ACIT, Ludhiana V. Sh. Sanjiv Gupta, Ludhiana

ITA 738/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51478 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAISHREE SHARMADR
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.738/CHD/2011 (ASSESSMENT YEAR : 2008-09) THE A.C.I.T., VS. SH.SANJIV GUPTA, CIRCLE-VI, PROP.M/S PYARE LAL BANSAL & CO., LUDHIANA. 353-IAA, LUDHIANA. PAN: ABMPG0989R (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.JAISHREE SHARMA,DR RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 06.09.2011 DATE OF PRONOUNCEMENT : 19.09.2011 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX(APPEALS), DATED 18.05.20 11 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORDER PASSED UN DER SECTION 143(3) OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN DELETING THE ADDITION OF RS.228,28,016/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEEMED DIVIDEND BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT 1961. 2. THAT THE ORDER OF LD. CIT(A), LUDHIANA BE SET AS IDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2 3. IN THE APPEAL FILED BY THE REVENUE, THE ONLY ISS UE RAISED IS IN CONNECTION WITH THE APPLICABILITY OF PROVISIONS OF SECTION 2(22)(E) OF THE INCOME-TAX ACT,1961. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THERE WAS A CREDIT BALANCE OF RS.26,44,795/- ON 25.02.2008 IN THE BOOKS OF THE AS SESSEE, WHICH WAS SUBSEQUENTLY REPAID BY THE ASSESSEE ON 31.03.2008. THE COPY OF ACCOUNT OF M/S PEE JAY FABRICS PVT.LTD. WAS FILED ON RECORD . THE AO FURTHER NOTED THAT SHRI SANJEEV GUPTA WAS THE PROPRIETOR O F M/S PAYARE LAL BANSAL & COMPANY, AND WAS BENEFICIAL OWNER IN THE S HARE HOLDING OF M/S PEE JAY FABRICS PVT.LTD. AS SUBSTANTIAL SHAREHOLDER OF 50% SHARES. THE SAID CONCERN WAS A CLOSELY HELD COMPANY IN WHICH PU BLIC WERE NOT SUBSTANTIALLY INTERESTED. THE AO, THUS, OBSERVED T HAT SHRI SANJEEV GUPTA WAS THE BENEFICIAL OWNER HOLDING SHARES OF 50% OF T HE VOTING POWER AND FULFILLED THE CONDITION OF SHARE HOLDING RATIO OF M ORE THAN 10% AS PROVIDED U/S 2(22)(E) OF THE ACT. THE SECOND CONDIT ION OF POSSESSING ACCUMULATED PROFITS TO THE EXTENT OF ADVANCE OR LOA N GIVEN, WERE FOUND TO BE FULFILLED BY THE SAID CONCERN WHICH HAD RESER VES AND SURPLUS OF RS.72,40,281/- AS ON 31.03.2008. VIDE ORDER-SHEET ENTRY DATED 16.12.2010, THE ASSESSEE WAS SHOW CAUSED AS TO WHY PAYMENT OF RS.28,28,016/- PAID TO M/S RAYMONDS LIMITED BY M/S PEE JAY FABRICS LTD. ON BEHALF OF THE ASSESSEE, BE NOT TREATED AS L OAN GIVEN BY THE COMPANY TO THE FIRM U/S 2(22)(E) OF THE ACT. IN RE PLY, THE ASSESSEE EXPLAINED THAT BOTH THE CONCERNS WERE THE CONSIGNEE