ITO 6(1)(2), MUMBAI V. BEST CFS P. LTD, MUMBAI

ITA 4075/MUM/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0235 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Deemed dividend
• Section: 143(3); 2(22)(e); 145; 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BEFORE HONBLE HONBLE SHRI ( INCOME TAX OFFICER 6(1)(2) ROOM NO.503 AAYKAR BHAVAN MUMBAI-400 020 ( APPELLANT ASSESSEE BY REVENUE BY DATE OF HEARING DATE OF PRONOUNCEMENT PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , ! '# $ '# HONBLE SHRI MAHAVIR SINGH, JM SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.4075/MUM/201 3 ASSESSMENT YEAR: 2009- 10 INCOME TAX OFFICER - VS. BEST CFS PRIVATE LIMITED 101/102, PRESTIGE CHAMBERS 127- B, KALYAN STREET MASJID BUNDER(E) MUMBAI 400 009 PAN/GIR NO. AABCB- 4832 APPELLANT ) : ( %& RESPONDENT ASSESSEE BY : RUSHABH MEHTA & MEHTA, LD. AR S REVENUE BY : CHAUDHARY ARUN KUMAR SINGH, LD. DR ' DATE OF HEARING : 08/10/2018 ' / DATE OF PRONOUNCEMENT : 05/12/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 20 THE ORDER OF LD. COMMISSIONER OF INCOME - TAX (APPEALS) ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL () SHRI MAHAVIR SINGH, JM AND MANOJ KUMAR AGGARWAL, AM 3 10 ) BEST CFS PRIVATE LIMITED 101/102, PRESTIGE B, KALYAN STREET MASJID BUNDER(E) 400 009 4832 -H RESPONDENT ) RUSHABH MEHTA & JIGAR S CHAUDHARY ARUN KUMAR LD. DR ASSESSMENT YEAR [AY] 20 09-10 TAX (APPEALS) -14 [CIT(A)], MUMBAI, APPEAL NO. 14/02/2013 ON FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. ERRED IN DELETING THE ADDITION OF RS.55,58,394/ OFFICER TO THE NET PROFIT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN THE FIGURES ADOPTED FOR WORK IN PROGRES S SATISFACTORILY DURING THE COURSE OF ASSESSM 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF DEEMED DIVIDEND MADE U/ S 2 (22) (E) OF THE ACT TO THE TUNE OF RS.17,25,000/ IN THE HANDS OF THE DIRECTORS BEING THE SHAREHOLDERS AND N OT IN THE HANDS OF THE ASSESSEE COMPANY, WHO IS NOT A SHAREHOLDER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING DEEMED DIVIDEND IN THE HANDS OF THE ASS ESSEE RECEIVED THE ACCUMULATED PROFITS UNDER THE GARB OF LOAN. THE CIT(A) FAILED TO APPRECIATE EXPLANATORY NOTES ON THE PROVISIONS OF F INANCE ACT, 1987 GIVEN IN CIRCULAR NO.495 DATED 22 2(22)(E) HAS BEEN BROUGHT TO PLUG THE LOOPHOLD OF THE CLOSELY HE LD COMPANY NOT DISTRIBUTING PROFITS TO SHAREHOLDERS BUT DIST RIBUTING THE ACCUMULATED PROFIT BY WAY OF ADVANCE OR LOAN TO A CONCERN IN WHICH S HAREHOLDER HAS SUBSTANTIAL INTEREST I.E. THE ASSESSEE COMPA CIT(A) ERRED IN INTERPRETING THAT ASSESSEE COMPANY NOT BEING SHAREHOLDER OF LENDER COMPANY IS NOT COVERED U/S. 2(22)(E). 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED BY FAILING TO FOLLOW THE M ACCOUNT THE RATIONALE BEHIND INTRODUCTION OF AMENDM ENT TO SECTION 2(22)(E) AND WRONGLY INTERPRETED THAT ASSESSEE COMPANY NOT B EING SHAREHOLDER OF LENDER COMPANY IS NOT COVERED U/S 2(22)(E). 2.1 FACTS IN BRIEF ARE THAT ASSESSEE ENGAGED AS ASSESSMENT U/S 143(3) ON 23/12/2011 BY LD. INCOME T AX OFFICER [AO] AT RS.101.52 LACS AFTER CERTAIN ADDITIONS AS A GAINST RETURNED INCOME OF RS.28.69 LACS FILED BY THE ASSESSEE ON 30 /09/2009. THE FOLLOWING ADDITIONS MADE BY L AUTHORITY ARE THE SUBJECT MATTER OF PRESENT APPEAL BEFORE US: NO. NATURE OF ADDITION 1. ENHANCEMENT OF NET PROFIT 2. DEEMED DIVIDEND U/S 2(22)(E) 2 APPEAL NO. CIT(A)-1 4/IT.116/RG.6(1)/11 ON FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. ERRED IN DELETING THE ADDITION OF RS.55,58,394/ - MADE BY THE ASSESSING OFFICER TO THE NET PROFIT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN THE FIGURES ADOPTED FOR WORK IN PROGRES S SATISFACTORILY DURING THE COURSE OF ASSESSM ENT PROCEEDING. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF DEEMED DIVIDEND MADE U/ S 2 (22) (E) OF THE ACT TO THE TUNE OF RS.17,25,000/ - , HOLDING THAT DEEMED DIVIDEND WOULD BE ATTRACTED HANDS OF THE DIRECTORS BEING THE SHAREHOLDERS AND N OT IN THE HANDS OF THE ASSESSEE COMPANY, WHO IS NOT A SHAREHOLDER. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING DEEMED DIVIDEND IN THE HANDS OF THE ASS ESSEE RECEIVED THE ACCUMULATED PROFITS UNDER THE GARB OF LOAN. THE CIT(A) FAILED TO APPRECIATE EXPLANATORY NOTES ON THE PROVISIONS OF F INANCE ACT, 1987 GIVEN IN CIRCULAR NO.495 DATED 22 -09- 1987 WHICH CLARIFIED THAT AMENDMENT TO SECTION BEEN BROUGHT TO PLUG THE LOOPHOLD OF THE CLOSELY HE LD COMPANY NOT DISTRIBUTING PROFITS TO SHAREHOLDERS BUT DIST RIBUTING THE ACCUMULATED PROFIT BY WAY OF ADVANCE OR LOAN TO A CONCERN IN WHICH S HAREHOLDER HAS SUBSTANTIAL INTEREST I.E. THE ASSESSEE COMPA NY IN THE PRESENT CASE. THE CIT(A) ERRED IN INTERPRETING THAT ASSESSEE COMPANY NOT BEING SHAREHOLDER OF LENDER COMPANY IS NOT COVERED U/S. 2(22)(E). ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED BY FAILING TO FOLLOW THE M ISCHIEF RULE OF INTERPRETATION AND DID NOT TAKE IN TO ACCOUNT THE RATIONALE BEHIND INTRODUCTION OF AMENDM ENT TO SECTION 2(22)(E) AND WRONGLY INTERPRETED THAT ASSESSEE COMPANY NOT B EING SHAREHOLDER OF LENDER COMPANY IS NOT COVERED U/S 2(22)(E). ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE AS CIVIL CONTRACTOR WAS ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 23/12/2011 BY LD. INCOME T AX OFFICER [AO] AT RS.101.52 LACS AFTER CERTAIN ADDITIONS AS A GAINST RETURNED INCOME OF RS.28.69 LACS FILED BY THE ASSESSEE ON 30 /09/2009. THE FOLLOWING ADDITIONS MADE BY L D. AO BUT DELETED BY FIRST APPELLATE AUTHORITY ARE THE SUBJECT MATTER OF PRESENT APPEAL BEFORE US: NATURE OF ADDITION AMOUNT (RS.) ENHANCEMENT OF NET PROFIT 55.58 LACS DEEMED DIVIDEND U/S 2(22)(E) 17.25 LACS ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 4/IT.116/RG.6(1)/11 -12 DATED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) MADE BY THE ASSESSING OFFICER TO THE NET PROFIT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN THE FIGURES ADOPTED FOR WORK IN PROGRES S SATISFACTORILY DURING THE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF DEEMED DIVIDEND MADE U/ S 2 (22) (E) OF THE ACT TO , HOLDING THAT DEEMED DIVIDEND WOULD BE ATTRACTED HANDS OF THE DIRECTORS BEING THE SHAREHOLDERS AND N OT IN THE HANDS OF ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING DEEMED DIVIDEND IN THE HANDS OF THE ASS ESSEE COMPANY WHICH RECEIVED THE ACCUMULATED PROFITS UNDER THE GARB OF LOAN. THE CIT(A) FAILED TO APPRECIATE EXPLANATORY NOTES ON THE PROVISIONS OF F INANCE ACT, 1987 GIVEN IN 1987 WHICH CLARIFIED THAT AMENDMENT TO SECTION BEEN BROUGHT TO PLUG THE LOOPHOLD OF THE CLOSELY HE LD COMPANY NOT DISTRIBUTING PROFITS TO SHAREHOLDERS BUT DIST RIBUTING THE ACCUMULATED PROFIT BY WAY OF ADVANCE OR LOAN TO A CONCERN IN WHICH S HAREHOLDER HAS NY IN THE PRESENT CASE. THE CIT(A) ERRED IN INTERPRETING THAT ASSESSEE COMPANY NOT BEING SHAREHOLDER OF ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED ISCHIEF RULE OF INTERPRETATION AND DID NOT TAKE IN TO ACCOUNT THE RATIONALE BEHIND INTRODUCTION OF AMENDM ENT TO SECTION 2(22)(E) AND WRONGLY INTERPRETED THAT ASSESSEE COMPANY NOT B EING SHAREHOLDER OF RESIDENT CORPORATE WAS ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 23/12/2011 BY LD. INCOME T AX OFFICER -6(1)(2) [AO] AT RS.101.52 LACS AFTER CERTAIN ADDITIONS AS A GAINST RETURNED INCOME OF RS.28.69 LACS FILED BY THE ASSESSEE ON 30 /09/2009. THE D. AO BUT DELETED BY FIRST APPELLATE AUTHORITY ARE THE SUBJECT MATTER OF PRESENT APPEAL BEFORE US: - 2.2 FACTS QUA THE SAME ARE THAT DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE COMPANY HAD AN ENTITY NAMELY M/S SRISHTI RAJ ENTERPRISES RESIDENTIAL BUILDING AT PLOT NO. 92, TILAK NAGAR, CHEMBUR, MUMBAI. PERUSAL OF FINANCIAL STATEMENTS REVEALED THAT THE A SSESSEE CAPITAL WORK IN PROGRESS OF RS.3 65.76 LACS AND THIS, THE TURNOVER REFLECTED BY THE DIRECTORS LACS. THE ASSESSEE SUBMITTED CONTRACT DETAILS AND C OPIES OF RUNNING ACCOUNT BILLS AGGREGATING TO RS.459.50 LACS RAISED BY THE ASSESSEE DURING THE YEAR , THE DETAILS OF WHICH HAVE BEEN EXTRACTED IN THE Q UANTUM ASSESSMENT ORDER. 2.3 IT TRANSPIRED THAT THE AFORESAID PAYMENTS FOR THE WORK DONE ASSESSEE IN HONBLE BOMBAY HIGH COURT. SUBSEQUENTLY, CERTAIN CONSENT TERMS WERE AGREED UPON BY THE PARTIES APPROVED BY THE COURT. AS GET AN AMOUNT OF RS.341 LACS CONTRACTEE. THE LD. AO NOTED THAT THE ASSESSEE, PRIOR TO 21/02/ 2009 HAD RECEIVED A SUM OF RS.116.95 LACS AND THEREFORE, THE GROSS AMOUNT RECEIVABLE UNDER THE CONTRACT WAS 457.95 LACS I.E. RS.116.95 LACS + RS.341 LACS. RESULTANTLY, THE DIFFERENTIAL AMOUNT O F RS.92.18 LACS [RS.457.95 LACS, BEING TURNOVER CALCULATED BY LD. A O LESS RS.365.76 LACS BEING CAPITAL WORK IN PROGRESS REFLECTED BY THE ASS ESSEE] WAS TREATED AS INCOME OF THE ASSESSEE. AGAINST THE SAME , EXPENDITURE OF RS.17.82 LACS AS CLAIMED BY THE ASSESSEE IN PROFIT & LOSS ACCOUNT WAS 3 THE SAME ARE THAT DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE COMPANY HAD CARRIED OUT SUB M/S SRISHTI RAJ ENTERPRISES FOR CONSTRUCTION OF PLOT NO. 92, TILAK NAGAR, CHEMBUR, MUMBAI. PERUSAL OF FINANCIAL STATEMENTS REVEALED THAT THE A SSESSEE CAPITAL WORK IN PROGRESS AT RS.402.34 LACS WHICH COMPRISED 65.76 LACS AND 10% PROFIT MARGIN OF RS.36.57 LACS. TURNOVER REFLECTED BY THE DIRECTORS IN THEIR REPORT WAS RS.422 LACS. THE ASSESSEE SUBMITTED CONTRACT DETAILS AND C OPIES OF RUNNING ACCOUNT BILLS AGGREGATING TO RS.459.50 LACS RAISED BY THE ASSESSEE , THE DETAILS OF WHICH HAVE BEEN EXTRACTED IN THE Q UANTUM IT TRANSPIRED THAT THE AFORESAID CONTRACTEE WAS NOT MAKING THE PAYMENTS FOR THE WORK DONE AND ACCORDINGLY A SUIT WAS FILED BY THE BOMBAY HIGH COURT. SUBSEQUENTLY, CERTAIN CONSENT UPON BY THE PARTIES ON 21/02/2009 WHICH WAS DULY APPROVED BY THE COURT. AS PE R THE CONSENT TERMS, THE ASSESSEE WAS TO GET AN AMOUNT OF RS.341 LACS A GAINST THE AMOUNT RECEIVABLE FROM THE THE LD. AO NOTED THAT THE ASSESSEE, PRIOR TO 21/02/ 2009 RS.116.95 LACS AND THEREFORE, THE GROSS AMOUNT RECEIVABLE UNDER THE CONTRACT WAS 457.95 LACS I.E. RS.116.95 LACS + RS.341 LACS. RESULTANTLY, THE DIFFERENTIAL AMOUNT O F RS.92.18 LACS [RS.457.95 LACS, BEING TURNOVER CALCULATED BY LD. A O LESS RS.365.76 BEING CAPITAL WORK IN PROGRESS REFLECTED BY THE ASS ESSEE] WAS TREATED AS INCOME OF THE ASSESSEE. AGAINST THE SAME , EXPENDITURE OF RS.17.82 LACS AS CLAIMED BY THE ASSESSEE IN PROFIT & LOSS ACCOUNT WAS ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 THE SAME ARE THAT DURING ASSESSMENT PROCEEDINGS, IT CARRIED OUT SUB -CONTRACT FOR FOR CONSTRUCTION OF PLOT NO. 92, TILAK NAGAR, CHEMBUR, MUMBAI. THE PERUSAL OF FINANCIAL STATEMENTS REVEALED THAT THE A SSESSEE REFLECTED AT RS.402.34 LACS WHICH COMPRISED -OFF OF COST 10% PROFIT MARGIN OF RS.36.57 LACS. AS AGAINST IN THEIR REPORT WAS RS.422 LACS. THE ASSESSEE SUBMITTED CONTRACT DETAILS AND C OPIES OF RUNNING ACCOUNT BILLS AGGREGATING TO RS.459.50 LACS RAISED BY THE ASSESSEE , THE DETAILS OF WHICH HAVE BEEN EXTRACTED IN THE Q UANTUM WAS NOT MAKING THE AND ACCORDINGLY A SUIT WAS FILED BY THE BOMBAY HIGH COURT. SUBSEQUENTLY, CERTAIN CONSENT ON 21/02/2009 WHICH WAS DULY R THE CONSENT TERMS, THE ASSESSEE WAS TO GAINST THE AMOUNT RECEIVABLE FROM THE THE LD. AO NOTED THAT THE ASSESSEE, PRIOR TO 21/02/ 2009 RS.116.95 LACS AND THEREFORE, THE GROSS AMOUNT RECEIVABLE UNDER THE CONTRACT WAS 457.95 LACS I.E. RS.116.95 LACS + RS.341 LACS. RESULTANTLY, THE DIFFERENTIAL AMOUNT O F RS.92.18 LACS [RS.457.95 LACS, BEING TURNOVER CALCULATED BY LD. A O LESS RS.365.76 BEING CAPITAL WORK IN PROGRESS REFLECTED BY THE ASS ESSEE] WAS TREATED AS INCOME OF THE ASSESSEE. AGAINST THE SAME , EXPENDITURE OF RS.17.82 LACS AS CLAIMED BY THE ASSESSEE IN PROFIT & LOSS ACCOUNT WAS ALLOWED AND BALANCE AMOUNT OF RS.74.37 LACS WAS TRE ATED THE ASSESSEE. IN OTHER WORDS, THE INCOME FROM THE CONTRACT WAS WO RKED OUT TO RS.74.37 LACS AS AGAINST RS.18.78 LACS REFLE CTED BY THE ASSESSEE. 2.4 THE SECOND ADDITION STEM RECEIVED UNSECURED LOAN OF RS.17.25 L ROADWAYS LIMITED. IT WAS NOTED THAT TWO INDIVIDUALS NAMELY GUPTA & SUMAN GUPTA MORE THAN 20% EACH IN THE ASSESSEE COMPANY MORE THAN 10% EACH IN THE LENDER COMPANY. THE AFORESAID FACT LED THE LD. AO TO INVOKE THE PROVISIONS OF SECTION 2(22)(E) AND ACCORDINGLY, THE STATED AMOUNT WAS ADDED AS ASSESSEE COMPANY. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH S LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/02/2013 WHE REIN THE ASSESSEE AGITATED THE IMPUGNED ADDITIONS BY WAY OF WRITTEN S UBMISSIONS WHICH HAVE ALREADY BEEN EXTRACTED IN THE IMPUGNED ORDER. THE ASSESSEE SUBMITTED THAT THERE WAS FROM THE CONTRACTEE EVEN AFTER THE CONSENT TERMS DA TED 21/02/2009 SINCE THE CONTRACTEE DID NOT HONOR THE CONS FURTHER SUIT IN CIVIL COURT FOR THE SAME AND THEREF ORE, THE INCOME DID NOT ACCRUE T O THE ASSESSEE AND AY. IN THE ALTERNATIVE, A PLEA WAS RAISED TO AMOUNT AS BUSINESS LOSS. THE AFORESAID EXPLANATION / PLEAS FOUND FAVOR WITH FIRST APPELLATE AUTHORITY WHO DELETED THE ADDI TION FOLLOWING OBSERVATIONS:- 4 ALLOWED AND BALANCE AMOUNT OF RS.74.37 LACS WAS TRE ATED IN OTHER WORDS, THE INCOME FROM THE CONTRACT WAS WO RKED OUT TO RS.74.37 LACS AS AGAINST RS.18.78 LACS REFLE CTED BY THE THE SECOND ADDITION STEM S FROM THE FACT THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.17.25 L ACS FROM AN ENTITY NAMELY IT WAS NOTED THAT TWO INDIVIDUALS NAMELY GUPTA & SUMAN GUPTA WHO HAD SUBSTANTIAL INTEREST I.E. IN THE ASSESSEE COMPANY HAD SHAREHOLDING OF IN THE LENDER COMPANY. THE AFORESAID FACT LED THE LD. AO TO INVOKE THE PROVISIONS OF SECTION 2(22)(E) AND ACCORDINGLY, THE STATED AMOUNT WAS ADDED AS DEEMED DIVIDEND IN THE HANDS OF THE AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH S LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/02/2013 WHE REIN THE ASSESSEE AGITATED THE IMPUGNED ADDITIONS BY WAY OF WRITTEN S UBMISSIONS WHICH HAVE ALREADY BEEN EXTRACTED IN THE IMPUGNED ORDER. THE ASSESSEE SUBMITTED THAT THERE WAS SIGNIFICANT UNCE RTAINTY IN REALIZATION OF DUES FROM THE CONTRACTEE EVEN AFTER THE CONSENT TERMS DA TED 21/02/2009 SINCE THE CONTRACTEE DID NOT HONOR THE CONS ENT TERMS AND THE ASSESSEE FILED FURTHER SUIT IN CIVIL COURT FOR THE SAME AND THEREF ORE, THE INCOME DID NOT O THE ASSESSEE AND THEREFORE, NOT RECOGNIZED DURING IMPUGNED AY. IN THE ALTERNATIVE, A PLEA WAS RAISED TO ALLOW THE NON AMOUNT AS BUSINESS LOSS. THE AFORESAID EXPLANATION / PLEAS FOUND FAVOR WITH FIRST APPELLATE AUTHORITY WHO DELETED THE ADDI TION ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 ALLOWED AND BALANCE AMOUNT OF RS.74.37 LACS WAS TRE ATED AS INCOME OF IN OTHER WORDS, THE INCOME FROM THE CONTRACT WAS WO RKED OUT TO RS.74.37 LACS AS AGAINST RS.18.78 LACS REFLE CTED BY THE FROM THE FACT THAT THE ASSESSEE ACS FROM AN ENTITY NAMELY BEST IT WAS NOTED THAT TWO INDIVIDUALS NAMELY JAI KUMAR SUBSTANTIAL INTEREST I.E. SHAREHOLDING OF HAD SHAREHOLDING OF IN THE LENDER COMPANY. THE AFORESAID FACT LED THE LD. AO TO INVOKE THE PROVISIONS OF SECTION 2(22)(E) AND ACCORDINGLY, THE IN THE HANDS OF THE AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH S UCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/02/2013 WHE REIN THE ASSESSEE AGITATED THE IMPUGNED ADDITIONS BY WAY OF WRITTEN S UBMISSIONS WHICH HAVE ALREADY BEEN EXTRACTED IN THE IMPUGNED ORDER. THE ASSESSEE RTAINTY IN REALIZATION OF DUES FROM THE CONTRACTEE EVEN AFTER THE CONSENT TERMS DA TED 21/02/2009 SINCE ENT TERMS AND THE ASSESSEE FILED FURTHER SUIT IN CIVIL COURT FOR THE SAME AND THEREF ORE, THE INCOME DID NOT NOT RECOGNIZED DURING IMPUGNED ALLOW THE NON -RECOVERED AMOUNT AS BUSINESS LOSS. THE AFORESAID EXPLANATION / PLEAS FOUND FAVOR WITH FIRST APPELLATE AUTHORITY WHO DELETED THE ADDI TION S BY MAKING 3.8 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. COU NSEL OF THE APPELLANT WELL AS THE FACTS OF THE CASE. THE APPELLANT HAS AR GUED THAT THE CONTRACTEE DISPUTED THE WORKMANSHIP OF THE APPELLANT AND THUS REJECTED THE BILLS RAISED UPON IT. THIS FACT IS NEITHER CONTROVERTED NOR DISPUTED BY THE ASSESSING OFFICER. ACCORDINGLY, THE BILLS HAVE NOT BEEN RECOGNISED DUE TO UNCERTAINTY RELATIN G TO THE REALISATION OF THE BILLS. A SUIT FOR RECOVERY WAS ALSO FILED FOR RECOVERY OF TH ESE BILLS AND EVENTUALLY, HON'BLE BOMBAY HIGH COURT, ON THE BASIS OF THE CONSENT TERMS REACH ED BETWEEN THE APPELLANT AND CONTRATEES, PASSED AN ORDER ON 21 IS ELIGIBLE TO AN AMOUNT OF RS.4,57 95,049/ FROM THE CONTRACTEES. 3.9 HOWEVER, SINCE THE CONTRA HAD TO FILE A SUIT AGAINST THE CONTRACTEES FOR NOT HONOURING THE CONSENT TERMS REACHED BETWEEN THEM. FURTHER, THE APPELLANT HAS AL SO POINTED OUT THAT IT BEING A CONTRACTO R HAS TO FOLLOW PERCENTAGE COMPLETION METHOD AS PRE SCRIBED IN ACCOUNTING STANDARD - 7 'CONSTRUCTION CONTRACTS' ISSUED BY ICAL PRESCRIBE D BY SECTION 145 OF THE INCOME TAX ACT, 1961. THE AO HAS NOT DISPUTED T HIS FACT OR THE APPLICATION OF SAID METHOD ALSO. 3. 10 THE APPELLANT HAS THUS ARGUED THAT THE SAID INCO ME HAD NOT YET ACCRUED AND THUS IN ACCORDANCE WITH THE CONCEPT OF PRUDENCE UND ER ACCOUNTING STANDARD PRESCRIBED UNDER SECTION 145, THE SAID INCOME CANNO T BE RECOGNISED. THE ASSESSING OFFICER HAS ALSO N APPELLANT HAS FURTHER ARGUED THAT IT HAS BEEN FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING IN THE PRECEDING YEAR AS WELL AS IN THE CURRENT YEAR AND ITS BOOKS ARE AUDITED. THUS THERE IS NO QUESTION OF CHAN ARGUED BY THE APPELLANT THAT A MERE MENTION IN THE DIRECTORS REPORT TO THE SHAREHOLDERS OF A TURNOVER OF RS 422 LAKHS DOES NOT SUBSTANTIATE RECOGNITION OF THE SAID INCOME. IT IS WORTH NOTING HERE THAT THE AO HA S C WORK-IN- PROGRESS OF RS.4,57,95,049/ 3.11 I AM INCLINED TO AGREE WITH THE CONTENTION OF THE A PPELLANT THAT ONLY THE INCOME, WHICH ACCRUES OR IS DEEMED TO ACCRUE DURING THE YEAR UNDER CAN BE, INCLUDED IN THE TOTAL INCOME OF THE APPELLA NT. THE APPELLANT HAS, IN THIS REGARD CITED VARIOUS DECISIONS INCLUDING THE JUDGME NT OF THE HON'BLE PATNA HIGH COURT IN THE CASE OF CIT V/S. CHANCHANI BROTHERS (C ONTRACTORS) PVT. LTD (SUPRA). THESE DECISIONS SUPPORT THE ARGUMENT OF THE APPELLA NT THAT THE ADDITIONS COULD NOT BE MADE ONLY ON THE BASIS OF THE DISPUTED BILLS AND THE INCOME CAN BE DEEMED TO ACCRUE TO THE APPELLANT ONLY WHEN SUCH DISPUTED BIL LS ARE PAID BY THE CONTRACTEE. 3.12 IN THE CASE OF CIT V/S. DHAMPUR SUGAR MILLS LTD (NO. 1 ) (SUPRA), HON ALLAHABAD HIGH COURT HELD THAT SINCE THE RIGHT TO R ECEIVE THE PAYMENT HAD BEEN IN DISPUTE, IT THEREFORE DOES NOT FORM PART OF THE TRA DING RECEIPT OF THE ASSESSEE. IN THE CASE OF CIT V/S. U.P. FINANCIAL CORPORATION (SUPRA), THE ALLAHABAD H IGH COURT HELD THAT WHERE SUIT FOR RECOVERY OF INTEREST ACCRUE TO ASSESSEE DURING RELEVANT ASSESSMENT YEARS . IN ADDITION TO THIS, THE HONBLE BANGALORE TRIBUN HELD THAT SO LONG AS THE INCOME CANNOT BE SAID TO HAVE ACCRUED W ITHIN THE MEANING OF SECTION 5 WHICH IS THE CHARGING SECTION, SECTIONS 28 TO 44D COMPUTING THE INCOME UNDER THE HEAD 'PROFITS AND GAINS BE BROUGHT INTO OPERATION.' 5 HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. COU NSEL OF THE APPELLANT WELL AS THE FACTS OF THE CASE. THE APPELLANT HAS AR GUED THAT THE CONTRACTEE DISPUTED THE WORKMANSHIP OF THE APPELLANT AND THUS REJECTED THE BILLS RAISED UPON IT. THIS FACT CONTROVERTED NOR DISPUTED BY THE ASSESSING OFFICER. ACCORDINGLY, THE BILLS HAVE NOT BEEN RECOGNISED DUE TO UNCERTAINTY RELATIN G TO THE REALISATION OF THE BILLS. A SUIT FOR RECOVERY WAS ALSO FILED FOR RECOVERY OF TH ESE BILLS AND EVENTUALLY, HON'BLE HIGH COURT, ON THE BASIS OF THE CONSENT TERMS REACH ED BETWEEN THE APPELLANT AND CONTRATEES, PASSED AN ORDER ON 21 . 02.2009 HOLDING THAT THE APPELLANT IS ELIGIBLE TO AN AMOUNT OF RS.4,57 95,049/ - (I.E. RS. 3,41,00,000 + RS.1,16,95,049/ 3.9 HOWEVER, SINCE THE CONTRA C TEES DID NOT HONOUR THE SAME, THE APPELLANT ALSO HAD TO FILE A SUIT AGAINST THE CONTRACTEES FOR NOT HONOURING THE CONSENT TERMS REACHED BETWEEN THEM. FURTHER, THE APPELLANT HAS AL SO POINTED OUT THAT IT BEING A R HAS TO FOLLOW PERCENTAGE COMPLETION METHOD AS PRE SCRIBED IN ACCOUNTING 7 'CONSTRUCTION CONTRACTS' ISSUED BY ICAL PRESCRIBE D BY SECTION 145 OF THE INCOME TAX ACT, 1961. THE AO HAS NOT DISPUTED T HIS FACT OR THE APPLICATION OF 10 THE APPELLANT HAS THUS ARGUED THAT THE SAID INCO ME HAD NOT YET ACCRUED AND THUS IN ACCORDANCE WITH THE CONCEPT OF PRUDENCE UND ER ACCOUNTING STANDARD PRESCRIBED UNDER SECTION 145, THE SAID INCOME CANNO T BE RECOGNISED. THE ASSESSING OFFICER HAS ALSO N OT REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT, THE APPELLANT HAS FURTHER ARGUED THAT IT HAS BEEN FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING IN THE PRECEDING YEAR AS WELL AS IN THE CURRENT YEAR AND ITS BOOKS ARE AUDITED. THUS THERE IS NO QUESTION OF CHAN GE IN THE METHOD OF ACCOUNTING. IT IS ALSO ARGUED BY THE APPELLANT THAT A MERE MENTION IN THE DIRECTORS REPORT TO THE SHAREHOLDERS OF A TURNOVER OF RS 422 LAKHS DOES NOT SUBSTANTIATE RECOGNITION OF THE SAID INCOME. IT IS WORTH NOTING HERE THAT THE AO HA S C OMPUTED INCOME BASED ON THE PROGRESS OF RS.4,57,95,049/ - AND HAS COMPUTED INCOME ON THE SAID FIGURE. I AM INCLINED TO AGREE WITH THE CONTENTION OF THE A PPELLANT THAT ONLY THE INCOME, WHICH ACCRUES OR IS DEEMED TO ACCRUE DURING THE YEAR UNDER CAN BE, INCLUDED IN THE TOTAL INCOME OF THE APPELLA NT. THE APPELLANT HAS, IN THIS REGARD CITED VARIOUS DECISIONS INCLUDING THE JUDGME NT OF THE HON'BLE PATNA HIGH COURT IN THE CASE OF CIT V/S. CHANCHANI BROTHERS (C ONTRACTORS) PVT. LTD (SUPRA). THESE DECISIONS SUPPORT THE ARGUMENT OF THE APPELLA NT THAT THE ADDITIONS COULD NOT BE MADE ONLY ON THE BASIS OF THE DISPUTED BILLS AND THE INCOME CAN BE DEEMED TO ACCRUE TO THE APPELLANT ONLY WHEN SUCH DISPUTED BIL LS ARE PAID BY THE CONTRACTEE. THE CASE OF CIT V/S. DHAMPUR SUGAR MILLS LTD (NO. 1 ) (SUPRA), HON ALLAHABAD HIGH COURT HELD THAT SINCE THE RIGHT TO R ECEIVE THE PAYMENT HAD BEEN IN DISPUTE, IT THEREFORE DOES NOT FORM PART OF THE TRA DING RECEIPT OF THE ASSESSEE. IN THE U.P. FINANCIAL CORPORATION (SUPRA), THE ALLAHABAD H IGH COURT HELD THAT WHERE SUIT FOR RECOVERY OF INTEREST - BEARING LOANS WERE PENDING, INTEREST DOES NOT ACCRUE TO ASSESSEE DURING RELEVANT ASSESSMENT YEARS . IN ADDITION TO THIS, THE HONBLE BANGALORE TRIBUN AL IN THE CASE OF CANARA BANK VS. JOINT CIT (SUPRA) HAS LONG AS THE INCOME CANNOT BE SAID TO HAVE ACCRUED W ITHIN THE MEANING OF SECTION 5 WHICH IS THE CHARGING SECTION, SECTIONS 28 TO 44D INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS' CANNOT BE BROUGHT INTO OPERATION.' ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. COU NSEL OF THE APPELLANT WELL AS THE FACTS OF THE CASE. THE APPELLANT HAS AR GUED THAT THE CONTRACTEE DISPUTED THE WORKMANSHIP OF THE APPELLANT AND THUS REJECTED THE BILLS RAISED UPON IT. THIS FACT CONTROVERTED NOR DISPUTED BY THE ASSESSING OFFICER. ACCORDINGLY, THE BILLS HAVE NOT BEEN RECOGNISED DUE TO UNCERTAINTY RELATIN G TO THE REALISATION OF THE BILLS. A SUIT FOR RECOVERY WAS ALSO FILED FOR RECOVERY OF TH ESE BILLS AND EVENTUALLY, HON'BLE HIGH COURT, ON THE BASIS OF THE CONSENT TERMS REACH ED BETWEEN THE 02.2009 HOLDING THAT THE APPELLANT (I.E. RS. 3,41,00,000 + RS.1,16,95,049/ -) TEES DID NOT HONOUR THE SAME, THE APPELLANT ALSO HAD TO FILE A SUIT AGAINST THE CONTRACTEES FOR NOT HONOURING THE CONSENT TERMS REACHED BETWEEN THEM. FURTHER, THE APPELLANT HAS AL SO POINTED OUT THAT IT BEING A R HAS TO FOLLOW PERCENTAGE COMPLETION METHOD AS PRE SCRIBED IN ACCOUNTING 7 'CONSTRUCTION CONTRACTS' ISSUED BY ICAL PRESCRIBE D BY SECTION 145 OF THE INCOME TAX ACT, 1961. THE AO HAS NOT DISPUTED T HIS FACT OR THE APPLICATION OF 10 THE APPELLANT HAS THUS ARGUED THAT THE SAID INCO ME HAD NOT YET ACCRUED AND THUS IN ACCORDANCE WITH THE CONCEPT OF PRUDENCE UND ER ACCOUNTING STANDARD - 1 PRESCRIBED UNDER SECTION 145, THE SAID INCOME CANNO T BE RECOGNISED. THE OT REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT, THE APPELLANT HAS FURTHER ARGUED THAT IT HAS BEEN FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING IN THE PRECEDING YEAR AS WELL AS IN THE CURRENT YEAR AND ITS BOOKS ARE GE IN THE METHOD OF ACCOUNTING. IT IS ALSO ARGUED BY THE APPELLANT THAT A MERE MENTION IN THE DIRECTORS REPORT TO THE SHAREHOLDERS OF A TURNOVER OF RS 422 LAKHS DOES NOT SUBSTANTIATE RECOGNITION OF THE OMPUTED INCOME BASED ON THE AND HAS COMPUTED INCOME ON THE SAID FIGURE. I AM INCLINED TO AGREE WITH THE CONTENTION OF THE A PPELLANT THAT ONLY THE INCOME, WHICH ACCRUES OR IS DEEMED TO ACCRUE DURING THE YEAR UNDER CONSIDERATION CAN BE, INCLUDED IN THE TOTAL INCOME OF THE APPELLA NT. THE APPELLANT HAS, IN THIS REGARD CITED VARIOUS DECISIONS INCLUDING THE JUDGME NT OF THE HON'BLE PATNA HIGH COURT IN THE CASE OF CIT V/S. CHANCHANI BROTHERS (C ONTRACTORS) PVT. LTD (SUPRA). THESE DECISIONS SUPPORT THE ARGUMENT OF THE APPELLA NT THAT THE ADDITIONS COULD NOT BE MADE ONLY ON THE BASIS OF THE DISPUTED BILLS AND THE INCOME CAN BE DEEMED TO ACCRUE TO THE APPELLANT ONLY WHEN SUCH DISPUTED BIL LS ARE PAID BY THE CONTRACTEE. THE CASE OF CIT V/S. DHAMPUR SUGAR MILLS LTD (NO. 1 ) (SUPRA), HON BLE ALLAHABAD HIGH COURT HELD THAT SINCE THE RIGHT TO R ECEIVE THE PAYMENT HAD BEEN IN DISPUTE, IT THEREFORE DOES NOT FORM PART OF THE TRA DING RECEIPT OF THE ASSESSEE. IN THE U.P. FINANCIAL CORPORATION (SUPRA), THE ALLAHABAD H IGH COURT HELD BEARING LOANS WERE PENDING, INTEREST DOES NOT ACCRUE TO ASSESSEE DURING RELEVANT ASSESSMENT YEARS . IN ADDITION TO THIS, THE AL IN THE CASE OF CANARA BANK VS. JOINT CIT (SUPRA) HAS LONG AS THE INCOME CANNOT BE SAID TO HAVE ACCRUED W ITHIN THE MEANING OF SECTION 5 WHICH IS THE CHARGING SECTION, SECTIONS 28 TO 44D OF BUSINESS' CANNOT 3.13 SINCE THE INCOME BEING IN DISPUTE, CANNOT BE SAID T O HAVE ACCRUED TO THE APPELLANT U/S 5 OF THE ACT, DUE TO PREVALENT SITUAT ION AS DISCUSSED ABOVE, SAME CANNOT BE ASSESSED IN THE YEAR UNDER CONSIDERATIO IS HENCE DELETED. 3.14 THE APPELLANT HAS MADE AN ALTERNATIVE PLEA TO ALLOW THE UNRECOVERABLE AMOUNT AS BUSINESS LOSS. IN VIEW OF MY DECISION ABOVE, THE RE IS NO NEED TO ADJUDICATE THE SAME. T HE SECOND ADDITION OF RS.17.25 L MAKING FOLLOWING OBSERVATIONS: 4.5 IT MAY BE SEEN FROM THE ABOVE THAT FOR A PAYMEN T OF AN ADVANCE OR LOAN TO BE DEEMED AS DIVIDEND IN THE HANDS OF THE APPELLANT, T HE APPELLANT MUST BE A SHAREHOLDER AND THAT TOO A BENEFICIAL IS NOT THE FACT IN THE PRESENT CASE. FURTHERMORE, I N THE ALTERNATIVE, THE PAYMENT BY A COMPANY COULD HAVE ALSO BEEN DEEMED TO BE DIVIDEND IN THE HANDS OF 'A PERSON'' WHO IS A SHAREHOLDER AND A BENEFICIAL OWNER PAYMENT, IT THE PAYMENT WAS MADE TO ANY CONCERN IN WHICH SUCH PERSON/SHAREHOLDER WAS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST. THIS IS ALSO NOT THE FACT IN THE PRESENT CASE, FOR THE PAYMENT TO APPELLANT TO BE ASSESSED AS DEEMED DIVIDEND IN THE HANDS OF THE APPELLANT BECAUSE THE APPELLANT IS NEITHER A SHAREHOLDER, COMPANY MAKING PAYMENT (I.E. BEST ROADWAYS LTD). OF THE PR OVISIONS OF SECTION 2(22)(E) HAS BEEN MADE BY THE I TAT MUMBAI; IN THE CASE OF BHAUMIK COLOURS (P) LTD (SUPRA). THEREFORE, IT IS EVIDENT THAT THE ADDITION OF RS,17,25,000/- U/S. 2(22)(E) OF THE ACT, IN THE HANDS OF THE APPEL LANT CANNOT BE SUSTAINED. SAME IS HEREBY IS DELETED. AGGRIEVED BY THE STAND OF LD. CIT(A), THE REVENUE I S IN FURTHER APPEAL BEFORE US. 4. RIVAL CONTENTIONS ESTIMATION OF NET PROFIT IS CONCERNED, WE FIND THAT IT IS UNDISPUTED FACT THAT THE ASSESSE E WAS HAVING DIFFICULTY IN REALIZING THE DUES FROM THE AFORESAID CONTRACTEE WHICH IS EVIDENT FROM CONSENT TERMS DATED 21/02/2009 AS APPROVED BY HONBLE BOMBAY HIGH COURT PETITION FILED BY THE ASSESSEE AGAINST THE AFORESAI D ENTITY HONOU RING THE TERMS OF THE CONSENT TERMS BY THE CONTRACT EE GIVE CREDENCE TO THE ARGUMENTS 6 SINCE THE INCOME BEING IN DISPUTE, CANNOT BE SAID T O HAVE ACCRUED TO THE APPELLANT U/S 5 OF THE ACT, DUE TO PREVALENT SITUAT ION AS DISCUSSED ABOVE, SAME CANNOT BE ASSESSED IN THE YEAR UNDER CONSIDERATIO N. THE ADDITION OF RS.55,58,394/ 3.14 THE APPELLANT HAS MADE AN ALTERNATIVE PLEA TO ALLOW THE UNRECOVERABLE AMOUNT AS BUSINESS LOSS. IN VIEW OF MY DECISION ABOVE, THE RE IS NO NEED TO ADJUDICATE THE HE SECOND ADDITION OF RS.17.25 L ACS U/S 2(22)(E) WAS DELETED BY MAKING FOLLOWING OBSERVATIONS: - 4.5 IT MAY BE SEEN FROM THE ABOVE THAT FOR A PAYMEN T OF AN ADVANCE OR LOAN TO BE DEEMED AS DIVIDEND IN THE HANDS OF THE APPELLANT, T HE APPELLANT MUST BE A SHAREHOLDER AND THAT TOO A BENEFICIAL OWNER OF SHARES IN THE LENDING COMPANY, WHICH IS NOT THE FACT IN THE PRESENT CASE. FURTHERMORE, I N THE ALTERNATIVE, THE PAYMENT BY A COMPANY COULD HAVE ALSO BEEN DEEMED TO BE DIVIDEND IN THE HANDS OF 'A PERSON'' WHO IS A SHAREHOLDER AND A BENEFICIAL OWNER OF SHARES IN THE SAID COMPANY MAKING PAYMENT, IT THE PAYMENT WAS MADE TO ANY CONCERN IN WHICH SUCH PERSON/SHAREHOLDER WAS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL THIS IS ALSO NOT THE FACT IN THE PRESENT CASE, FOR THE PAYMENT TO APPELLANT TO BE ASSESSED AS DEEMED DIVIDEND IN THE HANDS OF THE APPELLANT BECAUSE THE APPELLANT IS NEITHER A SHAREHOLDER, NOR BENEFICIAL OWNER OF SHARES IN THE SAID COMPANY MAKING PAYMENT (I.E. BEST ROADWAYS LTD). THE VERY SAME INTERPRETATION OVISIONS OF SECTION 2(22)(E) HAS BEEN MADE BY THE I TAT MUMBAI; IN THE CASE OF BHAUMIK COLOURS (P) LTD (SUPRA). THEREFORE, IT IS EVIDENT THAT THE ADDITION OF U/S. 2(22)(E) OF THE ACT, IN THE HANDS OF THE APPEL LANT CANNOT BE HEREBY IS DELETED. AGGRIEVED BY THE STAND OF LD. CIT(A), THE REVENUE I S IN FURTHER APPEAL HAVE BEEN HEARD AND PERUSED. ESTIMATION OF NET PROFIT IS CONCERNED, WE FIND THAT IT IS UNDISPUTED FACT THAT E WAS HAVING DIFFICULTY IN REALIZING THE DUES FROM THE AFORESAID CONTRACTEE WHICH IS EVIDENT FROM CONSENT TERMS DATED AS APPROVED BY HONBLE BOMBAY HIGH COURT PETITION FILED BY THE ASSESSEE AGAINST THE AFORESAI D ENTITY RING THE TERMS OF THE CONSENT TERMS BY THE CONTRACT EE GIVE CREDENCE TO THE ARGUMENTS OF LD. AR THAT THERE WAS SIGNIFICANT ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 SINCE THE INCOME BEING IN DISPUTE, CANNOT BE SAID T O HAVE ACCRUED TO THE APPELLANT U/S 5 OF THE ACT, DUE TO PREVALENT SITUAT ION AS DISCUSSED ABOVE, SAME N. THE ADDITION OF RS.55,58,394/ - 3.14 THE APPELLANT HAS MADE AN ALTERNATIVE PLEA TO ALLOW THE UNRECOVERABLE AMOUNT AS BUSINESS LOSS. IN VIEW OF MY DECISION ABOVE, THE RE IS NO NEED TO ADJUDICATE THE ACS U/S 2(22)(E) WAS DELETED BY 4.5 IT MAY BE SEEN FROM THE ABOVE THAT FOR A PAYMEN T OF AN ADVANCE OR LOAN TO BE DEEMED AS DIVIDEND IN THE HANDS OF THE APPELLANT, T HE APPELLANT MUST BE A OWNER OF SHARES IN THE LENDING COMPANY, WHICH IS NOT THE FACT IN THE PRESENT CASE. FURTHERMORE, I N THE ALTERNATIVE, THE PAYMENT BY A COMPANY COULD HAVE ALSO BEEN DEEMED TO BE DIVIDEND IN THE HANDS OF 'A PERSON'' OF SHARES IN THE SAID COMPANY MAKING PAYMENT, IT THE PAYMENT WAS MADE TO ANY CONCERN IN WHICH SUCH PERSON/SHAREHOLDER WAS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL THIS IS ALSO NOT THE FACT IN THE PRESENT CASE, FOR THE PAYMENT TO THE APPELLANT TO BE ASSESSED AS DEEMED DIVIDEND IN THE HANDS OF THE APPELLANT BECAUSE NOR BENEFICIAL OWNER OF SHARES IN THE SAID THE VERY SAME INTERPRETATION OVISIONS OF SECTION 2(22)(E) HAS BEEN MADE BY THE I TAT MUMBAI; IN THE CASE OF BHAUMIK COLOURS (P) LTD (SUPRA). THEREFORE, IT IS EVIDENT THAT THE ADDITION OF U/S. 2(22)(E) OF THE ACT, IN THE HANDS OF THE APPEL LANT CANNOT BE AGGRIEVED BY THE STAND OF LD. CIT(A), THE REVENUE I S IN FURTHER APPEAL HAVE BEEN HEARD AND PERUSED. SO FAR AS THE ESTIMATION OF NET PROFIT IS CONCERNED, WE FIND THAT IT IS UNDISPUTED FACT THAT E WAS HAVING DIFFICULTY IN REALIZING THE DUES FROM THE AFORESAID CONTRACTEE WHICH IS EVIDENT FROM CONSENT TERMS DATED AS APPROVED BY HONBLE BOMBAY HIGH COURT AND CONTEMPT PETITION FILED BY THE ASSESSEE AGAINST THE AFORESAI D ENTITY FOR NOT RING THE TERMS OF THE CONSENT TERMS BY THE CONTRACT EE . THESE FACTS THAT THERE WAS SIGNIFICANT UNCERTAINTY AS TO THE RECOVERY OF THE T HE CIRCUMSTANCES, COULD NOT BE RECOGNIZE NO DEFECTS HAVE BEEN FOUND IN THE BOOKS AND THEREFO RE, THE ACTION OF THE ASSESSEE IN ESTIMAT ING THE INCOME @ COULD NOT BE SAID TO BE WITHOUT INFIRMITY IN TH E ORDER OF LD. FIRST APPELLATE AUTHORITY IN DELETIN G THE ESTIMATED ADDITIONS AS MADE BY LD. AO. 5. SO FAR AS THE ADDITION CONCERNED, NOTHING ON RECORD SUGGEST THAT THE ASSES SEE COMPANY WAS REGISTERED SHAREHOLDER OR BENEFI IN ANY MANNER. THE FACT THAT EMERGES ARE THAT BOTH THE ENTITIES I.E. LENDER AND THE ASSESSEE COMPANY HAS CERTAIN INDIVIDUALS HOLD THRESHOLD SHAREHOLDING SECTION 2(22)(E). HOWEVER, SHAREHOLDING IN THE LENDER COMPANY AS A BENEFICIAL SHAREHOLDER SPECIAL BENCH OF MUMBAI TRIBUNAL (P) LTD. [118 ITD 1] AS RELIED UPON BY FIRST APPELLATE AUTHORITY BECOMES SQUARELY APPLICABLE. FURTHER, WE FIND THAT AFORESAID RATIO HAS ALREADY ATTAINED FINALITY IN THE WAKE OF DECISION OF HONBL E APEX COURT RENDERED IN CIT VS. MADHU R HOUSING & DEVELOPMENT CO. [2017 WHICH HAS UPHELD THE VIEW OF HONBLE DELHI HIGH COU RT RENDERED IN VS. ANKITECH P. LTD. [11 TAXMANN.COM 100] AFORESAID VIEW OF THE SPECI DOES NOT EXTEND THE MEANING OF THE TE 7 THE RECOVERY OF THE FINAL AMOUNT AND THE INCOME, UNDER HE CIRCUMSTANCES, COULD NOT BE RECOGNIZE D WITH REASONABLE CERTAINTY. NO DEFECTS HAVE BEEN FOUND IN THE BOOKS AND THEREFO RE, THE ACTION OF THE ING THE INCOME @ 10% OF CAPITAL WORK IN PROGRESS COULD NOT BE SAID TO BE WITHOUT STRONG FOUNDATION. THEREFORE, WE FIND NO E ORDER OF LD. FIRST APPELLATE AUTHORITY IN DELETIN G THE ESTIMATED ADDITIONS AS MADE BY LD. AO. SO FAR AS THE ADDITION OF DEEMED DIVIDEND CONCERNED, NOTHING ON RECORD SUGGEST THAT THE ASSES SEE COMPANY WAS REGISTERED SHAREHOLDER OR BENEFI CIAL SHAREHOLDER OF THE LENDER COMPANY, IN ANY MANNER. THE FACT THAT EMERGES ARE THAT BOTH THE ENTITIES I.E. LENDER AND THE ASSESSEE COMPANY HAS CERTAIN INDIVIDUALS SHAREHOLDERS SHAREHOLDING IN THE TWO ENTITIES WITHIN THE MEANING OF SECTION 2(22)(E). HOWEVER, THE ASSESSEE ITSELF DOES SHAREHOLDING IN THE LENDER COMPANY EITHER AS REGISTERED SHAREHOLDER OR BENEFICIAL SHAREHOLDER . THIS BEING THE CASE, THE RATIO OF OF MUMBAI TRIBUNAL RENDERED IN ACIT VS AS RELIED UPON BY FIRST APPELLATE AUTHORITY BECOMES FURTHER, WE FIND THAT AFORESAID RATIO HAS ALREADY ATTAINED FINALITY IN THE WAKE OF DECISION OF HONBL E APEX COURT RENDERED R HOUSING & DEVELOPMENT CO. [2017 - TIOL WHICH HAS UPHELD THE VIEW OF HONBLE DELHI HIGH COU RT RENDERED IN VS. ANKITECH P. LTD. [11 TAXMANN.COM 100] WHICH H AFORESAID VIEW OF THE SPECI AL BENCH OF THE TRIBUNAL THAT SECTION DOES NOT EXTEND THE MEANING OF THE TE RM SHAREHOLDERS AND THAT THE LOAN ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 THE INCOME, UNDER WITH REASONABLE CERTAINTY. NO DEFECTS HAVE BEEN FOUND IN THE BOOKS AND THEREFO RE, THE ACTION OF THE CAPITAL WORK IN PROGRESS THEREFORE, WE FIND NO E ORDER OF LD. FIRST APPELLATE AUTHORITY IN DELETIN G THE DEEMED DIVIDEND U/S 2(22)(E) IS CONCERNED, NOTHING ON RECORD SUGGEST THAT THE ASSES SEE COMPANY WAS OF THE LENDER COMPANY, IN ANY MANNER. THE FACT THAT EMERGES ARE THAT BOTH THE ENTITIES I.E. LENDER SHAREHOLDERS WHO WITHIN THE MEANING OF DOES NOT HOLD ANY EITHER AS REGISTERED SHAREHOLDER OR . THIS BEING THE CASE, THE RATIO OF DECISION OF ACIT VS BHAUMIK COLOR AS RELIED UPON BY FIRST APPELLATE AUTHORITY BECOMES FURTHER, WE FIND THAT AFORESAID RATIO HAS ALREADY ATTAINED FINALITY IN THE WAKE OF DECISION OF HONBL E APEX COURT RENDERED TIOL -398-SC-IT] WHICH HAS UPHELD THE VIEW OF HONBLE DELHI HIGH COU RT RENDERED IN CIT H AS AFFIRMED THE AL BENCH OF THE TRIBUNAL THAT SECTION 2(22)(E) AND THAT THE LOAN SO GRANTED COULD NOT BE TAXED AS DIVIDEN RECIPIENT COMPANY WHO WAS NOT THE 6. THE DECISION OF HONBLE APEX COU VS CIT [2017-TIOL-02- SC CONSIDERED BY HONBLE MADRAS HIGH COURT CIT VS. ENNORE CARGO CONTAINER TERMINAL P 695-SC-MAD-IT] WHEREIN HONBLE COURT HAS DISTINGUISHED THE SAME BY OBSERVING AS UNDER:- 4.2 THE REVENUE SEEKS TO ASSESS AS INCOME THE CAPITAL A DVANCE RECEIVED BY THE ASSESSEE- COMPANY FROM INDEV LOGISTICS PVT. LTD. ON THE GROUN D THAT IT IS DEEMED DIVIDEND RECEIVED BY THE REGISTERED SHAREHOLDER. FOR THIS PURPOSE, THE PROVI SIONS OF SECTION 2(22)(E) OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT') IS SOUGHT TO BE RELIED UPON. THE TRIBUNAL HAS REJECTED THE SAID CONTENTION OF THE RE VENUE GROUND THAT DEEMED DIVIDEND CAN ONLY BE ASSESSED IN THE HANDS OF THE REGISTERED SHAREHOLDER FOR WHOSE BENEFIT THE MONEY WAS ADVANCED. 4.3 AS INDICATED ABOVE, THERE IS NO DISPUTE THAT THE AS SESSEE DID RECEIVE CAPITAL ADVANCE FROM INDE COMMON SHAREHOLDERS BOTH IN THE ASSESSEE PVT. LTD. THEREFORE, QUITE CORRECTLY, AS NOTED BY T HE TRIBUNAL, THOUGH, THE ADVANCE RECEIVED BY THE ASSESSEE COMPANY MAY HAVE THE AFOREMENTIONED REGISTERED SHAREHOLDERS, IT COUL D ONLY BE ASSESSED IN THE HANDS OF THOSE REGISTERED SHAREHOLDERS AND NOT IN T HE HANDS OF THE ASSESSEE COMPANY. 4.4 IN OUR VIEW, ON A PLAIN READING OF THE PROVISIONS O F SECTION 2 ( ACT, NO OTHER CONCLUSION CAN BE REACHED. AS A MATTE R OF FACT, A DIVISION BENCH OF THIS COURT, IN THE CASE OF SERVICES P. LTD. , CONCLUSION. 5. MR. SENTHIL KUMAR, HOWEVER, CONTENDS TO THE CONTRAR Y AND RELIES UPON THE JUDGMENT OF THE SUPREME COURT IN INCOME-TAX, KOLKATA 5.1 IN OUR VIEW, THE QUESTION OF LAW CONSIDERED BY THE SUPREME COURT IN THE CASE OF GOPAL AND SONS PRESENT MATTER. THE QUESTION OF LAW WHICH THE SUPRE ME COURT WAS CALLED UPON TO CONSIDER WAS WHETHER LOANS AND ADVANCES REC EIVED BY A HUF COULD BE DEEMED AS A DIVIDEND WITHIN THE MEANING OF SECTI ON 2(22)(E) OF THE ACT. THE ASSESSEE IN THAT MADE TO THE HUF. THE SHARES WERE HELD BY THE KARTA OF THE HUF. IT IS IN THIS CONTEXT THAT THE SUPREME COURT CAME TO THE CONCLUSI ON THAT HUF WAS THE BENEFICIAL SHAREHOLDER. 8 SO GRANTED COULD NOT BE TAXED AS DIVIDEN D INCOME IN THE HANDS OF THE WAS NOT THE SHAREHOLDER OF TH E LENDER COMPANY. THE DECISION OF HONBLE APEX COU RT RENDERED IN GOPAL SONS & H SC -IT] AS RELIED UPON BY REVENUE HAS DULY BEEN CONSIDERED BY HONBLE MADRAS HIGH COURT IN ITS DECISION R CIT VS. ENNORE CARGO CONTAINER TERMINAL P RIVATE LIMITED WHEREIN HONBLE COURT HAS DISTINGUISHED THE SAME BY THE REVENUE SEEKS TO ASSESS AS INCOME THE CAPITAL A DVANCE RECEIVED BY THE COMPANY FROM INDEV LOGISTICS PVT. LTD. ON THE GROUN D THAT IT IS DEEMED DIVIDEND RECEIVED BY THE ASSESSEE- COMPANY FOR THE BENEFIT OF THE REGISTERED SHAREHOLDER. FOR THIS PURPOSE, THE PROVI SIONS OF SECTION 2(22)(E) OF TAX ACT, 1961 (IN SHORT 'THE ACT') IS SOUGHT TO BE RELIED UPON. THE TRIBUNAL HAS REJECTED THE SAID CONTENTION OF THE RE VENUE GROUND THAT DEEMED DIVIDEND CAN ONLY BE ASSESSED IN THE HANDS OF THE REGISTERED SHAREHOLDER FOR WHOSE BENEFIT THE MONEY WAS ADVANCED. AS INDICATED ABOVE, THERE IS NO DISPUTE THAT THE AS SESSEE DID RECEIVE CAPITAL ADVANCE FROM INDE V LOGISTICS PVT. LTD. THERE IS ALSO NO DISPUTE THAT THERE ARE COMMON SHAREHOLDERS BOTH IN THE ASSESSEE - COMPANY AND INDEV LOGISTICS PVT. LTD. THEREFORE, QUITE CORRECTLY, AS NOTED BY T HE TRIBUNAL, THOUGH, THE ADVANCE RECEIVED BY THE ASSESSEE COMPANY MAY HAVE BEEN FOR THE BENEFIT OF THE AFOREMENTIONED REGISTERED SHAREHOLDERS, IT COUL D ONLY BE ASSESSED IN THE HANDS OF THOSE REGISTERED SHAREHOLDERS AND NOT IN T HE HANDS OF THE ASSESSEE IN OUR VIEW, ON A PLAIN READING OF THE PROVISIONS O F SECTION 2 ( ACT, NO OTHER CONCLUSION CAN BE REACHED. AS A MATTE R OF FACT, A DIVISION BENCH OF THIS COURT, IN THE CASE OF COMMISSIONER OF INCOME TAX , (2015) 373 ITR 665 (MAD.) , HAS REACHED A SOMEWHAT SIMILAR MR. SENTHIL KUMAR, HOWEVER, CONTENDS TO THE CONTRAR Y AND RELIES UPON THE JUDGMENT OF THE SUPREME COURT IN GOPAL AND SONS (HUF) KOLKATA -XI, (2017) 77 TAXMANN.COM 71 (SC) . IN OUR VIEW, THE QUESTION OF LAW CONSIDERED BY THE SUPREME COURT IN THE CASE GOPAL AND SONS (SUPRA ) WAS DIFFERENT FROM THE ISSUE WHI PRESENT MATTER. THE QUESTION OF LAW WHICH THE SUPRE ME COURT WAS CALLED UPON TO CONSIDER WAS WHETHER LOANS AND ADVANCES REC EIVED BY A HUF COULD BE DEEMED AS A DIVIDEND WITHIN THE MEANING OF SECTI ON 2(22)(E) OF THE ACT. THE ASSESSEE IN THAT CASE WAS THE HUF AND THE PAYMENT IN QUESTION WAS MADE TO THE HUF. THE SHARES WERE HELD BY THE KARTA OF THE HUF. IT IS IN THIS CONTEXT THAT THE SUPREME COURT CAME TO THE CONCLUSI ON THAT HUF WAS THE BENEFICIAL SHAREHOLDER. ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 INCOME IN THE HANDS OF THE E LENDER COMPANY. GOPAL SONS & H UF AS RELIED UPON BY REVENUE HAS DULY BEEN IN ITS DECISION R ENDERED IN RIVATE LIMITED [2017-TIOL- WHEREIN HONBLE COURT HAS DISTINGUISHED THE SAME BY THE REVENUE SEEKS TO ASSESS AS INCOME THE CAPITAL A DVANCE RECEIVED BY THE COMPANY FROM INDEV LOGISTICS PVT. LTD. ON THE GROUN D THAT IT IS COMPANY FOR THE BENEFIT OF THE REGISTERED SHAREHOLDER. FOR THIS PURPOSE, THE PROVI SIONS OF SECTION 2(22)(E) OF TAX ACT, 1961 (IN SHORT 'THE ACT') IS SOUGHT TO BE RELIED UPON. THE TRIBUNAL HAS REJECTED THE SAID CONTENTION OF THE RE VENUE , PRINCIPALLY, ON THE GROUND THAT DEEMED DIVIDEND CAN ONLY BE ASSESSED IN THE HANDS OF THE REGISTERED SHAREHOLDER FOR WHOSE BENEFIT THE MONEY WAS ADVANCED. AS INDICATED ABOVE, THERE IS NO DISPUTE THAT THE AS SESSEE DID RECEIVE CAPITAL V LOGISTICS PVT. LTD. THERE IS ALSO NO DISPUTE THAT THERE ARE COMPANY