DCIT, New Delhi V. M/s. Falcon Business Resources (P) Ltd., New Delhi

ITA 2119/DEL/2013

• Counselvise Citation: 211920114 RSA 2013
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: HARDIPENDER SI NGH
• Keywords: Deemed dividend
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NOS.2119 & 1359/DEL/2013 ASSESSMENT YEARS : 2008-09 & 2009-10 DCIT, CIRCLE 11 (1), ROOM NO.312, CR BUILDING, NEW DELHI. VS. FALCON BUSINESS RESOURCES (P) LTD., D-158B, OKHLA INDL. AREA, PHASE I, NEW DELHI. PAN : AAACF8295M ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI HARDIPENDER SINGH, ADVOCATE DEPARTMENT BY : S MT. NIDHI SRIVASTAVA, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THESE ARE DEPARTMENTS APPEALS FOR ASSESSMENT YEARS 2008-09 AND 2009-10, RESPECTIVELY, AGAINST THE ACTION OF THE LD. CIT (A) IN DELETING THE ADDITION OF ` 32 LAC (FOR ASSESSMENT YEAR 2008-09) AND ` 20 LAC (FOR ASSESSMENT YEAR 2009-10), MADE ON ACCOUNT OF DEEMED DIV IDEND INCOME U/S 2 (22) (E) OF THE IT ACT. THE FACTS IN BOTH THESE CASE S BEING, MUTATIS MUTANDIS EXACTLY SIMILAR, BOTH THESE APPEALS ARE BEING DISPOSED O F BY THIS COMPOSITE ORDER. THE FACTS, FOR FACILITY, ARE BEING TAKEN FROM ITA NO.2119/DEL/2013. ITA NOS.2119 & 1359/DEL/2013 2 2. THE ASSESSING OFFICER FOUND THE ASSESSEE COMPANY TO HAVE RECEIVED LOANS OF ` 32 LACS AND ` 20 LACS FROM M/S SHIVALIK DAI RIES PVT. LTD. IN BOTH THESE YEARS. THE ASSESSING OFFICER OBSERVED THAT SINCE THE MAJOR SHAREHOLDERS OF THE ASSESSEE COMPANY, I.E., S/SHRI DEVEND RA DHAWAN, NEERAJ DHAWAN AND SURAJ DHAWAN, ETC., ARE INTERESTED IN M/S SHIVALIK DAIRIES PVT. LTD., THE LOANS RECEIVED BY THE ASSESSEE COMPANY ARE DEE MED INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 2 (22) (E) OF T HE ACT, SINCE LOANS RECEIVED FROM A PRIVATE LIMITED COMPANY BY A CONCER N, WHOSE PARTNERS ARE INTERESTED IN THE PRIVATE LIMITED COMPANY, ARE DEEME D TO BE THE INCOME OF THE RECEIVER CONCERN AS PER THE PROVISIONS OF SECTION 2 (22)(E) OF THE ACT. BY VIRTUE OF THE IMPUGNED ORDERS, THE LD. CIT (A) DELET ED THE ADDITIONS MADE BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERAT ION. 3. CHALLENGING THE IMPUGNED ORDERS, THE LD. DR HAS CO NTENDED THAT THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITIONS CORRE CTLY MADE BY THE ASSESSING OFFICER; THAT WHILE DOING SO, THE LD. CIT (A) HAS FAILED TO TAKE INTO CONSIDERATION THE FACT THAT AS RIGHTLY OBSERVED BY THE ASSESSING OFFICER, FINANCE ACT, 1987, HAS CHANGED THE DEFINITION OF DE EMED DIVIDEND U/S 2 (22) (E) OF THE ACT AND THEREBY, ANY SUM BY WAY OF ADVANCE OR LOAN TO ANY CONCERN IN WHICH A SHAREHOLDER, BEING A PERSON WHO I S THE BENEFICIAL OWNER OF THE SHARE