AGENT OF THE SAME COMPANY I.E. M/S RAYMONDS LTD. BOTH THE ASSESSEE F IRM AND THE COMPANY HAD TO PAY/RECEIVE AMOUNTS AGAINST THE BILL S ISSUED AND COMISSION EARNED AND DUE TO SOME ENTRY PASSED BY M /S RAYMONDS LTD., THE ASSESSEE HAD TO SHOW CREDIT TO M/S PEE JAY FABR ICS PVT.LTD., WHICH 3 CAME TO ITS NOTICE AT THE TIME OF RECONCILIATION OF THE ACCOUNT WITH M/S RAYMONDS LTD. IT WAS FURTHER EXPLAINED THAT THERE WAS NO DIRECT PAYMENT MADE TO THE ASSESSEE BY THE SAID COMPANY AN D ONLY BECAUSE OF SOME ENTRY PASSED BY M/S RAYMONDS LTD. IN BOTH ACCO UNTS, THE AMOUNT WAS REQUIRED TO BE CREDITED BY THE ASSESSEE TO M/S PEE JAY FABRICS PVT.LTD. THE ASSESSEE FURNISHED THE COPIES OF ACCO UNTS IN THE BOOKS OF M/S RAYMONDS LTD. OF BOTH THE ASSESSEE AND THE COMP ANY. THE CONTENTION OF THE ASSESSEE WAS FOUND TO BE UNTENABL E BY THE AO IN VIEW OF THE FACT THAT HOW M/S RAYMONDS LTD. COULD RECEIV E PAYMENT FROM ONE PARTY I.E. M/S PEE JAY FABRICS LTD. AGAINST THE PUR CHASES MADE BY THE OTHER PARTY I.E. M/S PAYARE LAL BANSEL & COMPANY AN D VICE-VERSA AND ALSO HOW WHEN THE ASSESSEE HAD MADE PURCHASES WORTH RS.20 LACS, IT WAS NOT AWARE THAT IT HAD NOT MADE THE PAYMENT CORRESPO NDING TO THIS PURCHASE AND NOR THE AMOUNT WAS DEBITED TO ITS ACCO UNT. ON THE OTHER SIDE AO ALSO WONDERED HOW M/S PEE JAY FABRICS PVT. LTD. WAS NOT AWARE THAT ITS ACCOUNT WAS DEBITED BY M/S RAYMONDS LTD. F OR PURCHASES WHICH WERE NOT MADE BY IT. THE AO, THUS HELD AS UNDER: HENCE, IT IS QUITE CLEAR THAT M/S RAYMONDS LIMITED HAS TAKEN PAYMENT OF RS.28,28,016/- FROM M/S PEE JAY FA BRICS (P) LTD. ON ACCOUNT OF PURCHASES MADE TO ASSESSEE O UT OF WHICH RS.26,44,795/- WERE SUBSEQUENTLY REPAID BY TH E ASSESSEE TO M/S PEE JAY FABRICS (P) LTD. ON 31.3.20 08 AS EVIDENT FROM ITS COPY OF ACCOUNT AND THE BALANCE AM OUNTS OF RS.11,892/- & 1,71,329/- WERE TRANSFERRED BY M/S RA YMONDS LTD. FROM THE ACCOUNT OF THE ASSESSEE TO M/S PEE JA Y FABRICS (P) LTD. AS MENTIONED ABOVE. HENCE, AS PER THE PROVISIONS OF SECTION 2(22)(E), THE WHOLE AMOUNT OF RS.28,28,016/- IS TO BE TREATED AS LOAN AND ADVANCE TO THE ASSESSEE BY M/S PEE JAY FABRICS (P) LTD. 4 5. ACCORDINGLY, A SUM OF RS.28,28,016/- WAS TREATED AS DEEMED DIVIDEND UNDER THE PROVISIONS OF SECTION 2(22)(E) O F THE ACT IN THE HANDS OF THE ASSESSEE AND WAS ADDED TO THE INCOME OF THE ASSESSEE. 