AND INDEV LOGISTICS PVT. LTD. THEREFORE, QUITE CORRECTLY, AS NOTED BY T HE TRIBUNAL, THOUGH, THE BEEN FOR THE BENEFIT OF THE AFOREMENTIONED REGISTERED SHAREHOLDERS, IT COUL D ONLY BE ASSESSED IN THE HANDS OF THOSE REGISTERED SHAREHOLDERS AND NOT IN T HE HANDS OF THE ASSESSEE - IN OUR VIEW, ON A PLAIN READING OF THE PROVISIONS O F SECTION 2 ( 22)(E) OF THE ACT, NO OTHER CONCLUSION CAN BE REACHED. AS A MATTE R OF FACT, A DIVISION COMMISSIONER OF INCOME TAX V. PRINTWAVE , HAS REACHED A SOMEWHAT SIMILAR MR. SENTHIL KUMAR, HOWEVER, CONTENDS TO THE CONTRAR Y AND RELIES UPON THE GOPAL AND SONS (HUF) V. COMMISSIONER OF . IN OUR VIEW, THE QUESTION OF LAW CONSIDERED BY THE SUPREME COURT IN THE CASE ) WAS DIFFERENT FROM THE ISSUE WHI CH ARISES IN THE PRESENT MATTER. THE QUESTION OF LAW WHICH THE SUPRE ME COURT WAS CALLED UPON TO CONSIDER WAS WHETHER LOANS AND ADVANCES REC EIVED BY A HUF COULD BE DEEMED AS A DIVIDEND WITHIN THE MEANING OF SECTI ON 2(22)(E) OF THE ACT. CASE WAS THE HUF AND THE PAYMENT IN QUESTION WAS MADE TO THE HUF. THE SHARES WERE HELD BY THE KARTA OF THE HUF. IT IS IN THIS CONTEXT THAT THE SUPREME COURT CAME TO THE CONCLUSI ON THAT HUF WAS THE 5.2 IN THE INSTANT CASE, HOWEVER, ARE TWO INDIVIDUALS AND NOT THE ASSESSEE THE JUDGMENT OF THE SUPREME COURT DOES NOT RULE ON THE ISSUE WHICH HAS COME UP FOR CONSIDERATION IN THE INSTANT MATTER.' UPON DUE CONS IDERATION OF FACTUAL MATRIX, WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF IS NOT A PPLICABLE TO THE FACTS OF THE PRESENT CASE THAT CASE, WAS A HUF ENTITY AND ADVANCES RECEIVED BY THE TREATED AS 'DEEMED DIVIDEND' WITHIN THE MEANING OF SEC. 2(22)(E) OF THE ACT. NOTABLY, IN THE CASE BEFORE THE HON'BLE SUPREM E COURT, THE PAYMENT WAS MADE BY THE COMPANY TO THE HUF AND THE SHARES IN TH E COMPANY WERE HELD BY THE HON'BLE SUPREME COURT UPHELD THE ADDITION IN THE HA NDS OF THE HUF AS FACTUALLY THE HUF WAS THE BENEFICIAL SHAREHOLDER. T HE FACT THE CASE BEFORE US STANDS ON AN ENTIRELY DIFFERENT FOOTING INASMUCH AS THE ASSESSEE- RECIPIENT OF MONEY IS NEITHER THE REGISTERED NOR TH E BENEFICIAL SHAREHOLDER OF THE THE HON'BLE SUPREME COURT IN THE IS INAPPLICABLE TO THE FACTS OF THE PRESENT CASE NOTED BY HONBLE MADRAS HIGH COURT IN THEIR OBSERVA TIONS AS EXTRACTED ABOVE. 7. CONSIDERING THE ABOVE, IN CONSONANCE WITH SETTLED JUDICIAL PROPOSITION OF LAW AND THEREFORE, REQUIRES NO INTERFERENCE ON OUR PART 8. RESULTANTLY, THE APPEA 9 IN THE INSTANT CASE, HOWEVER, BOTH THE REGISTERED AND BENEFICIAL SHAREHOLDERS ARE TWO INDIVIDUALS AND NOT THE ASSESSEE - COMPANY. THEREFORE, IN OUR VIEW, THE JUDGMENT OF THE SUPREME COURT DOES NOT RULE ON THE ISSUE WHICH HAS COME UP FOR CONSIDERATION IN THE INSTANT MATTER.' IDERATION OF FACTUAL MATRIX, WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF GOPAL AND SONS (HUF) PPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE THE ASSESSEE, IN ENTITY AND THE ISSUE WAS AS TO WHETHER THE LOANS AND ADVANCES RECEIVED BY THE HINDU UNDIVIDED FAMILY TREATED AS 'DEEMED DIVIDEND' WITHIN THE MEANING OF SEC. 2(22)(E) OF THE ACT. NOTABLY, IN THE CASE BEFORE THE HON'BLE SUPREM E COURT, THE MADE BY THE COMPANY TO THE HUF AND THE SHARES IN TH E COMPANY WERE HELD BY THE KARTA OF THE HUF. IT IS IN THIS CONTEXT THAT THE HON'BLE SUPREME COURT UPHELD THE ADDITION IN THE HA NDS OF THE HUF AS FACTUALLY THE HUF WAS THE BENEFICIAL SHAREHOLDER. T HE FACT THE CASE BEFORE US STANDS ON AN ENTIRELY DIFFERENT FOOTING INASMUCH AS RECIPIENT OF MONEY IS NEITHER THE REGISTERED NOR TH E BENEFICIAL SHAREHOLDER OF THE LENDER COMPANY. THEREFORE, THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOPAL AND SONS (HUF) IS INAPPLICABLE TO THE FACTS OF THE PRESENT CASE WHICH HAS ALSO BEEN NOTED BY HONBLE MADRAS HIGH COURT IN THEIR OBSERVA TIONS AS EXTRACTED CONSIDERING THE ABOVE, THE VIEW TAKEN BY FIRST APPELLATE AUTHORITY IS IN CONSONANCE WITH SETTLED JUDICIAL PROPOSITION OF LAW AND THEREFORE, REQUIRES NO INTERFERENCE ON OUR PART . RESULTANTLY, THE APPEA L STANDS DISMISSED. ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 BOTH THE REGISTERED AND BENEFICIAL SHAREHOLDERS COMPANY. THEREFORE, IN OUR VIEW, THE JUDGMENT OF THE SUPREME COURT DOES NOT RULE ON THE ISSUE WHICH HAS IDERATION OF FACTUAL MATRIX, WE FIND THAT THE JUDGMENT OF GOPAL AND SONS (HUF) ( SUPRA ) SINCE THE ASSESSEE, IN AND THE ISSUE WAS AS TO WHETHER THE LOANS HINDU UNDIVIDED FAMILY [HUF] COULD BE TREATED AS 'DEEMED DIVIDEND' WITHIN THE MEANING OF SEC. 2(22)(E) OF THE ACT. NOTABLY, IN THE CASE BEFORE THE HON'BLE SUPREM E COURT, THE MADE BY THE COMPANY TO THE HUF AND THE SHARES IN TH E OF THE HUF. IT IS IN THIS CONTEXT THAT THE HON'BLE SUPREME COURT UPHELD THE ADDITION IN THE HA NDS OF THE HUF AS FACTUALLY THE HUF WAS THE BENEFICIAL SHAREHOLDER. T HE FACT -SITUATION IN THE CASE BEFORE US STANDS ON AN ENTIRELY DIFFERENT FOOTING INASMUCH AS RECIPIENT OF MONEY IS NEITHER THE REGISTERED NOR TH E THEREFORE, THE DECISION OF GOPAL AND SONS (HUF) ( SUPRA ) WHICH HAS ALSO BEEN NOTED BY HONBLE MADRAS HIGH COURT IN THEIR OBSERVA TIONS AS EXTRACTED VIEW TAKEN BY FIRST APPELLATE AUTHORITY IS IN CONSONANCE WITH SETTLED JUDICIAL PROPOSITION OF LAW AND THEREFORE, ORDER PR ONOUNCED IN THE OPEN COURT ON SD/- (MAHAVIR SINGH) ! '# / JUDICIAL MEMBER MUMBAI; ' DATED : 05/12/2018 SR.PS:-JAISY VARGHESE ! COPY OF THE ORDER FORWARDED TO 1. / THE APPELLANT 2. %& / THE RESPONDENT 3. * / THE CIT(A) 4. * / CIT CONCERNED 5. +,% ' - - 6. ,./0 GUARD FILE 10 ONOUNCED IN THE OPEN COURT ON 05 TH DECEMBER, 2018 SD/- (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER '# / ACCOUNTANT MEMBER 05/12/2018 COPY OF THE ORDER FORWARDED TO : / THE CIT(A) CONCERNED - / DR, ITAT, MUMBAI ' # '$ % ITA.NO.4075/MUM/2013 BEST CFS PVT.LTD. ASSESSMENT YEAR 2009-10 DECEMBER, 2018 (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER ' / BY ORDER, (DY./ASSTT.REGISTRAR) / ITAT, MUMBAI