Assistant Commissioner of Income tax, Central Circle-2(3), Bengaluru V. Sri Prakash Ladhani, Bengaluru

ITA 72/BANG/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2896 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 05-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVASAN
• Keywords: Capital asset; Additional evidence; Deemed dividend
• Section: 143(3); 153A; 2(22)(e); 13; 119; 132

Judgement Text

ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NOS.72 TO 74/BANG/2018 ASSESSMENT YEARS:2011-12, 2012-13& 2013-14 ACIT CENTRAL CIRCLE-2(3) BANGALORE VS. SRI PRAKASH LADHANI 12, 3 RD MAIN, JAYAMAHAL EXTENSION BENGALURU 560 046 PAN NO :ABAPL 8912B APPELLANT RESPONDENT C.O. NOS.65 & 66/BANG/2018 (ARISING OUT OF ITA NOS.72 & 73/BANG/2018 ASSESSMENT YEARS :2011-12&2012-13 SRI PRAKASH LADHANI 12, 3 RD MAIN, JAYAMAHAL EXTENSION BENGALURU 560 046 VS. ACIT CENTRAL CIRCLE-2(3) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, A.R. RESPONDENT BY : MS. NEERA MALHOTRA, D.R. DATE OF HEARING : 03.08.2021 DATE OF PRONOUNCEMENT : 25.10.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEALS FILED BY THE REVENUE RELATE TO ASSESSME NT YEARS 2011-12 TO 2013-14. THE CROSS OBJECTIONS FILED BY THE ASSESSEE RELATE TO ASSESSMENT YEARS 2011-12 & 2012-13. ALL THESE APPEALS ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 2 OF 14 WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS URGED BY THE REVENUE IN ALL THE 3 YEARS RELATE TO RELIEF GRANTED BY LD. CT(A) IN RESPECT OF ADDITION MADE U/S 2(22)(E) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] AN D ALSO ADDITION OF UNDISCLOSED INCOME. IT IS PERTINENT TO MENTION HERE THAT THE UNDISCLOSED INCOME WAS ADDED PROTECTIVELY IN THE HANDS OF THE ASSESSEE IN ALL THE 3 YEARS AND THE SUBSTANTIVE ADD ITION WAS MADE IN THE HANDS OF M/S CAUVERY AQUA P LTD. THE RELEVA NT DETAILS ARE TABULATED BELOW: ASSESSMENT YEAR DEEMED DIVIDED (RS.) PROTECTIVE ADDITION (RS.) 2011-12 81,76,829 1,74,00,000 2012-13 1,30,44,602 2,51,00,000 2013-14 50,31,297 1,91,00,000 THE REVENUE HAS RAISED IDENTICAL GROUNDS IN ALL THE 3 YEARS. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE GROUNDS U RGED BY THE REVENUE IN ASSESSMENT YEAR 2011-12: 1) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE UNDISCLOSED INCOME OF THE ASSESSEE AMOUNTING TO RS.81,76,829/- AND RS.1,74,00,000/-? 2) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 81,76,829 /- WITHOUT APPRECIATING THE PROVISION OF SECTION 2(22)(E) OF THE I.T. ACT.? 3) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 81,76,829 /- WITHOUT APPRECIATING THAT THE ASSESSEE HOLDS MORE THAN 25% OF SHARES IN THE COMPANY M/S CAUVERY ACQUA PVT. LTD. AND M/S BRINDAVAN BEVERAGE PVT. LTD. ? THE ASSESSEE IS A BENEFICIAL SHARE HOLDER IN M/S CAUVER Y ACQUA PVT. LTD AND ALSO SUBSTANTIAL SHARE HOLDING IN M/S BRINDAVAN BEV ERAGE PVT. LTD. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 3 OF 14 4) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 81,76,829 /- WITHOUT APPRECIATING THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT, THERE IS NO DISTINCTION BETWEEN AN ADVANCE AND A BUSINESS ADVANCE. THE SECTION IS AKIN TO PROVISIONS OF SECTION 40A(2)(B) WHEREIN A NEXUS FOR BENEFIT IS DEEMED. THE PARAMETERS ONCE FULFILLED, THERE IS NO ESCAPE FROM TAX LIABILITY. 