6. THE CIT(A) HELD AS UNDER : I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANTS COUNSE L, DURING THE COURSE OF APPELLATE PROCEEDINGS. FACTS OF THE CASE IN HAND ARE THAT THE APPELLANT AND M/S PEE JAY FABRICS PVT.LTD. ARE CONSIGNEE AGENTS OF M/S RAYMONDS LTD. THE APPELLANT HOLDS 30% SHARE IN M/S PEE JAY FABRICS PV T.LTD., IS ALSO NOT IN DISPUTE. BOTH THE CONCERNS I.E. PROP RIETARY CONCERN OF THE APPELLANT AND M/S LPEE JAY FABRICS P VT.LTD. HAVE TO PAY/RECEIVE AMOUNTS AGAINST THE BILLS ISSUE D AND COMMISSION EARNED FROM M/S RAYMONDS LTD. ON A PARTI CULAR DATE M/S RAYMONDS LTD. PASSED AN ENTRY DEBITING RS.26,44,795/- AND CREDITING RS.26,44,795/- WITH ID ENTICAL AMOUNT. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE APPELLANT HAD INSTRUCTED/REQUESTED M/S RAYMONDS LTD. TO PASS ANY SUCH ENTRY. AS PER THE APPELLANT, IT W AS ONLY AT THE TIME OF RECONCILIATION OF ACCOUNTS THAT THE FAC TUM OF SUCH ENTRIES HAVING BEEN PASSED BY M/S RAYMONDS LTD . CAME TO THE NOTICE OF THE APPELLANT. IT IS AN UNDI SPUTED FACT THAT THERE WAS NO DIRECT PAYMENT BY M/S PEE JAY FAB RICS PVT. LTD. TO THE APPELLANT. IT IS ALSO UNDISPUTED F ACT THAT THERE WAS NO DIRECT PAYMENT BY M/S PEE JAY FABRICS PVT. LTD. TO THE APPELLANT. IT IS ALSO UNDISPUTED THAT N O SUCH LOAN/ADVANCE WAS MADE BY M/S PEE JAY FABRICS PVT.LT D. TO THE APPELLANT. WHATEVER TRANSACTIONS/ENTRIES WERE P ASSED, WERE IN THE NORMAL COURSE OF BUSINESS. THERE WAS N O DIRECT PAYMENT MADE BY M/S PEE JAY FABRICS PVT.LTD. TO THE APPELLANT. I HAVE ALSO GONE THROUGH THE RATIO OF TH E JUDGMENTS REFERRED TO BY THE LD COUNSEL IN HIS SUBM ISSIONS. AFTER GIVING A CAREFUL CONSIDERATION TO THE FACTS O F THE CASE AND THE LEGAL POSITION. I FIND MERIT IN THE CONTENT IONS RAISED BY THE APPELLANTS COUNSEL. MERELY BECAUSE T HE PRINCIPAL I.E. M/S RAYMONDS LTD. HAS PASSED AN ENTR Y 5 DEBITING ONE ACCOUNT AND CREDITING THE OTHER ACCOUN T, THE INTENTION OF GIVING A LOAN/ADVANCE CANNOT BE MADE O UT. ULTIMATELY, THE ACCOUNTS INTER SE WERE ADJUSTED BY ISSUING A CHEQUE ON 31.3.2008 ON THE RECONCILIATION OF ACCOUN TS AS IS APPARENT FROM THE PERUSAL OF THE COPY OF ACCOUNT. I N VIEW OF THE ABOVE FACTS, PROVISIONS OF SECTION 2(22)(E) ARE NOT ATTRACTED AND THE ADDITION MADE AT RS.28,28,016/- I S DIRECTED TO BE DELETED. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(A). LD. DR FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF TH E AO, ALSO PLACED RELIANCE ON THE DECISION OF THE GUJRAT HIGH COURT I N RAVINDRA D.AMIN V CIT 208 ITR 815. LD AR FOR THE ASSESSEE PLACING RELIANCE ON THE ORDE R OF THE CIT(A) POINTED OUT THAT THE PROVISIONS OF SE CTION 2(22)(E) OF THE ACT ARE ATTRACTED IN CASE OF ANY PAYMENT BY A COMPA NY TO ITS SHAREHOLDER AND IN THE FACTS OF THE PRESENT CASE, THERE WAS NO PAYMENT BY THE COMPANY TO ITS SHAREHOLDER I.E. THE ASSESSEE BEFORE US. IT WAS FURTHER POINTED OUT THAT BECAUSE OF THE ENTRIES PASSED BETW EEN THE COMPANY AND M/S RAYMONDS LTD., THERE