HOLDING NOT LESS THAN 10% OF THE VOTING P OWER OF A COMPANY, IS A MEMBER OR A PARTNER AND IN WHICH, HE HAS A SUBSTANTI AL INTEREST; THAT IT ELUDED THE LD. CIT (A) THAT THE FINANCE ACT, 1987, AS SUCH, HAS BROUGHT IN AN ADDITIONAL CATEGORY OF RECEIPT OF LOAN OR ADVANCE F ROM A COMPANY AND THIS ADDITIONAL CATEGORY, AS CORRECTLY OBSERVED BY THE ASSESSI NG OFFICER REPRESENTS A CONCERN, WHEREIN, THE SHAREHOLDER IS A PAR TNER OR A MEMBER AND IN WHICH, HE HAS A SUBSTANTIAL INTEREST; THAT THE LD. CIT (A) HAS ALSO FAILED TO CONSIDER THE OBSERVATION OF THE ASSESSING OFFICER THAT TH E WORD CONCERN HAS BEEN DEFINED IN EXPLANATION 3 TO SECTION 2 (22) (E) OF THE ACT AS AN HUF OR A FIRM OR AN AOP OR A BODY OF INDIVIDUALS OR A COMPAN Y AND THAT ACCORDING TO THIS PROVISION, A PERSON HAS SUBSTANTIAL INTEREST IN A CON CERN, IF HE IS ENTITLED ITA NOS.2119 & 1359/DEL/2013 3 TO AT LEAST 20% OF ITS PROFITS; THAT SINCE IN THE PRESEN T CASE, ALL THE CONDITIONS PRESCRIBED BY SUCH SECTION 2 (22) (E) OF THE ACT ARE SATISFIED, THE ASSESSING OFFICER HAD CORRECTLY TREATED THE LOANS RECEIVED BY THE ASSESSEE FROM M/S SHIVALIK DAIRIES PVT. LTD. AS DEEMED DIVIDEND OF THE ASSESSEE COMPANY. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDERS. IT HAS BEEN CONTENDE D THAT THE ORDERS PASSED BY THE LD. CIT (A) ARE WELL REASONED ELABORATE SPEAKING ORDERS, REQUIRING NO INTERFERENCE AT OUR HANDS; THAT THE LOA NS WERE ADVANCED BY M/S SHIVALIK DAIRIES PVT. LTD. IN THE ORDINARY COURSE OF ITS BUSINESS; THAT THE LENDING OF MONEY WAS A SUBSTANTIAL PART OF THE BUSINESS O F THE SAID LENDING COMPANY; THAT TO ATTRACT SECTION 2 (22) (E) OF THE ACT, THE PAYMENT MUST BE MADE TO THE PERSON WHO IS A REGISTERED HOLDER OF SHARES AND THE SHAREHOLDER ALONE, AS HELD IN CIT VS. BHOPAL CLOTHING COMPANY PV T. LTD., 350 ITR 67 (DEL); THAT ALL THESE ASPECTS HAVE DULY BEEN TAKEN INT O CONSIDERATION BY THE LD. CIT (A) WHILE RIGHTLY DELETING THE ADDITIONS WRO NGLY MADE BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION ; AND THAT THEREFORE, THERE BEING NO MERIT THEREIN BOTH THE APPEALS OF THE DEPARTMENT BE DISMISSED. 5. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. IT REMAINS UNDISPUTED THAT THE LOANS WERE ADVANCED TO TH E ASSESSEE BY M/S SHIVALIK DAIRIES PVT. LTD. IN THE ORDINARY COURSE OF ITS BUSINESS AND THAT LENDING OF MONEY WAS A SUBSTANTIAL PART OF THE BUSINESS O F SHIVALIK DAIRIES PVT. LTD. THE PROFIT & LOSS ACCOUNT OF THE LENDING CO MPANY, A COPY WHEREOF HAS BEEN PLACED ON RECORD, SHOWS THAT THERE IS 100% IN COME FROM LENDING MONEY AND THERE IS NO OTHER BUSINESS ACTIVITY FROM FY 2007-08 TO FY 2010- 11. AS PER THE MEMORANDUM AND ARTICLES OF ASSOCIATION O F