5) ON THE SECOND ISSUE, ADDITION OF RS. 1,74,00,000/- TOWARDS UNEXPLAINEDINVESTMENT, WHETHER THE DECISION OF HON' BLE HIGH COURT OF GUJARAT IN 140ITR517, IS NOT SQUARELY APPLICABLE? 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS ONE OF THE DIRECTORS IN M/S. BRINDAVAN BEVERAGES PVT. LTD. (BBPL) AND ALSO IN M/S. CAUVERI AQUA PVT. LTD. (CAPL). A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE HANDS OF THE ASSE SSEE AND OTHER GROUP CONCERNS ON 18.12.2012. CONSEQUENTLY, ASSESSM ENTS OF THE THREE ASSESSMENT YEARS UNDER CONSIDERATION WERE COM PLETED BY THE A.O. U/S 143(3) R.W.S. 153A OF THE ACT. 4. THE ASSESSEE HAS FILED CROSS OBJECTIONS CHAL LENGING THE VALIDITY OF SEARCH PROCEEDINGS IN AY 2011-12 AND 2012-13. 5. THE FIRST ISSUE RELATES TO ADDITION MADE U/S 2(2 2)(E) OF THE ACT AS DEEMED DIVIDEND IN ALL THE 3 YEARS. THE A.O. NO TICED THAT THE ASSESSEE HELD 33% OF SHARES IN CAPL AND 65% OF SHAR ES IN BBPL. THUS, THE ASSESSEE HEREIN IS A SHAREHOLDER HAVING S UBSTANTIAL INTEREST IN BOTH THE ABOVE SAID COMPANIES. THE A.O . NOTICED THAT M/S. BBPL HAS RECEIVED LOAN OF RS.2.27 CRORES, RS.2 .60 CRORES & RS.50.42 LAKHS FROM M/S. CAPL RESPECTIVELY IN THE Y EARS RELEVANT TO THE ASSESSMENT YEARS 2011-12, 2012-13 & 2013-14. S INCE THE LOAN WAS RECEIVED BY A CONCERN, IN WHICH THE ASSESSEE IS SUBSTANTIALLY INTERESTED, THE A.O. TOOK THE VIEW THAT THE LOAN RE CEIVED BY THE BBPL FROM CAPL SHALL BE ASSESSABLE AS DEEMED DIVID END IN THE ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 4 OF 14 HANDS OF THE ASSESSEE, BEING A SHAREHOLDER HAVING S UBSTANTIAL INTEREST, IN TERMS OF SEC. 2(22)(E) OF THE ACT. 6. THE ASSESSEE SUBMITTED BEFORE AO THAT M/S. CAPL HAS GIVEN FUNDS TO M/S. BBPL FOR BUSINESS PURPOSES AND HENCE THE PROVISIONS OF SEC. 2(22)(E) ARE NOT ATTRACTED. IT WAS EXPLAINED THAT M/S. CAPL HAD ENTERED INTO AN AGREEMENT WITH M/S. B BPL, AS PER WHICH, BOTH THE COMPANIES HAVE AGREED TO MAKE INVES TMENTS JOINTLY IN PROPERTY DEVELOPMENT PROJECTS OF M/S. EMBASSY GR OUP. IT WAS SUBMITTED THAT THE PAYMENTS WERE MADE BY CAPL TO BB PL IN CONNECTION WITH THE ABOVE SAID BUSINESS ACTIVITIES. THE A.O. DID NOT ACCEPT THE ABOVE SAID EXPLANATIONS OF THE ASSESSEE. HE TOOK THE VIEW THAT M/S. CAPL SHOULD HAVE GIVEN MONEY DIRECTL Y TO M/S. EMBASSY GROUP AND NOT TO ITS SISTER CONCERN. HE AL SO EXPRESSED THE VIEW THAT THE ABOVE ARRANGEMENT DOES NOT HAVE ACKNOWLEDGEMENT OF EMBASSY GROUP. ACCORDINGLY, THE AO HELD THAT THE AMOUNT RECEIVED BY M/S. BBPL FROM CAPL IS DEEME D DIVIDEND ASSESSABLE U/S 2(22)(E) OF THE ACT. UNDER THE PROV ISIONS OF SEC.2(22)(E) OF THE ACT, THE LOAN AMOUNT IS ASSESSA BLE TO THE EXTENT OF ACCUMULATED PROFITS AVAILABLE WITH LENDER COMPAN Y, I.E., LOWER OF LOAN AMOUNT OR ACCUMULATED PROFITS IS ASSESSABLE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. ACCORDINGLY, THE AO ASSESSED LOWER OF ACCUMULATED PROFITS OR THE LOAN AMOUNT AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE IN ALL THE 3 YEARS AS PER DETAILS GIVEN IN THE TABLE ABOVE. 7. THE LD. CIT(A), HOWEVER, ACCEPTED THE EXPLANA TIONS OF THE ASSESSEE THAT THESE TRANSACTIONS ARE BUSINESS TRANS ACTIONS AND ACCORDINGLY, DELETED THE ADDITIONS MADE U/S 2(22)(E ) OF THE ACT IN ALL THE 3 YEARS UNDER CONSIDERATION. THE REVENUE IS AG GRIEVED. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 5 OF 14 8. IT IS PERTINENT TO NOTE THAT THE AO HAD MAD E ADDITIONS U/S 2(22)(E) OF THE ACT IN AY 2007-08, 2008-09, 2010-11 TO 2013-14. THE LD CIT(A) HAD DELETED THE ADDITIONS IN ALL THE SIX YEARS. WE ARE CONCERNED HEREUNDER WITH THE APPEALS FILED BY THE R EVENUE FOR AY 2011-12 TO 2013-14. 9.THE LD D.R SUBMITTED THAT M/S CAPL HAS GIVEN LOAN S TO BBPL IN VARIOUS YEARS AND THE AGGREGATE AMOUNT OF LOANS SO GIVEN FROM AY 2007-08 TO 2013-14 WAS RS.13.84 CRORES. THE ASSES SEE HAD PLACED RELIANCE ON ASSIGNMENT AGREEMENTS DATED 28-03-2015 FOR SALE OF UNDIVIDED INTEREST IN LAND AND BUILT UP SPACE, AS P ER WHICH PROPERTIES WORTH RS.13.64 CRORES WERE ASSIGNED IN F AVOUR OF CAPL BY BBPL. ACCORDINGLY, THE LD CIT(A) HAS GRANTED RE LIEF TO THE ASSESSEE. THE LD D.R SUBMITTED THAT A CLOSE PERUSA L OF THE ASSIGNMENT AGREEMENTS WOULD SHOW THAT THE FACTS ARE NOT AS CLAIMED BY THE ASSESSEE BEFORE LD CIT(A). SHE SUBM ITTED THAT THE CAPL GOT FOLLOWING PROPERTIES AS PER ASSIGNMENT AGR EEMENTS:- CONSTRUCTION AGREEMENT ASSIGNED - 10,63,17,108 UNDIVIDED INTEREST IN LAND ASSIGNED - 3,00,86,10 0 ----------------- 13,64,03,208 ============= HOWEVER, IN THE CONSTRUCTION AGREEMENT, IT IS MENTI ONED THAT THE ASSIGNEE/S HAVE ALREADY PAID A SUM OF RS.8,84,36,26 6/- AND IT HAS AGREED TO PAY THE BALANCE OF RS.1,78,80,842/- TO TH E ASSIGNOR ON OR BEFORE 20-06-2015. IN ADDITION TO THE ABOVE, IT IS STATED THAT THE ASSIGNEE HAS AGREED TO REIMBURSE A SUM OF RS.34,35, 100/- TO THE ASSIGNOR TOWARDS THE ADDITIONAL IN RESPECT OF SCHED ULE B APARTMENT, WHICH HAS BEEN PAID BY THE ASSIGNORS TO THE DEVELOP ERS. THE LD D.R CONTENDED THAT THERE WAS NO NECESSITY TO MAKE F URTHER PAYMENTS, WHEN THE LOANS GIVEN BY CAPL TO BBPL IS M ORE THAN THE ASSIGNED VALUE. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 6 OF 14 10. THE LD D.R SUBMITTED THAT THE ASSIGNMENT AGR EEMENTS DO NOT SPECIFICALLY MENTION THAT THE LOANS AND ADVANCES PA ID BY M/S CAUVERY AQUA P LTD WERE ADJUSTED IN ASSIGNMENT AGRE EMENT. ACCORDINGLY, THE LD DR CONTENDED THAT THE LOANS AND ADVANCES WERE NOT ADJUSTED AGAINST ACQUISITION OF PROPERTY BY WAY OF ASSIGNMENT AGREEMENTS DATED 28-03-2015. ACCORDINGLY, THE LD D R CONTENDED THAT THE LOANS GIVEN BY CAPL TO BBPL WERE SEPARATE TRANSACTIONS AND HENCE THE ASSESSMENT OF DEEMED DIVIDEND MADE U/ S 2(22)(E) OF THE ACT SHOULD BE UPHELD. 11. THE LD. A.R., HOWEVER, SUBMITTED THAT THERE WERE TRADING TRANSACTIONS BETWEEN CAPL & BBPL IN THE PAST. THE TRADING OPERATIONS WERE SUSPENDED AND FROM THE YEAR 2002 ON WARDS BBPL OWED A SUM OF RS.1.97 CRORES TO M/S. CAPL. AT THAT POINT OF TIME, AN AGREEMENT DATED 14.11.2005 WAS ENTERED BETWEEN B OTH THE COMPANIES WITH THE OBJECTIVE OF MAKING INVESTMENT I N PROPERTY DEVELOPMENT ACTIVITIES. AS PER THE AGREEMENT, CAPL SHALL GIVE FURTHER MONEY TO BBPL FOR BUSINESS PURPOSES OF MAKI NG INVESTMENTS IN REAL ESTATE ACTIVITIES. ACCORDINGLY , CAPL HAS GIVEN MONEY TO BBPL IN CONNECTION WITH THE ABOVE SAID BUS INESS ACTIVITIES OVER THE YEARS. BOTH THE COMPANIES HAVE KEPT THE ACCOUNT OF OTHER COMPANY AS RUNNING ACCOUNT ONLY IN CONNECT ION WITH THE BUSINESS ACTIVITIES. FROM ASSESSMENT YEARS 2007-08 TO 2013-14, CAPL HAS GIVEN AN AGGREGATE SUM OF RS.13.85 CRORES. THE ASSIGNMENT AGREEMENTS WERE ENTERED ON 28-03-2015 BY BBPL IN FAVOUR