESTION WHETHER THE Y ACCRUE DE DIE, IN DIEM OR AT THE CLOSE OF THE YEAR OF ACCOUNT HAS AT BEST AN ACADEMIC SIGNIFICANCE, BUT W HEN UPON ASCERTAINMENT OF PROFITS THE RIGHT OF A PERSON TO A SHARE THEREIN IS DETERMINED, THE QUESTION ASSUMES PRACTICAL IMPORTANCE, FOR IT IS ONLY ON THE RIGHT T O RECEIVE PROFITS OR INCOME, PROFITS ACCRUE TO THAT PERSON. I F THERE IS NO RIGHT, NO PROFITS WILL BE DEEMED TO HAVE ACCR UED ..... ' - CIT VS. M. B. STOCKHOLDING PVT. LTD., 2015-TIOL- 1139-HC-AHM ++WHILE DETERMINING THE AMOUNT OF DEEMED DIVIDEND UNDER EXPLANATION 2 TO SECTION 2(22)(E) OF THE ACT, THE CURRENT PROFIT WAS NOT REQ UIRED TO BE INCLUDED TO BE PART OF ACCUMULATED PROFIT. AS SUCH, AS OBSERVED BY THE TRIBUNAL, THE ISSUE IS ALREADY S ETTLED BY THE SC AGAINST THE REVENUE IN THE CASE OF ASSOCI ATED BANKING CORPORATION OF IND. LTD. V IS. COMMISSIONER OF INCOME-TAX, BOMBAY REPORTED IN (1965) VO1.56 ITR 1 (SC) BY WHICH, THE VIEW TAKEN THAT THE PROFIT ACCRU ES WHEN THE BOOKS OF ACCOUNT ARE CLOSED.' OSERVATIONS OF THE AO 6 (A). THE LD. AO HAS OBSERVED THAT THE AGREEMENT T O SELL THE PROPERTY WAS ONLY A TAX EVASION SCHEME (PA GE 5 19 OF THE ASSTT. ORDER). IN THIS CONNECTION IT IS SUBM ITTED THAT THE AGREEMENTS ARE GENUINE AND EVEN THE LD. AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISPROVE THE GENUINENESS OF THE AGREEMENT TO SELL AND THE TERMINATION AGREEMENT. BOTH THE AGREEMENTS WERE DUL Y SIGNED ON THE STAMP PAPERS IN THE PRESENCE OF TWO WITNESSES. UNDER SIMILAR CIRCUMSTANCES EVEN WHEN TH E AGREEMENT WAS NOT ON THE STAMP PAPER, THE HON'BLE ITAT BANGALORE, IN THE CASE OF DCIT VS. SMT. VAISHN AVI TEKUMALLA, ITA NO. 493/BANG/2011, HAS HELD THAT THE AGREEMENT TO SELL THE PROPERTY IS GENUINE IN THE AB SENCE OF ANY EVIDENCE TO THE CONTRARY. SINCE THE COMPANY CEASED TO EXIST ON 29/3/2012, THE AGREEMENT HAD TO BE TERMINATED. THE SUCCESSOR LLP WAS NOT READY TO ENTE R INTO SUCH AN AGREEMENT TO SELL. THEREFORE, IT CANNO T BE SAID THAT THERE WAS ANY INTENTION TO EVADE TAX. (B) THE LD. AO HAS ALSO OBSERVED THAT THE AMOUNT RECEIVED BY THE APPELLANT WAS NEVER REFUNDED BACK (PAGE 6 OF THE ASSTT. ORDER). ON TERMINATION OF THE AGREEMENT THE MONEY RECEIVED BY THE APPELLANT WAS ACCOUNTED FOR AS CURRENT CAPITAL ACCOUNT IN THE LLP BEING DEBIT BALANCE. SINCE THE AMOUNT RECEIVED WAS NOT FORFEITED AND SHOWN AS DEBIT BALANCE IN THE BOOKS O F 20 LLP, IT CANNOT BE SAID THAT THE AMOUNT WAS NOT REFUNDED. (C) THE LD. AO HAS ALSO MENTIONED THAT CURRENT YEA R INCOME HAS TO BE PART OF ACCUMULATED PROFITS (PAGE 13 OF THE ASSTT. ORDER). THE LD. AO HAS NOT APPRECIATE D THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE ASHOKBHAI CHIMANBHAI WHEREIN IT WAS HELD '6. IN THE GROSS RECEIPTS OF A BUSINESS DAY AFTER D AY OR FROM TRANSACTION TO TRANSACTION LIES EMBEDDED OR DORMANT PROFIT OR LOSS; ON SUCH DORMANT PROFIT OR L OSS UNDOUBTEDLY TAXABLE PROFITS, IF ANY, OF THE BUSINES S WILL BE COMPUTED. BUT DORMANT PROFITS CANNOT BE EQUATED WITH PROFITS CHARGED TO TAX UNDER SS. 3 AND 4 OF TH E IT ACT.'. THEREFORE, THE LAW IS WELL SETTLED THAT THE PROFITS ON THE COMPANY CANNOT BE COMPUTED ON DAY TO DAY BASIS. ACCORDINGLY CURRENT YEAR INCOME, IF ANY, CAN NOT BE PART OF ACCUMULATED PROFIT. (D) THE LD. AO HAS ALSO OBSERVED THAT REVENUE COUL D BE RECOGNIZED DURING THE EXISTENCE OF THE COMPANY WITHOUT WAITING FOR THE CLOSE OF THE FINANCIAL YEAR (PAGE 17 OF THE ASSTT. ORDER), THE FACTS IN BRIEF ARE THA T THE COMPANY HAS GIVEN ITS LAND TO M/S. EMAAR MGF LAND LTD. FOR DEVELOPMENT. AS PER THE DEVELOPMENT 21 AGREEMENT THE DEVELOPER WAS MAKING PAYMENTS TO THE COMPANY PERIODICALLY. SINCE THE DEVELOPER IS FOLLOW ING PERCENTAGE COMPLETION METHOD AS PER GUIDANCE NOTE ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ON REVENUE RECOGNITION BY THE REAL ESTATE DEVELOPER, THE DEVELOPER RECOGNIZED THE REVENUE ON 31/03/2012. THE APPELLANT COMPANY WAS ACCORDINGLY BOUND TO RECOGNIZE ITS PROFITS AS PER THE PERCENTAG E OF COMPLETION METHOD ONLY AFTER RECEIVING THE CERTIFIC ATE FROM THE DEVELOPER. THE DEVELOPER HAS BEEN ISSUING A CERTIFICATE FOR EACH FINANCIAL YEAR CLEARLY INDICAT ING THE PERCENTAGE OF THE PROJECT COMPLETED AND THE PROFITS PERTAINING TO THE COMPANY INCLUDING THE COMPUTATION . ACCORDINGLY, NEITHER THE COMPANY KNEW ITS PROFIT NO R IT HAD ANY RIGHT TO RECEIVE THE PROFITS BEFORE' 31/03/ 2012. THE RIGHT TO RECEIVE THE PROFITS ACCRUE ONLY ON 31/03/2012 AFTER DETERMINATION OF INCOME BY THE DEVELOPER AS PER THE METHOD OF ACCOUNTING BEING FOLLOWED BY IT REGULARLY. SINCE IT WAS THE LLP WHIC H EXISTED ON 31/03/2012 AND NOT THE COMPANY, THE PROF ITS ACCRUED TO THE LLP ONLY WHICH WERE DULY DECLARED IN ITS IT RETURN AND TAXED ON THE RETURNED INCOME. AGAIN T HE HON'BLE SUPREME . COURT IN THE CASE ASHOKBHAI CHIMANBHAI HAS HELD 'THE CONCEPT OF ACCRUAL OF PROF ITS 22 OF A BUSINESS INVOLVES THE DETERMINATION BY THE MET HOD OF ACCOUNTING AT THE END OF THE ACCOUNTING YEAR OR ANY SHORTER PERIOD DETERMINED BY LAW WHEN UPON ASCERTAINMENT OF PROFITS THE RIGHT OF A PERSON TO A SHARE THEREIN IS DETERMINED, THE QUESTION ASSUMES PRACTIC AL IMPORTANCE, FOR IT IS ONLY ON THE RIGHT TO RECEIVE PROFITS OR INCOME, PROFITS ACCRUE TO THAT PERSON. IF THERE IS NO RIGHT, NO PROFITS WILL BE DEEMED TO HAVE ACCRUED .. ... '. THEREFORE, THE LAW IS WELL SETTLED THAT THE PROFITS WILL ACCRUE ONLY WHEN THERE IS A RIGHT TO RECEIVE THE SA ME. SINCE THE RIGHT TO RECEIVE THE PROFITS ACCRUED ONLY ON 31/03/2012 WHEN THE DEVELOPER DETERMINED THE SHARE OF PROFITS AND THE COMPANY HAVING BEEN CONVERTED IN TO LLP BEFORE 31/03/2012, NO INCOME COULD ACCRUE TO TH E COMPANY AS IT DID NOT EXIST ON 31/03/2012. THE OBSERVATIONS OF CIT(A) 7. A) THE LD. CITCA), IN PARA 3.2.16 HAS HELD THAT THE FACT THAT THE AGREEMENT HAS BEEN SUBSEQUENTLY CANCELLED, WOULD SHOW THAT THE AGREEMENT CANNOT BE GENUINE ONE. THIS MEANS THAT NO GENUINE AGREEMENT CAN BE CANCELLED SUBSEQUENTLY. ACCORDING TO HIM, TH E MOMENT A GENUINE AGREEMENT IS CANCELLED, IT BECOMES NON-GENUINE. THERE IS NO SUCH LAW IN THIS COUNTRY. 23 AGREEMENT IS GENUINE ,OR NON-GENUINE BY ITSELF AND DOES NOT DEPENDS ON ITS CANCELLATION. NEITHER THE L D. AO NOR THE LD. CIT(A) HAS BROUGHT ANY MATERIAL ON RECO RD TO ESTABLISHED THAT THE AGREEMENT FOR SALE OF PROPE RTY IS NOT GENUINE. LD. CIT(A) HAS ALSO ADMITTED THAT THER E IS NO ADVERSE MATERIAL IN RESPECT OF SALE OF PROPERTY AGREEMENT (PARA 3.2.16 OF CIT(A)'S ORDER). HENCE WH AT THE APPELLANT RECEIVED FROM THE COMPANY WAS AGAINST SALE TRANSACTION OF THE PROPERTY AND NEITHER LOAN N OR ADVANCE. THEREFORE, SECTION 2(22)(E) COULD NOT BE INVOKED. B)(I) THE LD. CITCA) HAS ALSO OBSERVED THAT PROFITS ACCRUE FROM DAY TO DAY AND NOT WHEN ACCOUNTS ARE PREPARED AT THE END OF THE YEAR. AS DISCUSSED ABOVE , THE HON'BLE SUPREME COURT HAS ALREADY NEGATED SUCH A VIEW. II) OTHERWISE ALSO, AS DISCUSSED ABOVE, THE COMPAN Y HAS BEEN ASSESSED AT LOSS AND EVEN IF THE LOSS IS BIFUR CATED TO THE PERIOD OF DISBURSEMENT, THE ACCUMULATED PROF IT WILL REMAIN LOSS ONLY. C) THEREFORE, UNDER THE CIRCUMSTANCES, THERE ARE N O ACCUMULATED PROFITS TO BE COVERED U/S 2(22)(E), OF COURSE, THIS SUBMISSION IS WITHOUT PREJUDICE TO THE SUBMISSIONS IN SUB PARA (A) ABOVE. 24 PRAYER 8. IN VIEW OF THE FACTS AND LAW AS DISCUSSED ABOVE , THE APPEAL OF THE REVENUE MAY KINDLY BE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE APPELLANT MAY KIN DLY BE ALLOWED. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE IMPUGNED ORDER PASSED BY THE REVENUE AUTHORITIE S AS WELL AS THE CASE LAWS RELIED UPON BY BOTH THE PARTIES. WE ARE OF TH E CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY OBSERVED THAT AO HAS WRONGL Y MADE THE ADDITION U/S. 2(22)(E) BY HOLDING THAT THERE ARE ACCUMULATE D PROFITS IN THE HANDS OF M/S ROBIN SOFTWARE PVT. LTD. LD. CIT(A) HAS ALSO NOTICED THAT THE AO HAS COMPLETED THE ASSESSMENT OF M/S ROBIN SOFTWARE PVT. LTD. FOR ASSESSMENT YEAR 2012-13 AND NO ADDITION HAS BEEN MA DE IN THE HANDS OF THAT COMPANY AND RETURN OF LOSS HAS BEEN ACCEPTED. THEREFORE, THE LD. CIT(A) HAS RIGHTLY CANCELLED THE ORDER OF THE AO B Y HOLDING THAT IF THE AO HAS ACCEPTED THE INCOME RETURNED BY THE SAID COM PANY AND NOT MADE ANY CHANGES IN THE RETURN OF INCOME AND ASSESSED TH E INCOME AS DECLARED BY THE SAID COMPANY, HE CANNOT HOLD THAT THERE WAS ACCUMULATED PROFITS FOR THE PURPOSE OF SECTION 2(22)(E) OF THE ACT. WE FURTHER NOTE THAT LD. CIT(A) HAS OBSERVED THAT ASSESSMENT OF M/S ROBIN S OFTWARE PVT. LTD HAS BEEN COMPLETED VIDE ORDER OF THE SAME ASSESSING OFF ICER ON 26.3.2014 AND AO HAS ACCEPTED THE RETURNED OF LOSS RS. 1,05 ,460/- AS ON 28.3.2012 OF THAT COMPANY. THIS BEING SO THE SAME AO COULD NOT HAVE ADOPTED A DIFFERENT INCOME / PROFIT FIGURE TO MAKE ADDITION U/S 2(22)(E). HENCE, LD. CIT(A) NOTED THAT WHEN AO ASSESSES THE I NCOME OF M/S ROBIN SOFTWARE PVT. LTD. AS LOSS FOR THE SAME FINANCIAL YEAR, THERE COULD BE NO GROUND AVAILABLE TO HOLD THAT THE SAID COMPANY HAD ACCUMULATED PROFITS AT THE TIME OF MAKING LOANS/ADVANCES. THEREFORE, THE A DDITION MADE AS DEEMED DIVIDEND U/S. 2(22)(E) OF RS. 13,88,23,000/ - WAS RIGHTLY DELETED BY THE LD. CIT(A) FOR WANT OF FULFILLMENT OF THE RE QUIRED CONDITIONS 25 STIPULATED UNDER THE SAID SECTION, WHICH DOES NOT N EED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) AND REJECT THE GROUND RAISED BY THE REVENUE. SINCE THERE WAS WANT OF FULFILLMENT OF THE REQUIRED CONDITIONS STIPULATED UNDER THE SAID SECTI ON, AS AFORESAID, THE CASE LAWS CITED FROM BOTH THE SIDES ARE NOT APPLICA BLE HERE. AS A RESULT, THE REVENUES APPEAL IS DISMISSED. ASSESSEES CROSS OBJECTIONS:- 9. SINCE WE HAVE ALREADY UPHELD THE ORDER OF THE L EARNED CIT(A) DELETING THE ADDITION ON MERIT IN THE REVENUES APP EAL, AS AFORESAID, THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND DISMISSED AS SUCH. AS A RESULT, THE CROSS OBJECTION S FILED BY THE ASSESSEE STAND DISMISSED. 10. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED ON 11-07-2018. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 11/07/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY ASSISTANT REGISTRAR, ITAT