SHIVALIK DAIRIES, ONE OF ITS MAIN OBJECTS WAS TO CARRY ON THE BUSINESS TO MANUFACTURERS, PRODUCERS AND PROCESSORS OF AND DEALERS IN MILK AND MILK PRODUCTS AND MILK PREPARATIONS OF ALL KINDS. THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF SHIVALIK DAIRIES, HELD ON 6.4.06 (APB ASSE SSMENT YEAR 2008-09, ITA NOS.2119 & 1359/DEL/2013 4 PAGES 55-56) SHOWS THAT THE AFORESAID MAIN OBJECTS OF TH E COMPANY COULD NOT BE CARRIED OUT DESPITE LAND HAVING BEEN PURCHASED FOR ESTABLISHING A MILK PLANT AND INSTALLATION OF RELATED MACHINERY. APPROV ALS FROM THE CONCERNED GOVERNMENT DEPARTMENT COULD NOT BE OBTAINED AND SO, THE PROJECT COULD NOT BE STARTED. THE SOURCE OF INCOME OF THE COMPANY HAD B EEN THE SALE OF SOME AGRICULTURAL PRODUCE. THE LAND OF THE COMPANY CAME UNDER COMPULSORY ACQUISITION BY THE GOVERNMENT OF DELHI. EVEN THE POSSE SSION THEREOF WAS TAKEN OVER. THE COMPANY HAD NEITHER ANY LAND, NOR A NY FIXED ASSETS. ACCORDINGLY, THE MEMORANDUM OF ASSOCIATION OF THE COM PANY WAS DECIDED TO BE AMENDED AND THE COMPANY WAS AUTHORIZED TO LEND MO NEY TO OUTSIDE PARTIES. FURTHER, BY VIRTUE OF THE MINUTES OF THE MEE TING DATED 11.3.07 (APB FOR ASSESSMENT YEAR 2008-09, PAGES 57-58), IT WAS DECIDE D THAT INTEREST @ 15% BE PAID TO THE COMPANY, IF LOANS WERE GRANTED I N FAVOUR OF THE ASSESSEE COMPANY. THEN, VIDE MINUTES OF THE MEETING DATED 18. 03.2007 (APB FOR 2008-09, PAGE 59), IT WAS, INTER ALIA, RESOLVED THAT A LOAN OF ` 30 LACS @ 15% INTEREST PER ANNUM BE GRANTED TO THE ASSESSEE COMPANY. T HIS LOAN WAS FORMALIZED BY VIRTUE OF THE AGREEMENT DATED 24.03.0 7 (APB FOR ASSESSMENT YEAR 2008-09, PAGES 60-61). 6. ALL THE ABOVE FACTS WERE NOT TAKEN INTO CONSIDERAT ION BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDERS. THE ASSESSMENT OR DERS DO NOT CONTAIN ANY REFERENCE TO THEM. THE ASSESSING OFFICER, T HUS, WENT ENTIRELY WRONG IN OBSERVING THAT THE INTEREST INCOME OF M/S SHI VALIK DAIRIES WAS A PART OF ABOUT 0.02% OF GROSS RECEIPT. 7. IN CIT VS. V.S. SHIVA SUBRAMANIAM, 141 CTR MADR AS 34, IT HAS BEEN HELD THAT WHERE THE ASSESSEE WAS A SHAREHOLDER IN A COMP ANY DOING ONLY MONEY LENDING BUSINESS, THE LOAN TAKEN BY THE ASSESSEE COU LD NOT BE TREATED AS DEEMED DIVIDEND, EVEN THOUGH THE COMPANY HAD ACCU MULATED PROFITS. FURTHER, IN CIT VS. PARLEY PLASTICS LTD. AND ANOTHER , 332 ITR 63 (BOM), IT HAS BEEN HELD THAT AS PER SECTION 2 (22) (E) OF THE ACT, ANY ADVANCE OR LOAN MADE BY A COMPANY TO A SHAREHOLDER OR A CONCERN IN W HICH THE SHAREHOLDER ITA NOS.2119 & 1359/DEL/2013 5 HAS A SUBSTANTIAL INTEREST WOULD NOT BE REGARDED AS A D IVIDEND, IF THE ADVANCE OR LOAN WAS MADE BY THE LENDING COMPANY IN T HE ORDINARY COURSE OF ITS