OF M/S. CAPL WHICH WAS ALSO ENDORSED BY EMBA SSY GROUP (THE DEVELOPERS). AS PER THE ABOVE SAID AGREEMENT, BBPL HAS ASSIGNED PROPERTY VALUE OF RS.13.64 CRORES TO CAPL. HENCE, M/S. CAPL HAS OBTAINED PROPERTIES ALMOST EQUAL TO THE AM OUNT ADVANCED BY IT FROM ASSESSMENT YEARS 2007-08 TO 2013-14. TH ESE FACTS PROVE THAT BOTH THE COMPANIES HAVE JOINED TOGETHER TO CAR RYING BUSINESS ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 7 OF 14 ACTIVITIES OF MAKING INVESTMENT IN REAL ESTATE ACTI VITIES. FINALLY, CAPL WAS GIVEN PROPERTIES ALMOST EQUAL TO THE INVES TMENTS MADE. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE AO WAS N OT CORRECT IN CONSIDERING THESE TRANSACTIONS AS LOAN TRANSACTIONS . HE SUBMITTED THAT THE LD CIT(A) HAS CORRECTLY APPRECIATED THESE TRANSACTIONS AS BUSINESS TRANSACTIONS.ACCORDINGLY, HE SUBMITTED THA T THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE IN ALL THE THREE YEARS. 12. THE LD. A.R. FURTHER SUBMITTED THAT THE A.O., IN THE GROUNDS OF APPEAL FILED BY THE REVENUE, HAS TAKEN A CONTENTION THAT THERE IS NO DISTINCTION BETWEEN AN ADVANCE AND BUSINESS ADVANCE . HE SUBMITTED THIS CONTENTION IS CONTRARY TO THE PROVIS IONS OF SECTION 2(22)(E) OF THE ACT AND ALSO THE DECISIONS RENDERED BY JURISDICTIONAL KARNATAKA HIGH COURT. 13. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH ERE IS NO DISPUTE WITH REGARD TO THE FACT THAT BOTH CAPL AND BBPL HAD ENTERED INTO AN AGREEMENT DATED 14 TH NOVEMBER, 2005. THE OBJECT OF ENTERING INTO THE ABOVE SAID AGREEMENT IS MENTIO NED AS UNDER IN THE AGREEMENT:- WHEREAS BBPL HAS MADE INVESTMENT IN PROPERTY DEVELOPMENT MAINLY WITH THE EMBASSY GROUP IN BANGAL ORE AND BBPL HAS AGREED TO INVOLVE CAPL IN SOME OF THES E VENTURES TO SHARE THE BENEFITS OF SUCH INVESTMENT I N REAL ESTATE VENTURES OF THE EMBASSY GROUP. IN THE AGREEMENT, IT IS ALSO SPECIFICALLY MENTIONED AS UNDER:- 2. CAPL SHALL MAKE FURTHER INVESTMENTS AS AND WHE N REQUIRED TO SUPPORT THIS REAL ESTATE INVESTMENT OF BBPL IN THE EMBASSY GROUP UPON THE REQUEST MADE BY BBPL FROM TI ME TO TIME AND ANY SUCH INVESTMENT SHALL NOT CARRY ANY IN TEREST. .. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 8 OF 14 9. THE AMOUNT INVESTED BY CAPL IN BBPL FROM TIME TO TIME SHALL BE PROPORTIONATELY ADJUSTED AS AND WHEN DEVEL OPED PROPERTIES ARE TRANSFERRED INTO CAPL. THE AGREEMENT DATED 14.11.2005 ENTERED BETWEEN BOTH THE COMPANIES MAKES IT CLEAR THAT BBPL HAS MADE INVESTM ENTS IN VARIOUS PROJECTS OF THE EMBASSY GROUP AND CAPL IS I NVOLVED IN THESE VENTURES. IT IS FURTHER MENTIONED THAT CAPL SHALL PAY MONEY TO BBPL AS AND WHEN REQUIRED TO SUPPORT THE REAL ES TATE INVESTMENT ACTIVITIES. IT HAS ALSO BEEN MENTIONED THAT THE AMO UNT INVESTED BY CAPL SHALL BE ADJUSTED AGAINST THE PROPERTIES. 14. IT IS AN UNDISPUTED FACT THAT THE AMOUNTS I NVESTED BY CAPL HAS BEEN ADJUSTED AGAINST THE PROPERTIES ASSIGNED T O CAPL BY BBPL, VIDE ASSIGNMENT AGREEMENTS DATED 28.03.2015. THUS THE ORIGINAL AGREEMENT DATED 14.11.2005 STANDS CORROBOR ATED BY THE ASSIGNMENT AGREEMENTS DATED 28-03-2015. THESE UNCO NTROVERTED DOCUMENTS SUPPORTS THE SUBMISSIONS OF THE ASSESSEE THAT THE AMOUNTS GIVEN BY CAPL TO BBPL ARE NOT LOANS OR ADVA NCES CONTEMPLATED IN SEC.2(22)(E) OF THE ACT. 15. THE LD DR CONTENDED THAT THE ASSIGNMENT AGR EEMENTS DO NOT MENTION