WAS ADJUSTMENT CARRIED OUT BY WAY OF BOOK END, WHICH DOES NOT ATTRACT THE PROVISIONS OF SECTI ON 2(22)(E) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF MADRAS HIGH COURT IN G.R.GOVINDARAJULU NAIDU & ANOTHER V CIT, 90 ITR 13. IT WAS ALSO POINTED OUT THAT THE ADVANCES WERE MADE DURING THE ORDINARY COURSE OF CARRYING ON THE BUSINESS AND THE SAME DID NOT CONST ITUTE LOAN FOR THE PURPOSE OF SECTION 2(22)(E) OF THE ACT. RELIANCE W AS PLACED ON THE RATIO LAID DOWN IN THE DCIT V LAKRA BROTHERS, 106 TTJ 25 0 (CHD). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. 9. THE ASSESSEE IS CARRYING ON THE BUSINESS AS SOLE PROPRIETOR OF M/S PAYARE LAL BANSAL & COMPANY AND IS A CONSIGNEE AGEN T OF M/S RAYMOND LTD. THE ASSESSEE IS ALSO BENEFICIAL OWNER OF SHARE HOLDING TO THE EXTENT 6 OF 50% SHARES OF M/S PEE JAY FABSRIS PVT.LTD. THE SAID COMPANY IS ALSO THE CONSIGNEE AGENT OF M/S RAYMOND LTD. BOTH THE C ONCERNS HAVE TRANSACTIONS WITH M/S RAYMONDS LTD. AND HAVE TO PAY /RECEIVE AMOUNTS AGAINST THE BILLS ISSUED AND COMMISSION EARNED. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD MADE PURCHASES FROM M/S RAYMONDS LTD. HOWEVER, THE PAYMENT IN CONNECTION WITH THE SAID PU RCHASES WAS TAKEN BY M/S RAYMONDS LTD. FROM M/S PEE JAY FABRICS PVT.L TD. ON RECONCILIATION OF THE ACCOUNT, THE ASSESSEE THEREAF TER REPAID M/S PEE JAY FABRICS LTD. ON 31.03.2008. IN THE ABOVESAID CIRCU MSTANCES, THE AO INVOKED THE PROVISIONS OF SECTION 2(2)(E) OF THE IN COME-TAX ACT AND WAS OF THE OPINION THAT M/S PEE JAY FABRICS PVT.LTD. HA D MADE THE PAYMENT TO M/S RAYMONDS LTD. ON BEHALF OR FOR INDIVIDUAL BE NEFIT OF THE ASSESSEE AND SUCH PAYMENT IS TO BE TREATED AS DEEMED DIVIDEN D AS PER SECTION 2(22)(E) OF THE ACT. 10. UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, IT IS PROVIDED THAT ANY PAYMENT BY A COMPANY, IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED, BY WAY OF ADVANCE OR LOAN TO A SHAREHOL DER, AND IS BENEFICIAL OWNER OF SHARES HOLDING NOT LESS THAN 10% OF THE VO TING POWER OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS THE MEMBER/PAR TNER OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT OF THE ACCUMULATED PROFI TS OF THE COMPANY, IS TO BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF TH E PERSON MAKING SUCH ADVANCES. THE SECTION IS A DEEMING PROVISION UNDER WHICH IT IS PROVIDED THAT WHERE ANY MONEY IS EITHER ADVANCED AS A LOAN T O A SHAREHOLDER OR TO ANY CONCERN IN WHICH SUCH A SHAREHOLDER IS A MEMBER OR PARTNER OR WHERE ANY PAYMENT IS MADE BY THE COMPANY ON BEHALF OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER BUT, LIMITED TO THE EXTENT OF THE ACCUMULATIVE PROFITS, THEN SUCH PAYMENT IS TO BE TR EATED AS DEEMED 7 DIVIDEND IN THE HANDS OF THE SHAREHOLDER. THE SHAR EHOLDER REFERRED TO IN THE SAID SUB-SECTION IS A PERSON WHO IS BENEFICIAL OWNER OF SHARES IN THE SAID COMPANY HOLDING NOT LESS THAN 10% OF THE VOTIN G POWER. 