BUSINESS AND THAT THE LENDING OF THE MONEY WAS A SUB STANTIAL PART OF THE BUSINESS OF THE LENDING COMPANY. BOTH THESE CONDITIONS A RE SATISFIED IN THE PRESENT CASE. 8. FURTHER, IN CIT VS. GOPAL CLOTHING COMPANY PVT. LTD. (SUPRA), IT WAS HELD THAT IN ORDER TO ATTRACT THE PROVISIONS OF SECTI ON 2 (22) (E) OF THE ACT, PAYMENT MUST BE MADE TO THE PERSON WHO IS A REGISTERED HOLDER OF SHARES AND THE SHAREHOLDER ALONG AND THAT THE FACTS THAT THE SHAREHOLDERS OF THE ASSESSEE COMPANY WERE ALSO SHAREHOLDERS OF THE LENDING COM PANY, WAS NOT SUFFICIENT AND DID NOT MEET THE REQUIREMENT OF SECTI ON 2 (22) (E) OF THE ACT. 9. IN CIT VS. MCC MARKETING (P) LTD., 343 ITR 350 (DEL), IT WAS HELD THAT THE ASSESSEE COMPANY, WHO WAS NOT A SHAREHOLDER OF THE CO MPANY FROM WHICH IT HAD RECEIVED A LOAN OR AN ADVANCE, COULD N OT BE TREATED AS COVERED BY THE DEFINITION OF THE WORD DIVIDEND, AS CONTAIN ED IN SECTION 2 (22) (E) OF THE ACT. 10. IN MCC MARKETING (P) LTD. (SUPRA), THE HONBL E HIGH COURT OF DELHI HAS FOLLOWED CIT VS. ANKITECH (P) LTD., 199 TAXMANN 34 1 (DEL), WHICH HAS RIGHTLY BEEN FOLLOWED BY THE LD. CIT (A) IN FAVOUR OF THE A SSESSEE AND WHEREIN, IT WAS HELD THAT THE LEGAL FICTION CREATED U/S 2 (22 ) ( E) OF THE ACT ENLARGES THE DEFINITION OF DIVIDEND ONLY, THAT THE LEGAL FICTI ON IS NOT TO BE EXTENDED FURTHER BY BROADENING THE CONCEPT OF SHAREHOLDERS, TH AT ANY COMPANY IS SUPPOSED TO DISTRIBUTE PROFITS IN THE FORM OF DIVIDEND TO ITS SHAREHOLDERS/MEMBERS AND SUCH DIVIDEND CANNOT BE GIVEN TO NON-MEMBERS, THAT THE SECOND CATEGORY SPECIFIED IN SECTION 2 (22) (E) IS A CONCERN IN WHICH A SHAREHOLDER OF THE PAYER COMPANY HAS AT LEAST 20% OF VOTING POWER AND LOAN OR ADVANCE UNDER THIS CATEGORY IS GIVEN ADMITTED LY NOT TO A SHAREHOLDER/MEMBER OF THE PAYER COMPANY AND, THEREFO RE, IT CANNOT BE TREATED AS SHAREHOLDER/MEMBER RECEIVING DIVIDEND AND THAT WHERE LOANS OR ITA NOS.2119 & 1359/DEL/2013 6 ADVANCES ARE GIVEN IN THE NORMAL COURSE OF THE BUSINE SS AND THE TRANSACTION IN QUESTION BENEFITS BOTH THE PAYER AND THE PAYEE CO MPANIES, THE PROVISIONS OF SECTION 2 (22) (E) CANNOT BE INVOKED. 11. IN THE IMPUGNED ORDERS, WE FIND THAT THE LD. CIT (A) HAS DULY CONSIDERED THE ABOVE POSITION ON BOTH THE ASPECTS AND H AS FOUND THAT THE LOANS WERE ADVANCED IN THE REGULAR COURSE OF BUSINESS OF THE LENDING COMPANY. THE RELEVANT PORTION OF THE CIT (A)S ORDE R FOR ASSESSMENT YEAR 2008-09 READS AS FOLLOWS:- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND OBSERVATION OF THE ASSESSING OFFICER. IT IS SEEN THAT APPELLANT COMPANY HAD RECEIVED RS.32,00,000/FROM MIS SHIVALIK DAIRIES PVT. LTD. AS LOAN DURING THE YEAR. THIS LOAN HAS BEEN RECEIVED IN THE REGULAR COU RSE OF ITS BUSINESS. IT IS SEEN THAT M/S SHIVALIK DAIRIES PVT. LTD. IS ENGAGE D IN THE BUSINESS OF MONEY LENDING FROM APRIL 2006, FOR THIS, THE APPE LLANT HAS FILED COPIES OF THE MINUTES APPROVED BY THE BOARD OF DIRECTOR S IN APRIL 2006 AND 11.03.2007. COPIES OF THE MINUTES ARE FILED IN TH E PAPER BOOK AS ANNEXURE-(II) AND (III) OF THE SUBMISSION. IN THESE M INUTES THE BUSINESS OF THE COMPANY WAS CHANGED FROM DAIRIES TO INVESTMEN T IN FDRS, LOANS TO THE PARTIES, COMPANIES, FINANCIAL INSTITUTIONS AND IN VESTMENT IN STOCK. THE APPELLANT HAS ALSO FILED COPY OF MEMORANDU M OF ASSOCIATION WHEREBY COMPANY WAS PERMITTED TO LEND AND ADVANCE MONE Y OR GIVE CREDIT TO PERSONS, FIRMS OR COMPANIES. THE APPELLANT H AS FILED COPY OF MEMORANDUM OF ASSOCIATION IN THE SUBMISSION AS ANNEXU RE-(I) TO THE SUBMISSION. THE PURPOSE OF ADVANCING MONEY HAS BEEN LISTED AT S. NO. 17 OF THE MOD. THE APPELLANT HAS ALSO FILED COPY OF A CCOUNTS OF M/S SHIVALIK DAIRIES PVT. LTD. WHEREIN THE RECEIPT OF THE IN TEREST HAS BEEN DISCLOSED BY M/S SHIVALIK DAIRIES PVT. LTD. IN ITS PRO FIT AND LOSS ACCOUNT. DURING THE F.Y. 2007-08, THE APPELLANT COMPANY HAS PAI D INTEREST OF RS.7,38,082/-TO M/S SHIVALIK DAIRIES PVT. LTD. AS INT EREST ON THE MONEY TAKEN AS LOAN. IT IS ALSO SEEN FROM THE DETAILS FILED B Y THE APPELLANT THAT M/S SHIVALIK DAIRIES PVT. LTD. HAS EARNED INCOME BY W AY OF INTEREST FROM LENDING OF MONEY OF RS.L9,95,167/-DURING THE YE AR. M/S SHIVALIK DAIRIES' PVT. LTD HAS INCOME FROM INTEREST AND THERE IS NO OTHER INCOME IN ITS PROFIT AND LOSS ACCOUNT. ALL THESE FACTS ESTABLISH ED THAT LOAN OR ADVANCE WAS MADE BY MIS SHIVALIK DAIRIES PVT. LTD. TO THE APPELLANT COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS. IT IS ALSO SEEN THAT LENDING OF MONEY WAS SUBSTANTIAL PART OF THE BUSINESS O F M/S SHIVALIK DAIRIES PVT. LTD. THE PROVISIONS OF SECTION 2(22)( E) EXCLUDES SUCH T RANSACTIONS FROM THE PURVIEW OF DEEMED DIVIDEND. THE RELEVANT PORTION OF S ECTION 2(22)( E) IS REPRODUCED HEREUNDER:- SECTION 2(22)(E) ITA NOS.2119 & 1359/DEL/2013 7 ANY PAYMENT BY A COMPANY, NO BEING A COMPANY IN WHIC H THE PUBLIC ARE SUBSTANTIALLY INTERESTED OF ANY SUM . BUT 'DIVIDEND' DOES NOT INCLUDE -- (I) . (I)(A) . (II) ANY ADVANCE OR LOAN MADE TO A SHARE HOLDER (OR THE SAID CONCERN) BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS, WHERE THE LENDING OF MONEY IS A SUBSTANTIAL PART OF THE BUSINESS OF THE CO MPANY. THE ABOVE PROVISION CLEARLY EXCLUDES THE TRANSACTIONS OF LOANS OR ADVANCE BY A COMPANY WHO IS ENGAGED IN THE BUSINESS OF LENDING MONEY IN THE ORDINARY COURSE OF ITS BUSINESS. SINCE TH E MONEY ADVANCED TO THE APPELLANT COMPANY OF RS.32,00,000/- BY M/S SHIVALIK DAIRIES PVT. LTD. WAS GIVEN ON INTEREST IN THE ORDINARY COURSE OF ITS BUSINESS AND FOR THAT INTEREST OF RS.7,38,082/-HAS BEEN CHARGED FROM THE APPELLANT COMPANY. THEREFORE, THE TRANSACTION OF LOA N OF RS.32,00,000/- IS NOT COVERED UNDER SECTION 2(22)(E) OF THE IT ACT AND SAME CANNOT BE TAXED AS DEEMED DIVIDEND. HENCE, THE AD DITION MADE BY THE ASSESSING OFFICER OF DEEMED DIVIDEND OF RS.32 ,00,000/- IS DELETED. IN THIS REGARD RELIANCE IS PLACED ON HON'BLE DELHI H IGH COURT JUDGMENTS IN THE CASE OF ANKITECH PVT. LTD. 199 TAXMAN 341 WHEREI N 'IT IS HELD THAT LOANS AND ADVANCES GIVEN IN THE NORMAL COURSE OF BUSINESS AND TRANSACTION IN QUESTION BENEFITS BOTH PAYER AND PAYEE C OMPANY, THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) CANNOT BE INVOKED. . RELIANCE IS ALSO PLACED ON THE HONBLE DELHI HIGH CO URT JUDGMENT IN THE CASE OF RAJ KUMAR REPORTED IN 318 ITR 462 WHEREIN IT IS HELD THAT TRADE ADVANCES WHICH ARE IN THE NATURE OF MONEY TRANSACTED TO GIVE EFFECT TO THE COMMERCIAL TRANSACTIONS, CANNOT BE TREATED AS DEEMED DIVIDEND FALLING WITH THE AMBIT OF SECTION 2 (22) (E). . FURTHER RELIANCE IS PLACED ON THE JUDGMENT OF HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. CREATIVE DYEING & PRINTING PVT. LTD. 318 ITR 476 (DEL).. .. IN VIEW OF THE FACTUAL AND LEGAL POSITION DISCUSSED A BOVE IT BECOMES OBVIOUS THAT AMOUNT OF LOAN OF RS.32,00,000/- FROM M/S SHIVALIK DAIRIES PVT. LTD. BY THE APPELLANT WAS LOAN IN THE ORDINARY COUR SE OF BUSINESS ITA NOS.2119 & 1359/DEL/2013 8 AND FOR THAT INTEREST HAS BEEN CHARGED DURING THE YEAR A ND IN SUBSEQUENT YEARS. THE SURROUNDING CIRCUMSTANCES OF THE AMOUNT RECEIVED AND PAID SUGGEST THAT THE AMOUNT RECEIVED WAS TO GIVE EFFECT TO THE BUSINESS OR COMMERCIAL TRANSACTION BETWEEN THE AP PELLANT COMPANY AND M/S SHIVALIK DAIRIES PVT. LTD. THE RECEIP T AND PAYMENT OF MONEY TO GIVE EFFECT COMMERCIAL TRANSACTIONS DOES NOT F ALL WITHIN THE DEFINITION OF THE DEEMED DIVIDEND U/S 2(22)(E) OF THE IT ACT. HENCE THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.32,00,00 0/- AS DEEMED DIVIDEND IS DELETED. 12. THE DEPARTMENT HAS NOT BEEN ABLE TO COUNTER THE AFORESAID OBSERVATIONS OF THE LD. CIT (A), WITH WHICH, WE FIND OURSELVES AD IDEM . 13. IN VIEW OF THE ABOVE, FINDING NO MERIT THEREIN, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT FOR BOTH THE YEARS UNDER CONSIDERATION IS REJECTED. 14. IN THE RESULT, BOTH THE APPEALS FILED BY THE DEPA RTMENT ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.04.201 4. SD/- SD/- [ G.D. AGRAWAL ] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 4 TH APRIL, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.