ABOUT ADJUSTMENT OF LOAN AND ADVANCES GIVEN EARLIER BY CAPL TO BBPL. SHE ALSO STATED THAT THE AGREEMENTS MENTION ABOUT FURTHER PAYMENTS, WHICH WAS ACTUALLY NOT NECESSARY, WHEN THE AMOUNTS ALREADY GIVEN BY CAPL TO BBPL WERE IN EXCES S OF THE ASSIGNED VALUE OF PROPERTIES. HOWEVER, WE ARE OF THE VIEW THAT WHAT IS REQUIRED TO BE SEEN IS WHETHER CAPL HAS ADVANCED MONEYS AS PURE LOAN AMOUNTS OR FOR BUSINESS PURPOSES. THE AG REEMENTS PRODUCED BY THE ASSESSEE BEFORE LD CIT(A), WHICH WE RE ALSO CONFRONTED WITH THE AO, WOULD PROVE THAT THE TRANSA CTIONS ENTERED BETWEEN THE PARTIES ARE BUSINESS TRANSACTIONS. THE LD A.R ALSO ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 9 OF 14 SUBMITTED THAT BOTH THE COMPANIES ARE MAINTAINING A CCOUNTS AS RUNNING ACCOUNTS ONLY AND REAL ESTATE INVESTMENT AC TIVITY WAS AGREED TO BE A CONTINUOUS ACTIVITY. HENCE THE QUES TION OF MAKING ONE TO ONE RECONCILIATION, AS CONTENDED BY LD DR. W OULD NOT ARISE IN THESE TYPES OF TRANSACTIONS. 16. AT THIS JUNCTURE, WE FEEL IT PERTINENT TO EX TRACT THE ORDER PASSED BY LD. CIT(A) IN THIS REGARD:- 7.4 I CONSIDERED THE SUBMISSIONS MADE AND MATERIAL S ON RECORD. THE CONTENTION OF THE APPELLANT IS THAT THE DEEMED DIVIDEND CANNOT BE ASSESSED FOR THE ASSESSMENT YEARS 2007-08, 2008-09, 2010-11 & 2011-12 BECAUSE IT WAS NOT BASED ON ANY MATERIALS FOUND AT THE TIME OF SEARCH AND THESE ASSESSMENTS HAD NOT ABATED ON THE DATE OF SEARCH. THE SECOND CONTENTION OF THE APPELLANT IS THAT THE ADVANCE PAI D BY M/S. CAUVERY AQUA PVT. LTD., TO M/S. BRINDAVAN BEVERAGES PVT. LT D., IS NOT A LOAN OR ADVANCE SINCE IT WAS GIVEN IN CONNECTION WITH PROPE RTY INVESTMENTS TO BE MADE AFTER TERMINATION OF THE DISTRIBUTION BUSINESS BETWEEN THE 2 COMPANIES WHEN AN AMOUNT OF RS. 1,97,11,809/-WAS DU E TO M/S. CAUVERY AQUA PVT. LTD., FROM M/S. BRINDAVAN BEVERAGES PVT. LTD. 7.5 I FIND THAT THE APPELLANT HAS BEEN ABLE TO SUBSTANT IATE ITS EXPLANATION THAT THEAMOUNTS ADVANCED BY M/S. CAUVERY AQUA PVT. LTD., TO M/S. BRINDAVAN BEVARAGES PVT. LTD., IS NOT A LOAN OR ADV ANCE BUT A BUSINESS TRANSACTION BETWEEN THESE 2 COMPANIES FOR PURCHASE OF REAL ESTATE PROPERTIES. IT IS NOT IN DISPUTE THAT M/S. CAUVERY AQUA PVT. L TD., WAS A DISTRIBUTOR OF M/S. BRINDAVAN BEVERAGES FOR PRODUCT S MANUFACTURED FROM 1999 TO 2002 AND THERE WAS A SUM OF RS. 1,97,11,809 /- OUTSTANDING AT THAT TIME. THERE WAS AN AGREEMENT DATED 14/11/2005 BETWEEN THE 2 COMPANIES TO INVEST THE ABOVE AMOUNT DUE IN REAL ES TATE DEVELOPMENT PROJECTS OF EMBASSY GROUP WITH WHOM M/S. BRINDAVAN BEVERAGES PVT. LTD., WAS ALREADY HAVING SUBSTANTIAL INVESTMENTS. THIS CLAIM OF THE APPELLANT IS NOT SHOWN TO BE INCORRECT IN THE ASSES SMENT ORDER WITH REGARD TO ANY MATERIALS THAT SHOWS A DIFFERENT PICT URE. RATHER, THE A.O. HAS SIMPLY DISBELIEVED THE EXPLANATION OF THE APPEL LANT THAT THE TRANSACTIONS BETWEEN THESE COMPANIES WERE BUSINESS TRANSACTIONS AND HAS HELD THAT THE EXPLANATION WAS NOT A SATISFACTOR Y ONE BY OBSERVING THAT M/S. CAUVERY AQUA PVT. LTD., NEED NOT HAVE MAD E INVESTMENTS THROUGH M/S. BRINDAVAN BEVERAGES PVT. LTD., AND COU LD HAVE DIRECTLY GONE TO EMBASSY GROUP. THE A.O. HAS ALSO MENTIONED THAT THERE WAS NO ACKNOWLEDGMENT FROM EMBASSY GROUP SHOWING PAYMENTS FROM MI.S. CAUVERY AQUA PVT. LTD., FOR ANY PROJECT AND A.O. RE GARDED THE ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 10 OF 14 EXPLANATION OF THE APPELLANT AS GIVING A COLOUR OF BUSINESS TRANSACTIONS TO LOANS THAT WERE ADVANCED. 7.6 I FIND THE ABOVE BASIS STATED BY THE A.O. TO DISBEL IEVE THE EXPLANATION OF THE APPELLANT IN THE ASSESSMENT ORDE R IS NOT CORRECT . THE FACT THAT M/S. BRINDAVAN BEVERAGES HAD ALREADY MADE SUBSTANTIAL INVESTMENTS WITH EMBASSY GROUP AND THAT M/S. CAUVER Y AQUA PVT. LTD., HAD EXPRESSED ITS DESIRE TO JOIN IS VERY CLEAR FROM THE AGREEMENT DATED 14.11.2005, THE VERACITY OF WHICH HAS NOT BEEN IMPE ACHED IN THE ASSESSMENT PROCEEDINGS. MERELY BECAUSE THE A.O. IS OF THE VIEW THAT THE INVESTMENTS COULD HAVE BEEN MADE DIRECTLY AND NOT T HROUGH M/S. BRINDAVAN BEVERAGES PVT. LTD., CANNOT BE A REASON T O DISCARD THE BUSINESS ARRANGEMENT BETWEEN THE PARTIES. HENCE, I DO NOT FIND THE REASONS MENTIONED BY THE A.O. IN THE ASSESSMENT ORD ER THAT THE APPELLANT HAS TRIED TO GIVE A COLOUR OF BUSINESS TRANSACTION TO A LOAN ADVANCED VERY CONVINCING. 7.7THE APPELLANT HAS PRODUCED BEFORE ME TWO ASSIGNM ENT AGREEMENTS DATED 28.03.2015 BY WHICH M/S. BRINDAVAN BEVERAGES PVT. L TD., HAS ASSIGNED ITS RIGHTS IN THE PURCHASE AGREEMENT WITH EMBASSY GROUP IN RESPECT OF UNDIVIDED INTEREST IN LAND AS WELL AS CONSTRUCTION OF THE APARTMENT NO. 5211 IN THE PROJECT OF EMBASSY GROUP CALLED 'EMBASS Y LAKE TERRACES'. THIS ASSIGNMENT AGREEMENT IS ALSO ENDORSED BY M/S. EMBASSY GROUP WHO HAS SIGNED AS CONSENTING WITNESS . THIS DOCUMENT WAS PRODUCED TO SUBSTANTIATE THE CLAIM THAT THERE WAS AN AGREEMENT BETWEEN THE COMPANIES TO ACQUIRE REAL ESTATE PROPERTIES AS PER THE AGREEM ENT DATED 14.11.2005 ENTERED EARLIER. SINCE THE SAID DOCUMENT HAS BEEN E XECUTED ON 28.03.2015 AND VERY CLOSE TO THE ASSESSMENT ORDER DATED 30.03. 2015, THE PRAYER OF THE APPELLANT FOR ADMISSION OF THE SAME UNDER RULE 46A OF THE I.T.RULES IS CONSIDERED. NO SPECIFIC OBJECTION HAS ALSO BEEN RAI SED BY THE A.O. FOR ADMISSION OF THIS ADDITIONAL EVIDENCE. 7.8 TAKING INTO CONSIDERATION THE MATERIALS ON RECO RD, I HOLD THAT THEAPPELLANTHASBEEN ABLE TO ESTABLISH THAT THE AMOU NTS ADVANCED BY M/S. CAUVERY AQUA PVT. LTD., TO M/S. BRINDAVAN BEVERAGES PVT. LTD., ARE NOT MERE LOANS OR ADVANCES BUT THE SAID ADVANCES CONSTI TUTE A BONAFIDE BUSINESS TRANSACTION BETWEEN THE 2 COMPANIES FOR AC QUISITION AND INVESTMENTS TO BE MADE IN REAL ESTATE DEVELOPMENT P ROJECTS WITH EMBASSY GROUP. THE A.O. OBSERVATION THAT THERE WAS NO ACKNO WLEDGEMENT OF THIS ARRANGEMENT FROM EMBASSY GROUP IS ALSO ADDRESSED SI NCE IN THE ASSIGNMENT AGREEMENT DATED 28.3.2015, EMBASSY GROUP HAS SIGNED AS A CONSENTING WITNESS.HENCE, THE GROUNDS ON WHICH THE A.O. HAS DISBELIEVED THE STAND OF THE APPELLANT IN THE ASSESSMENT PROCEEDING S ARE REJECTED. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 11 OF 14 7.9. I ALSO FIND THAT THE STAND OF THE A.O. IN THE REMAND REPORT IS ALSO NOT THAT THE ADVANCES ARE NOT BUSINESS ADVANCES. THE A.O. HAS SUBMITTED IN THE REMAND REPORT THAT THERE IS NO DIFFERENCE BE TWEEN AN ADVANCE AND BUSINESS ADVANCE AND ONCE THE PARAMETERS MENTIONED IN SEC. 2(22)(E) ARE FULFILLED, THE LIABILITY TO TAX AS DEEMED DIVIDEND ARISES. HOWEVER, THIS STAND OF THE A.O. IS CONTRARY TO THE RULING OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BAGMANE CONSTRUCTIONS PVT . LTD., IN 119 DTR 49 (KAR.) WHERE IT HAS BEEN HELD AS UNDER:- '27. IN THIS BACKGROUND WHEN WE LOOK AT THE AFORESA ID PROVISION, IT IS CLEAR THAT ANY PAYMENT MADE BY A COMPANY BY WAY OF ADVANCE OR LOAN HAS TO BE UNDERSTOOD IN THE CONTEXT OF THE OBJ ECT WITH WHICH THE SAID PROVISION IS INTRODUCED THOUGH THE LEGISLA TURE HAS INTRODUCED `ADVANCE' AS WELL AS 'LOAN' WHICH ARE TW O DIFFERENT WORKS, THE MEANING OF EACH OF THOSE WORKS HAVE TO BE UNDER STOOD IN THE CONTEXT IN WHICH THEY ARE USED EACH WORK TAKES ITS COLOUR FROM THE OTHER. THE MEANING OF THE WORD 'ADVANCE ' IS TO BE UNDERSTOOD BY THE MEANING OF THE WORD LOAN WHICH IS USED IMMEDIATELY THEREAFTER. ASSOCIATED WORDS TAKEN THEIR MEANING FROM ONE ANOTH ER UNDER THE DOCTRINE OF NOSCITUR A SOCITS, THE PHILOSOPHY OF WH ICH IS THAT THE MEANING OF A DOUBTFUL WORD MAY BE ASCERTAINED BY RE FERENCE TO THE MEANING OF WORDS ASSOCIATED WITH IT. THIS RULE, ACC ORDING TO MAXWELL MEANS THAT, WHEN TWO OR MORE WORDS WHICH AR E SUSCEPTIBLE OF ANALOGOUS MEANING ARE COUPLED TOGETHER THEY ARE UNDERSTOOD TO BE USED IN THEIR COGNATE SENSE. THEY TAKE AS IT WER E THEIR COLOUR FROM EACH OTHER, THAT IS, THE MORE GENERAL IS RESTR ICTED TO A SENSE ANALOGOUS TO A LESS GENERAL. IN THE CASE OF A LOAN, MONEY IS ADVANCED GENERALLY ON PAYMENT OF INTEREST. IN OTHER WORDS THE LOAN ADVANCED GENERALLY ON PAYMENT OF INTEREST. IN OTHER WORDS THE LOAN ADVANCE HAS TO BE REPAID WITH INTEREST. IN THE CASE OF AN ADVANCE ALSO, THE ELEMENT OF REPAYMENT IS THERE BUT SUCH A REPAYMENT MAY BE WITH INTEREST OR WITHOUT INTEREST. THEREFORE, WHEN THE SAID TWO WORDS ARE USED IN THE AFORESAID PROVISION WITH THE PURPOS E OF LEVYING TAX, IF THE INTENTION OF SUCH ADVANCE OR LOAN IS TO AVOID P AYMENT OF DIVIDEND DISTRIBUTION TAX UNDER S. 115-0 OF THE ACT , SUCH A PAYMENT BY A COMPANY CERTAINLY CONSTITUTES A DEEMED DIVIDEN D BUT IF SUCH A PAYMENT IS MADE FIRSTLY NOT OUT OF ACCUMULATED PROF ITS AND SECONDLY EVEN IF IT IS OUT OF ACCUMULATED PROFITS BUT AS TRA DE ADVANCE AS A CONSIDERATION FOR THE GOODS RECEIVED OR FOR PURCHAS E OF A CAPITAL ASSET WHICH INDIRECTLY WOULD BENEFIT THE COMPANY AD VANCING THE LOAN, SUCH ADVANCE CANNOT BE BROUGHT WITHIN THE WORD 'ADVANCE' USED IN THE AFORESAID PROVISIONS. THE TRADE ADVANCE WHICH IS IN THE NATURE OF MONEY TRANSACTED TO GIVE EFFECT TO CO MMERCIAL TRANSACTIONS WOULD NOT FALL WITHIN THE AMBIT OF THE PROVISIONS OF S.2(22)(E) OF THE ACT'. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 12 OF 14 7.10 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON 'BLE JURISDICTIONAL HIGH COURT [SUPRA] I HOLD THAT A TRADE ADVANCE FOR PURCHASE OF CAPITAL ASSETS OR PURCHASE OF GOODS CANNOT BE CONSIDERED AS A LOAN OR ADVANCE WITHIN THE SCOPE OF SEC. 2(22)(E) OF THE ACT. I HAV E ALREADY HELD THAT THE APPELLANT HAS BEEN ABLE TO SUBSTANTIATE ITS EXPLANA TION THAT THE AMOUNTS ADVANCED BY M/S. CAUVERY AQUA PVT. LTD., TO M/S. BR INDAVAN BEVERAGES PVT. LTD., WAS FOR PURPOSES OF MAKING INVESTMENTS I N REAL ESTATE DEVELOPMENT PROJECTS OF EMBASSY GROUP AND THAT THER E IS NO MATERIAL TO DISBELIEVE THE SAID CLAIM OF THE APPELLANT. HENCE, THE ADDITIONS MADE BY THE A.O. OF RS.1,00,00,000/-, RS.59,68,494/-,RS.59, 72,492/-, RS.81,76,829/-, RS.1,30,44,602/- AND RS.50,31,297/- FOR THE ASSESSMENT YEARS 2007-08, 2008-09, 2010-11, 2011-12 , 2012-13 AND 2013-14 ARE DELETED. 17. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OUR C ONSIDERED VIEW, THE FINDINGS ARRIVED AT BY LD CIT(A) DO NOT CALL FO R ANY INTERFERENCE. ACCORDINGLY, WE CONFIRM THE ORDER OF LD CIT(A) IN D ELETING THE ADDITIONS MADE U/S 2(22)(E) OF THE ACT IN ALL THE T HREE YEARS UNDER CONSIDERATION. 18. THE ASSESSING OFFICER HAS ALSO MADE PROTECT IVE ADDITION OF UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE IN ALL THE THREE YEARS, THE DETAILS OF WHICH ARE GIVEN IN THE TABLE ABOVE. THE SUBSTANTIVE ADDITION WAS MADE BY THE AO IN THE HAND S OF M/S CAUVERY AQUA P LTD. THE FACTS RELATING TO THE SAME ARE THAT THE AO NOTICED A LEDGER ACCOUNT TITLED AS PRAKASH LADHANI IMPREST ACCOUNT. IT SHOWED THAT MONEY WAS GIVEN TO PRAKAS H LADHANI. HOWEVER, IT WAS NOT SHOWN IN THE BALANCE SHEET. TH E AO TOOK THE VIEW THAT THE MONEY WAS GIVEN TO PRAKASH LADHANI BY CAPL OUT OF UNDISCLOSED SOURCES AND ACCORDINGLY ASSESSED THE AM OUNTS SO GIVEN AS INCOME OF CAPL IN ALL THE THREE YEARS ON SUBSTAN TIVE BASIS. THE AO ALSO ASSESSED THE VERY SAME AMOUNTS ON PROTECTIV E BASIS IN THE HANDS OF THE ASSESSEE HEREIN. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 13 OF 14 19. THE LD CIT(A) HAD DELETED THE ADDITION IN AL L THE THREE YEARS IN THE HANDS OF CAPL ON THE REASONING THAT THE AMOUNTS SHOWED IN THE SEIZED LEDGERS STAND EXPLAINED AS CASH WITHDRAW AL FROM UNITED BANK OF INDIA AND THE SAME AMOUNT WAS DEPOSITED IN BANK OF INDIA. THE IMPREST ACCOUNT WAS CREATED IN BETWEEN IN ORDER TO HAVE CONTROL OVER THESE TRANSACTIONS. SINCE THESE TRANS ACTIONS STOOD EXPLAINED, THE LD CIT(A) DELETED THE PROTECTIVE ADD ITIONS MADE IN THE HANDS OF THE ASSESSEE IN ALL THE THREE YEARS. THE REVENUE IS AGGRIEVED. 20. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. WE NOTICE THAT THIS BENCH OF TRIBUNAL HAS CONFIRMED THE ORDER OF LD CIT(A) IN DELETING THE ADDITIONS MADE ON SUBSTANTIV E BASIS IN THE HANDS OF CAUVERY AQUA P LTD IN AY 2011-12 AND 2012- 13, VIDE ITS ORDER DATED 11.10.2021 PASSED IN ITA NOS.67 & 68/BA NG/2018. THIS BENCH HAS ACCEPTED THE FINDINGS OF LD CIT(A) T HAT ALL THE TRANSACTIONS HAVE BEEN ROUTED THROUGH THE BOOKS OF ACCOUNT AND HENCE THE QUESTION OF MAKING ANY ADDITION DOES NOT ARISE. FOR AY 2013-14 ALSO, THE TRIBUNAL HAS CONFIRMED THE ORDER OF LD CIT(A) IN DELETING THE ADDITION IN THE HANDS OF CAPL, VIDE CO RRIGENDUM DATED 22-10-2021 ISSUED IN IT(TP)A NO.27/BANG/2017. ACC ORDINGLY, WHEN THE SOURCES STOOD EXPLAINED, THE QUESTION OF M AKING ANY ADDITION ON SUBSTANTIVE BASIS OR PROTECTIVE BASIS D OES NOT ARISE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF LD CIT(A) IN DELETING THE ADDITIONS MADE ON PROTECTIVE BASIS IN ALL THE THREE YEARS. 21. WE SHALL NOW TAKE UP THE CROSS OBJECTIONS FI LED BY THE ASSESSEE FOR AY 2011-12 AND 2012-13. AT THE TIME O F HEARING, THE LD A.R DID NOT PRESS THE CROSS OBJECTIONS. ACCORDI NGLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED AS N OT PRESSED. ITA NOS.72 TO 74/BANG/2018 CO NOS.65 & 66/BANG/2018 SRI PRAKASH LADHANI, BANGALORE PAGE 14 OF 14 22. IN THE RESULT, ALL THE APPEALS OF REVENUE A ND BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCT, 2021. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 25 TH OCT, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.