11. ADMITTEDLY IN THE FACTS OF THE PRESENT CASE, TH E ASSESSEE IS THE BENEFICIAL OWNER OF 30% OF SHARE HOLDING IN THE CO MPANY M/S PEE JAY FABRICS PVT.LTD., WHICH IS A COMPANY IN WHICH PUBLI C ARE NOT SUBSTANTIALLY INTERESTED. ADMITTEDLY THE PROVISION S OF SECTION 2(22)(E) OF THE ACT ARE ATTRACTED IN THE PRESENT CASE AS THE PRELIMINARY CONDITIONS LAID DOWN IN THE SAID CLAUSE ARE FULFILLED. 12. NOW COMING TO THE FACTS OF THE PRESENT CASE, M/ S PEE JAY FABRICS PVT.LTD. HAD MADE PAYMENT TO M/S RAYMONDS LTD. ON B EHALF OF SOLE PROPRIETORSHIP BUSINESS OF THE ASSESSEE. THE CLAIM OF THE ASSESSEE IS THAT ON A PARTICULAR DATE, M/S RAYMONDS LTD. PASSED AN E NTRY AT THEIR END DEBITING M/S PEE JAY FABRICS PVT.LTD. OF RS.28,28,0 16/- AND CREDITING M/S PAYARE LAL BANSAL & COMPANY WITH THE SAME AMOUN T. LATER ON, M/S RAYMONDS LTD. DEBITED M/S PAYARE LAL BANSAL & COMPA NY WITH RS.1,82,221/- AND CREDITED M/S PEE JAY FABRICS PVT. LTD. BY AN IDENTICAL AMOUNT. THE FIRST LIMB TO BE HIT BY PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS THAT THERE HAS TO BE A PAYMENT BY THE COMPAN Y TO ITS SHAREHOLDER, SUBJECT TO FULFILLMENT OF OTHER CONDITIONS. THE LD. AR STRESSED THAT NO SUCH PAYMENT WAS EVER MADE BY THE SAID COMPANY TO M /S PAYARE LAL BANSAL & COMPANY OF WHICH THE ASSESSEE IS THE PROPR IETOR. THE ENTRY WAS PASSED BY M/S RAYMONDS LTD. BY DEBITING ONE PAR TY AND CREDITING THE OTHER. FURTHER PLEA OF THE LD. AR WAS THAT ONL Y AT THE TIME OF RECONCILIATION OF THE ACCOUNT, THE FACTUM OF THE EN TRIES PASSED BY M/S RAYMONDS LTD. CAME TO HIS KNOWLEDGE AND THEREAFTER CONSEQUENT ENTRIES WERE PASSED IN THE ACCOUNT WITH M/S PEE JAY FABRICS PVT.LTD. THESE TRANSACTIONS/ENTRIES WERE PASSED AS PER THE ASSESSE E IN THE NORMAL COURSE 8 OF BUSINESS. THE CASE OF THE AO IS THAT THE PAYMENT IN THE PRESENT CASE HAD BEEN MADE BY THE COMPANY ON BEHALF OF THE ASSES SEE, WHO IS HOLDING SUBSTANTIAL SHARE-HOLDING IN THE SAID COMPANY AND T HE PAYMENT WAS MADE WITHIN THE EXTENT OF THE ACCUMULATED PROFITS. AS P ER THE AO, THE BALANCE-SHEET OF M/S PEE JAY FABRICS LTD. FILED BY THE ASSESSEE RELATING TO ASSESSMENT YEAR 2008-09 REFLECTED RESERVES AND S URPLUS AT RS.72,40,281/- AS ON 31.03.2008. 13. THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT A RE APPLICABLE UNDER DIFFERENT CIRCUMSTANCES. THE FIRST LIMB OF THE SAI D CLAUSE DEALS WITH THE AMOUNT PAID BY WAY OF ADVANCE OR LOAN TO THE BENEFI CIAL SHAREHOLDER. THE SECOND LIMB OF THE SAID CLAUSE DEALS WITH PAYME NTS OF ANY SUM BY WAY OF ADVANCE OR LOAN TO ANY CONCERN IN WHICH THE SAID SHAREHOLDER IS A MEMBER OR PARTNER. THE THIRD LIMB OF THE SAID CLAUS E IS PAYMENT BY ANY SUCH COMPANY ON BEHALF OR FOR THE BENEFIT OF ANY SU CH SHAREHOLDER, BUT LIMITED TO THE EXTENT OF THE ACCUMULATED PROFITS OF THE COMPANY. IN THE FACTS OF THE PRESENT CASE, M/S PEE JAY FABRICS PVT. LTD. HAD MADE THE SAID PAYMENTS TO M/S RAYMONDS LTD. WHICH WAS RELATABLE T O THE ASSESSEE BEFORE US. THE PLEA OF THE ASSESSEE THAT NO DIRECT PAYMENT WAS MADE BY THE COMPANY TO THE ASSESSEE HAS NO RELEVANCE AS THE CASE OF THE ASSESSEE FALLS WITHIN THE THIRD LIMB I.E. PAYMENT ON BEHALF OR FOR THE INDIVIDUAL BENEFIT OF THE SHAREHOLDER. ADMITTEDLY, THE PAYMENT IN THE CASE HAS BEEN MADE WITHIN THE EXTENT OF THE ACCUMULATED PROFITS O F THE COMPANY. HOWEVER, THE ALTERNATE LIMB OF THE ARGUMENT OF THE ASSESSEE WAS THAT THE ENTRIES WERE PASSED IN THE NORMAL COURSE OF CARRYIN G ON OF THE BUSINESS. 14. WE FIND THAT THE CHANDIGARH BENCH OF TRIBUNAL I N DCIT V LAKRA BROTHERS (SUPRA) HAD LAID DOWN THE PRINCIPLE THAT L OAN IS SOMETHING DIFFERENT FROM SALE AND EVERY SALE OF GOODS ON CRED IT DOES NOT MEAN TO BE TRANSACTION OF LOAN. IN THE FACTS OF THE CASE BEFO RE THE CHANDIGARH 9 TRIBUNAL, THERE WAS A DEBIT BALANCE ON ACCOUNT OF A DVANCE PAID BY AEPL WHICH WAS HELD TO BE PURELY ADVANCE DURING THE COUR SE OF BUSINESS AND IT WAS HELD THAT SUCH PAYMENT DO NOT CONSTITUTE LOAN F OR THE PURPOSE OF SECTION 2(22)(E) OF THE ACT. WE ARE OF THE VIEW THA T IN THE FACTS OF THE PRESENT CASE, THE TRANSACTION IN QUESTION IS RELATA BLE TO THE CARRYING ON OF BUSINESS BY THE ASSESSEE. THE AFORESAID PAYMENT WAS MADE BY M/S PEE JAY FABRICS LTD. AS THE DEMAND WAS RAISED BY TH E CONSIGNOR M/S RAYMONDS LTD. AFTER DEBITING THE ACCOUNT OF THE SAI D COMPANY, THOUGH THE SAID TRANSACTION RELATED TO THE ASSESSEE. THER EAFTER, ON RECONCILIATION OF STATEMENT OF ACCOUNTS, THE SAID A MOUNT WAS REPAID BY THE ASSESSEE TO THE SAID COMPANY AND THE SAME DOES NOT PARTAKE THE CHARACTER OF LOAN AS CONTEMPLATED U/S 2(22)(E) OF T HE ACT. 15. UPHOLDING THE ORDER OF THE CIT(A), WE HOLD THAT THERE IS NO MERIT IN THE ADDITION MADE BY THE AO ON ACCOUNT OF DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. GROUND OF APPEAL RAISED BY THE REVENUE IS, THUS, DISMISSED. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH DAY OF S EPTEMBER, 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH SEPTEMBER, 2011 POONAM COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH