ACIT, New Delhi V. Shri Anumod Sharma, Gurgaon

ITA 6892/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9929 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Deemed dividend; Non compliance; Commercial expediency
• Section: 2(22)(e); 13; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 6892/DEL/2015 : ASSTT. YEAR : 2012-13 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-16, NEW DELHI-110055 VS SHRI ANUMOD SHARMA, D-305A, LABURNUM APARTMENT, SUSHANT LOK, SECTOR-28, GURGAON, HARYANA (APPELLANT) (RESPONDENT) PAN NO. AMYPS5587L ASSESSEE BY : SH. AKSHAT JAIN, CA & SH. RAJAT JAIN, CA REVENUE BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEAR ING: 1 6 . 12 .201 9 DATE OF PRONOUNCEMENT: 26 .12 .201 9 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF LD. CIT (A)-XXVI, NEW DELHI DATED 12.1 0.2015. 2. THE ONLY ONE GROUND RAISED IN THIS APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE ADDITIONS OF RS.10,57,01,194/- MADE U/S 2(22)(E) OF THE I.T. ACT ON ACCOUNT OF DEEMED DIVIDEND. 3. THE FACTS HAVE BEEN TAKEN FROM THE ORDER OF THE LD. CIT (A), THE RECORD OF THE REVENUE AND THE PAPER BOOK FILED. THE AO, IN THE ASSESSMENT ORDER, HAS HIGHLIGHTED THE FACT THAT THE ASSESSEE W AS HOLDING 86.67% SHARES IN M/S APRA AUTO INDIA P. LTD AND HAD BEEN I N RECEIPT OF AMOUNT RUNNING INTO RS.10.57 CRORES FROM THE ACCOUNT OF M/ S APRA AUTO INDIA P. LTD. KEEPING IN VIEW THE FACT, THAT THE SAID COMPAN Y THAT IS M/S. APRA AUTO ITA NO. 6892/DEL/2015 ANUMOD SHARMA 2 INDIA P. LTD. WAS ALSO HAVING ACCUMULATED PROFITS O F RS. 21.65 CRORE, THE AMOUNT SO RECEIVED BY THE ASSESSEE HAS BEEN TREATED AS DEEMED DIVIDEND AS PER THE SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 4. THE ASSESSEE CLAIMED BEFORE THE AO THAT THE AMOU NT RECEIVED FROM M/S APRA AUTO INDIA PVT. LTD. REPRESENTED FOLLOWING THREE DISTINCT TRANSACTIONS: I) ADVANCE AGAINST COMMERCIAL BUILDING RS. 5,62,00 ,000/- II) ANUMOD SHARMA (EXPENSE ACCOUNT) RS. 73,76,584/- III) ANUMOD SHARMA LEDGER ACCOUNT RS. 6,00,84,793 /- (SHOWING RS. 1,95,390/- AS CREDIT BALANCE) 5. THE AO AFTER CONSIDERING THE ASSESSEES EXPLANAT ION ON THE ISSUE HIGHLIGHTED THAT CLAIM OF RECEIVING ADVANCE AGAINST COMMERCIAL BUILDING WAS A PLOY TO ESCAPE THE DEEMING PROVISION OF SECTI ON 2(22)(E). THE AO HIGHLIGHTED THAT AGREEMENT TO SELL BETWEEN THE ASSE SSEE AND M/S APRA AUTO INDIA PVT. LTD. WAS DATED 03.04.2011 IN WHICH REFERENCE OF BANK TRANSACTION DATED 08.04.2011 WAS RECORDED REPRESENT ING A SUM OF RS.1.40 CRORE GIVEN AS ADVANCE PAYMENT AND CREDITED IN ASSE SSEES BANK ACCOUNT ON 08.04.2011. THE IMPUGNED AGREEMENT ALSO RECORDED THAT THE BALANCE PAYMENT OF RS.5.60 CRORE HAD TO BE PAID BY 31 ST DECEMBER 2011 AND IN THE EVENT OF NON COMPLIANCE THE AGREEMENT WAS TO BE TERMINATED LEADING TO REFUND OF ADVANCE PAYMENT WITHOUT INTEREST. THE AO CONCLUDED THAT THE CLAIM OF AN AGREEMENT TO SELL PUT FORWARD BY THE AS SESSEE WAS A COLOURABLE DEVICE INTENDED TO ESCAPE THE PROVISION OF SECTION 2(22)(E). IT WAS ALSO HIGHLIGHTED THAT SIMILAR PATTERN OF RECEIP T OF AMOUNT RUNNING INTO CRORES WAS EVIDENT FROM THE BANK STATEMENT OF EARLY YEARS. THE AO ALSO HELD THAT THE EXPENSES PAID OR AMOUNT TRANSFERRED T O DIFFERENT PERSONS BY M/S APRA AUTO INDIA PVT. LTD. ON BEHALF OF THE ASSE SSEE ALSO CAME UNDER THE PURVIEW OF DEEMED DIVIDEND. THE AO PLACED RELIA NCE ON THE FOLLOWING JUDGMENTS: WALCHAND & CO. LTD. VS CIT (1975) 100 ITR 598(BOM) ITA NO. 6892/DEL/2015 ANUMOD SHARMA 3 CIT VS. K. SHRINAVASAN 50 ITR 788 CIT VS. P. SARADA 154ITR 387 (1985) (MAD) MD JINDAL VS. CIT 164 1TR 028 (CAL) (1987) TARULATA SHYAM VS. CIT 108 ITR 345 (1977)(SC) RAJESH P. VED VS. AC1T 001 ITR 275 (ITAT MUMBAI) (2 010) MS. SARADA P VS. CIT 229 ITR 444(SC) (1998) 6. DURING THE ARGUMENTS BEFORE US, THE LD. DR ARGUE D THAT THE TRIFURCATION OF THE TOTAL AMOUNT INTO THREE DIFFERE NT HEADS AS I) ADVANCE AGAINST COMMERCIAL BUILDING RS. 5,62,00 ,000/- II) ANUMOD SHARMA (EXPENSE ACCOUNT) RS. 73,76,584/- III) ANUMOD SHARMA LEDGER ACCOUNT RS. 6,00,84,793/ - IS A COVER UP EXERCISE TO CAMOUFLAGE THE ISSUE OF D EEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE ASSESSEE HAS RE-CASTED HIS ACCOUNT INTO RECEIPTS, LOANS, ADVANCES, EXPENSE ACCOUNT AND LEDGER ACCOUNT S. IT WAS ARGUED THAT THE INITIAL SUBMISSIONS, THERE WAS NO SUCH DIFFEREN TIATION SUCH LOANS AND ADVANCES RATHER THE ENTIRE AMOUNT IS SHOWN AS ADVAN CE. IT IS THE AFTERTHOUGHT OF THE ASSESSEE TO BUILT A STORY OF AD VANCE AGAINST COMMERCIAL BUILDING IN SUPPORT OF WHICH BUYERS AGR EEMENT DATED 03.04.2011 HAS BEEN PREPARED ON A NON-JUDICIAL STAM P PAPER OF RS.100/- WHICH WAS PURCHASED ON 17.09.2010 BETWEEN THE ASS ESSEE WHO IS THE MAIN PROMOTER AND HOLDING 86.67% OF SHARES IN M/S A PRA AUTO (INDIA) PVT. LTD. THE LD. DR VEHEMENTLY ARGUED THAT THE BUYERS AGREEMENT DOES NOT EVEN BEAR COMPLETE DETAILS OF THE TWO WITNESS, NOT BEEN VERIFIED BY THE OATH COMMISSIONER AND ALSO NOT REGISTERED. IT IS A PLOY TO ESCAPE THE RIGORS OF PROVISIONS OF SECTION 2(22)(E). THE DOCUM ENTS LIKE BUYERS AGREEMENT AND THE TRIFURCATED LEDGER ACCOUNTS OF TH E ASSESSEE IN THE BOOKS OF SAID COMPANY APPEAR TO HAVE BEEN PREPARED IN SO HASTE THAT IN THOSE LEDGER ACCOUNTS THE NAME OF THE BANK IN ALL E NTRIES (DEBIT/CREDIT) HAS BEEN MENTIONED AS BANK OF BARODA WHEREAS ALL TH E TRANSACTIONS HAVE BEEN MADE THROUGH BANK ACCOUNT OF ASSESSEE AS WELL AS OF THE COMPANY IN ITA NO. 6892/DEL/2015 ANUMOD SHARMA 4 NAINITAL BANK. SHE HAS TAKEN US TO THE CONTENTS OF THE ASSESSMENT ORDER ALONG WITH THE ANNEXURES WHICH HAVE BEEN DULY PERUS ED BY US. 7. THE LD. AR RELIED ON THE SUBMISSIONS MADE BEFORE THE LD. CIT (A) AND REITERATED THE SAME AND RELIED ON THE ORDER OF THE LD. CIT (A). 8. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS ALSO ENGAGED I N THE BUSINESS OF REAL ESTATE DEVELOPMENT IN COLLABORATION WITH M/S UNITEC H LIMITED AND WAS DEVELOPING SIGNATURE TOWER - II, SECTOR - 15, GURGA ON, HARYANA. THE ASSESSEE ENTERED INTO BUYER'S AGREEMENT WITH INTEND ING BUYERS IN RESPECT OF COMMERCIAL SPACE IN THE SAID PROPERTY AND RECEIV ED ADVANCES DURING THE FINANCIAL YEAR UNDER CONSIDERATION. THE ASSESSEE HA S ALSO ENTERED INTO BUYER'S AGREEMENT WITH M/S APRA AUTO (INDIA) PRIVAT E LIMITED FOR SALE OF 7000 SQ. FT. COMMERCIAL SPACE AT SIGNATURE TOWER - II, SECTOR - 15, GURGAON, HARYANA FOR A CONSIDERATION OF RS.7,00,00, 000/- AND HAS RECEIVED ADVANCE OF RS.5,62,00,000/- AGAINST SALE O F SUCH COMMERCIAL SPACE FROM M/S APRA AUTO (INDIA) PRIVATE LIMITED. H OWEVER, THE SAID COMPANY WAS UNABLE TO PAY THE TOTAL CONSIDERATION U PTO SCHEDULED DATE AS PER CLAUSE 5 AND 6 OF BUYERS AGREEMENT, THEREFORE THE SAID AGREEMENT WAS TERMINATED AND THE ASSESSEE REFUNDED THE SAID A DVANCE RECEIVED TO THE SAID COMPANY DURING THE FINANCIAL YEAR UNDER CO NSIDERATION. THE AMOUNT OF RS.10,87,21,000/- SHOWN AS GIVEN TO THE A SSESSEE AND AMOUNT OF RS.10,84,00,000/- RECEIVED FROM THE ASSESSEE INC LUDES AMOUNT PAID ON ACCOUNT OF ADVANCE OF RS.5,62,00,000/- AGAINST PURC HASE OF COMMERCIAL SPACE AND ALSO REFUND OF RS.5,62,00,000/- AFTER TER MINATION OF THE SAID AGREEMENT. 9. WE FIND THAT THE ASSESSING OFFICER HAS INVOKED S ECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 BY TREATING THE ENTIRE PAY MENTS MADE BY M/S APRA AUTO (INDIA) PRIVATE LIMITED ONLY ON THE BASIS THAT THE ASSESSEE HAS ITA NO. 6892/DEL/2015 ANUMOD SHARMA 5 RECEIVED HUGE AMOUNT THROUGHOUT THE YEAR FROM THE S AID COMPANY. WE ALSO NOTE THAT THE ASSESSEE HAS NOT TAKEN ANY LOAN FROM M/S APRA AUTO (INDIA) PRIVATE LIMITED DURING THE FINANCIAL YEAR U NDER CONSIDERATION AND HAD CREDIT BALANCE DURING THE ENTIRE FINANCIAL YEAR IN THE BOOKS OF THE SAID COMPANY. DETAILS OF LOAN GIVEN BY THE ASSESSEE TO M /S APRA AUTO INDIA PRIVATE LIMITED AND REPAYMENT RECEIVED FROM THE SAI D COMPANY DURING THE FINANCIAL YEAR UNDER CONSIDERATION ALONG DETAIL OF BALANCE IS AS UNDER: DATE PARTICULARS DEBIT AMOUNT (IN RS.) CREDIT AMOUNT (IN RS.) BALANCE AMOUNT (IN RS.) 01/04/2011 OPENING BALANCE 7,884,793 7884793 11/04/2011 REPAID TO ANUMOD SHARMA 100,000 7,784,793 18/04/2011 REPAID TO ANUMOD SHARMA 200,000 7,584,793 19/04/2011 RECEIVED FROM ANUMOD SHARMA 22,000,000 29,584,793 19/04/20 11 REPAID TO ANUMOD SHARMA 5,000,000 24,584,793 26/04/2011 REPAID TO ANUMOD SHARMA 150,000 24,434,793 29/04/2011 REPAID TO ANUMOD SHARMA 50,000 24,384,793 10/05/2011 REPAID TO ANUMOD SHARMA 100,000 24,284,793 19/05/2011 REPAID TO ANUMOD SHARMA 8,500,000 15,784,793 24/05/2011 REPAID TO ANUMOD SHARMA 100,000 15,684,793 24/05/2011 RECEIVED FROM ANUMOD SHARMA 50,0000 16,184,793 26/05/2011 REPAID TO ANUMOD SHARMA 5,700,000 10,484,793 30/05/2011 REPAID TO ANUMOD SHARMA 50,000 10,434,793 07/06/2011 RECEIVED FROM ANUMOD SHARMA 250,0000 12,934,793 14/06/2011 RECEIVED FROM ANUMOD SHARMA 900,0000 21,934,793 ITA NO. 6892/DEL/2015 ANUMOD SHARMA 6 22/06/2011 REPAID TO ANUMOD SHARMA 5,000,000 16,934,793 22/06/2011 REPAID TO ANUMOD SHARMA 400,000 16,534,793 30/06/2011 REPAID TO ANUMOD SHARMA 50,000 16,484,793 01/07/2011 REPAID TO ANUMOD SHARMA 50,000 16,434,793 05/07/2011 REPAID TO ANUMOD SHARMA 500,000 15,934,793 07/07/2011 REPAID TO ANUMOD SHARMA 100,000 15,834,793 08/07/2011 REPAID TO ANUMOD SHARMA 160,000 15,674,793 14/07/2011 REPAID TO ANUMOD SHARMA 1,300,000 14,374,793 25/07/2011 RECEIVED FROM ANUMOD SHARMA 7,500,000 21,874,793 27/07/2011 REPAID TO ANUMOD SHARMA 700,000 21,174,793 28/07/2011 REPAID TO ANUMOD SHARMA 600,000 20,574,793 29/07/2011 REPAID TO ANUMOD SHARMA 700,000 19,874,793 01/08/2011 REPAID TO ANUMOD SHARMA 500,000 19,374,793 11/08/2011 REPAID TO ANUMOD SHARMA 100,000 19,274,793 20/08/2011 REPAID TO ANUMOD SHARMA 61,000 19,213,793 26/08/2011 REPAID TO ANUMOD SHARMA 70,000 19,143,793 27/08/2011 REPAID TO ANUMOD SHARMA 200,000 18,943,793 30/08/2011 REPAID TO ANUMOD SHARMA 600,000 18,343,793 02/09/2011 REPAID TO ANUMOD SHARMA 100,000 18,243,793 03/09/2011 REPAID TO ANUMOD SHARMA 2,500,000 15,743,793 12/09/2011 REPAID TO ANUMOD SHARMA 100,000 15,643,793 ITA NO. 6892/DEL/2015 ANUMOD SHARMA 7 21/09/2011 REPAID TO ANUMOD SHARMA 500,000 15,143,793 23/09/2011 REPAID TO ANUMOD SHARMA 600,000 14,543,793 01/10/2011 REPAID TO ANUMOD SHARMA 500,000 14,043,793 04/10/2011 REPAID TO ANUMOD SHARMA 1,100,000 12,943,793 14/10/2011 REPAID TO ANUMOD SHARMA 50,000 12,893,793 17/10/2011 REPAID TO ANUMOD SHARMA 200,000 12,693,793 01/11/2011 REPAID TO ANUMOD SHARMA 350,000 12,343,793 02/11/2011 REPAID TO ANUMOD SHARMA 5,000,000 7,343,793 03/11/2011 RECEIVED FROM ANUMOD SHARMA 5,000,000 12,343,793 11/11/2011 REPAID TO ANUMOD SHARMA 50,000 12,293,793 22/11/2011 REPAID TO ANUMOD SHARMA 30,000 12,263,793 01/12/2011 REPAID TO ANUMOD SHARMA 500,000 11,763,793 01/12/2011 REPAID TO ANUMOD SHARMA 300,000 11,463,793 03/12/2011 REPAID TO ANUMOD SHARMA 400,000 11,063,793 08/12/2011 REPAID TO ANUMOD SHARMA 400,000 10,663,793 02/01/2012 REPAID TO ANUMOD SHARMA 500,000 10,163,793 09/01/2012 REPAID TO ANUMOD SHARMA 300,000 9,863,793 12/01/2012 REPAID TO ANUMOD SHARMA 100,000 9,763,793 10/02/2012 REPAID TO ANUMOD SHARMA 7150,000 2,613,793 01/03/2012 REPAID TO ANUMOD SHARMA 200,000 2,413,793 02/03/2012 REPAID TO ANUMOD SHARMA 150,000 2,263,793 03/03/2012 REPAID TO ANUMOD SHARMA 100,000 2,163,793 ITA NO. 6892/DEL/2015 ANUMOD SHARMA 8 28/03/2012 REPAID TO ANUMOD SHARMA 300,000 1,863,793 29/03/2012 RECEIVED FROM ANUMOD SHARMA 5700,000 7,563,793 31/03/2012 ANUMOD SHARMA (EXPENSES A/C) 7,368,403 195,390 TOTAL 59,889,403 60,084,793 CLOSING BALANCE AS ON 31/03/2012 195,390 10. FROM THE ABOVE, IT CAN BE GAUGED THAT THE ASSES SEE HAD CREDIT BALANCE DURING THE ENTIRE FINANCIAL YEAR IN THE BOO KS OF THE M/S APRA AUTO INDIA PRIVATE LIMITED. THEREFORE, IT CAN BE SAID TH AT THE ASSESSEE HAS NOT TAKEN ANY LOAN FROM THE SAID COMPANY, WHILE THE ASS ESSEE HAS ACTUALLY GIVEN LOAN AND RECEIVED REPAYMENT DURING THE FINANC IAL YEAR UNDER CONSIDERATION OF LOAN GIVEN TO M/S APRA AUTO INDIA PRIVATE LIMITED. 11. WE FIND THAT THE ASSESSEE HAS ENTERED INTO BUYE R'S AGREEMENT WITH M/S APRA AUTO (INDIA) PRIVATE LIMITED FOR SALE OF 7 000 SQ. FT. COMMERCIAL SPACE AT SIGNATURE TOWER - II, SECTOR - 15, GURGAON , HARYANA FOR A CONSIDERATION OF RS.7,00,00,000/- AND RECEIVED ADVA NCE OF RS.5,62,00,000/- AGAINST SALE OF SUCH COMMERCIAL SP ACE FROM M/S APRA AUTO (INDIA) PRIVATE LIMITED. AS PER THE BUYER'S AG REEMENT, THE BUYER, M/S APRA AUTO (INDIA) PRIVATE LIMITED HAS TO PAY TOTAL CONSIDERATION UPTO 31ST DECEMBER 2011. THE BUYER HAS PAID RS.1,40,00,000/- AS ADVANCE PAYMENT TO THE ASSESSEE VIDE CHEQUE NO. 845668 DRAW N ON THE NAINITAL BANK LIMITED, GURGAON IN FAVOUR OF THE ASSESSEE UPO N SIGNING OF THE SAID BUYERS AGREEMENT. 12. AS PER CLAUSE OF THE SAID AGREEMENT, IN CASE OF DEFAULT IN PAYMENT THE OWNER (ASSESSEE) RESERVES RIGHT TO TERMINATE TH E AGREEMENT AND REFUND ADVANCE TO THE BUYER (M/S APRA AUTO (INDIA) PRIVATE LIMITED) ITA NO. 6892/DEL/2015 ANUMOD SHARMA 9 WITHOUT ANY INTEREST OR ADDITIONAL PAYMENT MADE BY THE BUYER. THE RELEVANT PORTION OF CLAUSE OF BUYERS AGREEMENT IS REPRODUCED AS UNDER: '6. THAT THE TIMELY PAYMENT, MENTIONED AT POINT NO. 5 ABOVE, WHICH SHALL COMMENCE FROM APRIL 2011 ONWARDS IN LIE U OF TOTAL CONSIDERATION IS THE ESSENCE OF THIS AGREEMENT. IT SHALL BE INCUMBENT ON THE BUYER TO STRICTLY COMPLY WITH THE TERMS OF PAYMENT. IN THE EVENT OF ANY BREACH OF THE PAYMENT WHICH IS PART OF THIS AGREEMENT, THE OWNER MAY, AT ITS SOLE DISCRETION RESERVES THE RIGHT TO TERMINATE THIS AGREEMENT AND FORTHWITH REFUND THE ADVANCE PAYMENT WITHOUT ANY INTEREST AND /OR THE ADDITIONAL PAYMENT MADE BY THE BUYER IF ANY TO THE BUYER AND THE BUYER SHALL BE LEFT WITH NO LIEN, RIGHT, TITLE, INTEREST OR CLAIM OF WHATSOEVER NATURE IN AND UPON THE SAID PRE MISES AND THE OWNER SHALL BE ENTITLED TO RE-SELL THE SAID PRE MISES AT ITS SOLE DISCRETION AND THE BUYER SHALL NOT BE OBJECT O R DEMUR TO THE SAID RE-SALE.' 13. SINCE, M/S APRA AUTO (INDIA] PRIVATE LIMITED WA S UNABLE TO PAY THE TOTAL CONSIDERATION UPTO SCHEDULED DATE AS PER CLAU SE 5 AND 6 OF BUYERS AGREEMENT, THEREFORE THE SAID AGREEMENT WAS TERMINA TED AND THE ASSESSEE REFUNDED THE SAID ADVANCE RECEIVED AGAINST SALE OF COMMERCIAL SPACE AT SIGNATURE TOWER - II, SECTOR - 15, GURGAON , HARYANA, TO THE SAID COMPANY DURING THE FINANCIAL YEAR UNDER CONSIDERATI ON. IT IS NOTED THAT DURING THE FINANCIAL YEAR 2011 - 12 AN AMOUNT OF RS .10,87,21,000/- HAS BEEN PAID TO THE ASSESSEE AND RS.10,84,00,000/- HAS BEEN RECEIVED BACK FROM THE ASSESSEE. THUS, THE AMOUNT OF RS.10,87,21, 000/- SHOWN AS GIVEN TO THE ASSESSEE AND AMOUNT OF RS.10,84,00,000/- REC EIVED FROM THE ASSESSEE WHICH INCLUDES AMOUNT PAID ON ACCOUNT OF A DVANCE OF RS.5,62,00,000/- AGAINST PURCHASE OF COMMERCIAL SPA CE AND ALSO REFUND OF RS.5,62,00,000/- AFTER TERMINATION OF THE BUYER'S A GREEMENT. 14. FURTHER, IT CAN BE FOUND THAT THE ASSESSEE HAS ALSO ENTERED INTO SIMILAR BUYER'S AGREEMENT DATED 18.04.2011 WITH M/S NH LEARNING INFRASTRUCTURE SERVICES LIMITED DURING THE FINANCIA L YEAR UNDER CONSIDERATION. THE BUYER'S AGREEMENT WAS EXECUTED F OR SALE OF 5000 SQ FT ITA NO. 6892/DEL/2015 ANUMOD SHARMA 10 TO M/S NH LEARNING INFRASTRUCTURE SERVICES LIMITED FOR A CONSIDERATION OF RS.5,00,00,000/- OUT OF WHICH AMOUNT OF RS.2,50,00, 000/- HAS BEEN RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR UNDER CONSIDERATION AS ADVANCE AS PER THE TERMS AND CONDITIONS OF THE AGRE EMENT. THE COPY OF SUCH BUYERS AGREEMENT WITH M/S NH LEARNING INFRAST RUCTURE SERVICES LIMITED ALONG WITH CONFIRMATION FROM THE SAID COMPA NY FOR PAYMENT OF RS.2,50,00,000/- TO THE ASSESSEE DURING THE FINANC IAL YEAR UNDER CONSIDERATION IS SIMILAR TO THE ONE ENTERED WITH M/ S APRA AUTO (INDIA) PVT. LTD. THE SAID AGREEMENT WITH M/S NH LEARNING INFRAS TRUCTURE SERVICES LIMITED HAD BEEN TERMINATED DURING THE FINANCIAL YE AR UNDER CONSIDERATION AND THE ASSESSEE HAS REPAID AN AMOUNT OF RS.2,30,00 ,000/- OUT OF ADVANCE RECEIVED AMOUNTING TO RS.2,50,00,000/- UP T O 31.12.2012 TO M/S NH LEARNING INFRASTRUCTURE SERVICES LIMITED. 15. HENCE, AS PER THE FACTS IT IS QUITE EVIDENT THA T THE ASSESSEE HAS NOT TAKEN ANY LOAN FROM M/S APRA AUTO (INDIA) PRIVATE L IMITED INSTEAD HE HAS GIVEN LOAN TO THE SAID COMPANY AND RECEIVED ADVANCE S FROM THE SAID COMPANY AGAINST SALE OF COMMERCIAL SPACE AS PER BUY ERS AGREEMENT AND THE SAME WAS REFUNDED DURING THE FINANCIAL YEAR UND ER CONSIDERATION ON TERMINATION OF BUYERS AGREEMENT AS PER ITS CLAUSES . IT IS TO NOTE THAT THE SAME ARE IN THE NORMAL COURSE OF BUSINESS OF THE AS SESSEE AND THE SAID COMPANY. THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 IS NOT APPLICABLE WHEN NO LOAN WAS TAKEN AND RECEIV ED ADVANCE UNDER THE COMMERCIAL EXPEDIENCY IN THE NORMAL COURSE OF BUSIN ESS. FOR THE SAKE OF CONVENIENCE, RELEVANT TEXT OF SECTION 2(22)(E) OF T HE INCOME TAX ACT, 1961 IS REPRODUCED AS UNDER: '2(22) 'DIVIDEND' INCLUDES (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF A NY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS OF TH E COMPANY OR OTHERWISE) [MADE AFTER THE 31ST DAY OF MAY, 1987 , BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS ITA NO. 6892/DEL/2015 ANUMOD SHARMA 11 THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES EN TITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RI GHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN P ER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHARE HOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTAN TIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS T HE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEH ALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER , TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSE S ACCUMULATED PROFITS; 16. HENCE, ANALYSIS OF THE FACTS OF THE CASE REFERR ED BY THE AO AND FACTS OF THE CASE OF THE ASSESSEE, IT IS QUITE EVIDENT TH AT THE FACTS OF THE REFERRED CASES IN THE IMPUGNED ORDER ARE ALTOGETHER DIFFEREN T FROM THE FACTS OF THE ASSESSEE, KEEPING IN VIEW OF THE FACT THAT THE ASSE SSEE HAS NEVER TAKEN ANY LOAN DURING THE FINANCIAL YEAR UNDER CONSIDERAT ION FROM M/S APRA AUTO (INDIA) PRIVATE LIMITED AND ALSO DID NOT HAVE ANY D EBIT BALANCE IN THE NAME OF THE ASSESSEE IN THE BOOKS OF ACCOUNT OF THE SAID COMPANY. 17. IN NUTSHELL, THE ASSESSEE HAS ALSO NOT RECEIVED ANY ADVANCE IN THE NATURE OF LOAN OR ADVANCES AS CONTEMPLATED IN THE S ECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 BUT RECEIVED ADVANCE AGAINST S ALE OF COMMERCIAL SPACE DEVELOPED BY THE ASSESSEE ON HIS OWN LAND IN COLLABORATION WITH M/S UNITECH LIMITED AS PER BUYER'S AGREEMENT. WE FIND T HAT PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 ARE NO T APPLICABLE IN CASE OF THE ASSESSEE AS THE ASSESSEE HAS RECEIVED ADVANCE O F RS.5,62,00,000/- FROM THE SAID COMPANY AGAINST SALE OF COMMERCIAL SP ACE IN SIGNATURE TOWER - II, SECTOR - 15, GURGAON, HARYANA. SINCE, T HE SAID RECEIPTS OF ADVANCE OF RS.5,62,00,000/- AGAINST SALE OF COMMERC IAL SPACE IS NOT A RECEIPT IN THE NATURE OF LOAN OR ADVANCE AS CONTEMP LATED IN SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 WHICH ATTRACTS THE PROVISIONS OF IN THAT SECTION AS THE SAID ADVANCE IS IN THE NATURE O F BUSINESS ADVANCE WHICH DID NOT FALL WITHIN THE AMBIT OF PROVISIONS O F SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. ITA NO. 6892/DEL/2015 ANUMOD SHARMA 12 18. WE HAVE GONE THROUGH THE RATIONALE GIVEN BY THE LD. CIT (A), THE RELEVANT OPERATIVE PORTION IS AS UNDER: 9. I HAVE CONSIDERED THE SPECIFIC ARGUMENTS RAISED BY THE APPELLANT DURING APPELLATE AS WELL AS ASSESSMENT PR OCEEDINGS AND THE COMMENTS OF THE AO/JCIT IN THE REMAND REPOR T. IT IS SEEN THAT THE AO, IN THE ASSESSMENT ORDER HAS HIGHL IGHTED RECEIPT OF AMOUNT OF RS 10,08,41,000 FROM M/S APRA AUTO INDIA P. LTD AND THE SAID RECEIPT OF PAYMENTS BY TH E APPELLANT HAVE BEEN HIGHLIGHTED IN THE ASSESSMENT ORDER IN TH E FORM OF A ACCOUNT WHICH DOES NOT HAVE A OPENING BALANCE OR TH E CLOSING BALANCE. IT IS IMPORTANT TO APPRECIATE THAT THE APP ELLANT ON BEING CONFRONTED WITH THE PROPOSED ADDITION HAD SPE CIFICALLY CLAIMED THAT FINANCIAL TRANSACTIONS OF THE APPELLAN T WITH M/S APRA AUTO INDIA P. LTD COMPRISED OF 3 DISTINCT TYPE S AS UNDER:- (I) ADVANCE AGAINST COMMERCIAL SPACING 5,62,00,0 00 (II) ANUMOD SHARMA LEDGER ACCOUNT 6,00,84 ,793 (III) ANUMOD SHARMA (EXPENSE ACCOUNT) 73,76,584 10. THE AO HAD REJECTED THE APPELLANTS CLAIM OF T HEIR BEING 3 DISTINCT TYPES OF TRANSACTION ON THE GROUND THAT IT WAS ONLY INTENDED TO COVER UP THE ISSUE OF DEEMED DIVIDEND U /S 2(22)(E). THE AO IN SUPPORT OF HIS CONCLUSION HAS H IGHLIGHTED THAT THE AGREEMENT BETWEEN M/S APRA AUTO INDIA P. L TD AND THE APPELLANT FOR PROPOSED SALE OF COMMERCIAL SPACE WAS MERELY TO AVOID THE APPLICABILITY OF PROVISIONS OF SECTION 2(22)(E) AS THE SAID AGREEMENT WAS ON NON-JUDICIAL STAMP PAPER OF RS 100. IT WAS FURTHER HIGHLIGHTED BY THE AO THAT THE ASSESSEE HAS TAKEN SUCH LOANS AND ADVANCES FROM SAM E COMPANY RUNNING INTO CRORES OF RUPEES IN THE EARLIE R YEARS AS WELL. THE APPELLANT IN SUPPORT OF THE IMPUGNED AGRE EMENT TO SELL BEING IN THE NORMAL COURSE OF BUSINESS HAD HIG HLIGHTED ANOTHER PROPOSED SALE TO N.H. LEARNING INFRASTRUCTU RE SERVICES LTD VIDE AGREEMENT DATED 18.04.2011 WHEREIN THE APP ELLANT HAD RECEIVED AN AMOUNT OF RS 2,50,00,000 OUT OF TOT AL AGREED AMOUNT OF RS 5 CRORES. THE SAID DEAL ALSO DID NOT F RUCTIFY INTO EVENTUAL SALE AND WAS TERMINATED LEADING TO REFUND OF THE SAID AMOUNT BY THE APPELLANT TO THE TUNE OF RS 2,30,00,0 00 DURING THE YEAR ONLY. IT IS SEEN THAT THE AO WHILE HIGHLIG HTING THE TRANSACTION BETWEEN THE APPELLANT AND M/S APRA AUTO INDIA P. LTD DID NOT DISCUSS AS TO HOW THE SAID DEAL WAS DIF FERENT FROM A DEAL FOR PROPOSED SALE BETWEEN THE APPELLANT AND N.H. LEARNING INFRASTRUCTURE SERVICES LTD. IN VIEW OF TH IS OMISSION, ITA NO. 6892/DEL/2015 ANUMOD SHARMA 13 THE AO DURING THE APPELLATE PROCEEDINGS WAS DIREC TED TO OFFER HIS COMMENTS VIDE THIS OFFICE LETTER DATED 30.07.20 15. THE AO VIDE HIS REPORT DATED 29.09.2015 SUBMITTED HIS COMM ENTS. 11. THE PERUSAL OF THE ORDER OF THE AO AT PAGE NO 9 SHOWS THAT A ISSUE HAS BEEN RAISED THAT THE ASSESSEE AT THE TI ME OF SUBMISSION BEFORE HIM SUBMITTED LEDGER ACCOUNT OF A PPELLANT'S DEALING WITH APRA AUTO (INDIA) P LTD AND THE NAME O F THE BANK WAS WRITTEN AS BANK OF BARODA WHEREAS ACTUAL TRANSA CTION HAD TAKEN PLACE THROUGH BANK OF NAINITAL. THE AO ON THE BASIS OF THIS MISTAKE OPINED THAT THE APPELLANT WAS IN A HAS TE BECAUSE OF WHICH THE INCORRECT SUBMISSION HAD BEEN MADE. TH E AR, DURING THE COURSE OF APPELLATE PROCEEDINGS, HAS SUB MITTED HIS EXPLANATION TO CLARIFY THE ISSUE AS RAISED BY THE A O IN THE ASSESSMENT ORDER. THE SUBMISSION OF THE APPELLANT A RE CONTAINED AT PARA 1.2.32 TO 1.2.35 OF HIS REPLY DAT ED 29.07.2015. IT HAS BEEN STRESSED THAT THE MISTAKE H AD CREPT IN ON ACCOUNT OF A TECHNICAL FLAW IN THE ACCOUNTING SO FTWARE USED BY THE APPELLANT NAMELY TALLY IN WHICH THE NAME OF FIRST ENTRY ON A SINGLE DAY CROPS UP ON THE QUERY BEING ISSUED TO THE SOFTWARE AND ON THIS ACCOUNT, THE LATER ENTRY GETS ECLIPSED FOR WHICH MANUAL CROSS CHECK HAS TO BE DONE SO AS TO CO RRECTLY PRESENT THE FACTUAL PICTURE. THE MISTAKE, HOWEVER, HAS BEEN CONFIRMED TO THE EXTENT THAT AT THE TIME OF SUBMISS ION, THE PRINTOUT TAKEN FROM THE COMPUTER WAS HAVING THE NAM E OF TRANSACTION ENTERED INTO WITH BANK OF BARODA BEING THE FIRST ENTRY ON THAT DAY. IN THE CIRCUMSTANCES, I DONT CO NSIDER IT ANY ISSUE OF MATERIAL CONSEQUENCE AS FACTUALLY, THE AMO UNT IN QUESTION HAS BEEN TRANSACTED THROUGH THE NAINITAL B ANK ONLY. 12. THE AO HAD FURTHER HIGHLIGHTED IN THE ASSESSME NT ORDER AT PAGE NO 9 THAT THE APPELLANT HAD TAKEN LOANS AND ADVANCES FROM APRA AUTO (INDIA) P LTD IN EARLIER YEARS AS WE LL. IN THIS REGARD, THE APPELLANT WAS DIRECTED TO FILE HIS LEDG ER ACCOUNT WITH APRA AUTO (INDIA) P LTD AND VICE- VERSA SO AS TO SEE IF THE FACTS WERE AS HIGHLIGHTED BY THE AO IN THE ASSESSME NT ORDER. IT IS SEEN THAT FOR THE FY 11-12 I.E. PRECEDING FY, THE APPELLANT HAD A OUTSTANDING FROM APRA AUTO (INDIA) P LTD AS O N 01.04.2010 TO THE TUNE OF RS 1,11,43,224 AND DURING THE ENTIRE YEAR, VARIOUS PAYMENTS HAVE BEEN MADE EITHER BY THE COMPANY OR BY THE APPELLANT BUT AT NO POINT OF TIME , THERE IS ANY NET OUTSTANDING BY THE APPELLANT TOWARDS APRA A UTO (INDIA) P LTD. IN VIEW OF THIS, THE OBSERVATIONS OF THE AO AS MENTIONED ABOVE DOES NOT SEEM TO HAVE ANY FACTUAL L EGS. ITA NO. 6892/DEL/2015 ANUMOD SHARMA 14 13. THE PERUSAL OF AO/JCITS COMMENTS IN THE REMAND REPORT CLEARLY SHOWS THAT NO DISTINCTION BETWEEN THE TWO D EALS HAS BEEN POINTED OUT EITHER DURING ASSESSMENT PROCEEDIN GS OR THE APPELLATE PROCEEDINGS. IT HAS BEEN THE CLAIM OF THE APPELLANT THAT BOTH THE DEALS WERE ENTERED INTO DURING THE YE AR UNDER CONSIDERATION IN THE NORMAL COURSE OF BUSINESS AND THE AO COULD NOT ACCEPT ONE WITH THE OUTSIDE PARTY AND REJ ECT ONE WITH THE ASSOCIATE CORPORATE ENTITY. IT IS SEEN THA T THE APPELLANT HAD RECEIVED AN AMOUNT OF RS.2,50,00,000 FROM N.H. LEARNING INFRASTRUCTURE SERVICES LTD IN PURSUA NCE OF THE AGREEMENT TO SELL AND THE SAID RECEIPT OF AMOUNT HA S BEEN ACCEPTED AS SUCH BY THE AO WHICH MEANS THAT THE AO WAS SATISFIED WITH REGARD TO THE IDENTITY, CREDITWORTHI NESS AND GENUINENESS OF THE TRANSACTION SO AS NOT TO INVITE ANY DEEMING PROVISIONS U/S 68 WITH REFERENCE TO THE SAID AMOUNT . THIS BEING SO IT WAS NOT OPEN TO THE AO TO TREAT ANOTHER EXACTLY SIMILAR TRANSACTION ENTERED INTO BY THE APPELLANT W ITH THE COMPANY IN WHICH HE IS SUBSTANTIALLY INTERESTED AS NOT BEING IN THE ORDINARY COURSE OF BUSINESS. NOTHING HAS BEEN H IGHLIGHTED TO DRAW ANY DISTINCTION BETWEEN THE TWO TRANSACTION S AS THE LANGUAGE AS WELL AS THE JUDICIAL STAMP PAPER USED F OR BOTH THE TRANSACTIONS IS EXACTLY THE SAME. THEREFORE, I DON' T FIND LOGIC IN THE CONCLUSION OF THE AO IN TREATING THE IMPUGNE D TRANSACTION WITH M/S APRA AUTO INDIA P. LTD AS BEIN G ONE FOR THE PURPOSES OF AVOIDING THE PROVISIONS OF SECTION 2(22)(E). HERE, IT WOULD BE IMPORTANT TO NOTE THAT THE APPELL ANT HAD AN AMOUNT RECEIVABLE TO THE TUNE OF RS 78,84,793 AND R S 1,95,390 AS ON 31.03.2011 AND 31.03.2011 FROM M/S A PRA AUTO INDIA P. LTD. THE PERUSAL OF THE COPY OF ACCOU NT SHOWS THAT DURING THE ENTIRE PERIOD OF THE FY UNDER CONSI DERATION, THERE HAVE BEEN AMOUNTS OUTSTANDING TOWARDS M/S APR A AUTO INDIA P. LTD RATHER THAN THE OTHER WAY ROUND. THERE FORE, APART FROM RECEIPT OF AMOUNTS ON ACCOUNT OF THE PROPOSED COMMERCIAL SALE BY THE APPELLANT, NO AMOUNTS HAD BE EN RECEIVED BY THE APPELLANT FROM M/S APRA AUTO INDIA P. LTD. THE AMOUNTS THAT HAD BEEN RECEIVED WERE ON ACCOUNT OF REPAYMENTS BY M/S APRA AUTO INDIA P. LTD TO THE APP ELLANT RATHER THAN OTHER WAY ROUND. THE TRANSACTION OF PRO POSED SALE OF COMMERCIAL SPACE, BEING ON COMMERCIAL CONSIDERAT IONS AND IN THE NORMAL COURSE OF BUSINESS OF THE APPELLANT C LEARLY COMES IN THE EXCEPTION CLAUSE OF SECTION 2(22)(E). IN VIE W OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDI TION MADE BY THE AO TO THE TUNE OF RS 10,57,01,194 IS DIRECTE D TO BE DELETED. ITA NO. 6892/DEL/2015 ANUMOD SHARMA 15 19. HAVING GONE THROUGH THE ENTIRE FACTUM OF THE IS SUE, THE CASE LAWS CITED BY BOTH THE PARTIES, RATIONALE OF THE LD. CIT (A), KEEPING IN VIEW THE FACT THAT IT IS THE COMPANY WHICH OWES THE ASSESSEE THE MONEY RATHER VICE-VERSA, IT IS UNEQUIVOCALLY PROVED THAT THE AD VANCE RECEIVED FROM THE COMPANY BY THE ASSESSEE IS IN THE NATURE OF TRADE A DVANCE AGAINST THE BOOKING OF COMMERCIAL PLACE BEING BUILT BY THE ASSE SSEE, WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) IN DELETING THE ADDITION MADE BY THE AO U/S 2(22)(E). 20. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/12/2019. SD/- SD/- (H. S. SIDHU) (DR . B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 26/12/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR