SUNIL KAPOOR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Aggrieved by the order of the Tribunal in dismissing the appeal filed by him, the appellant-assessee is before this court by filing the present appeal raising the following questions of law:

(2.) The Assessing Officer, taking note of the fact that the loan outstanding in the books of account of the company in favour of the appellant as on March 31, 2009, is Rs. 45,44,303, held that the amount of Rs. 76,86,829 received by the assessee from KIPL has not been repaid as on that date and, therefore, all the payments made by KIPL to the assessee up to March 31, 2009, by way of loans and advances should be treated as deemed dividend in terms of section 2(22)(e) of the Income-tax Act because the conditions required to hold the transaction as "deemed dividend" have been satisfied. The Assessing Officer held that the four basic requirements for construing a transaction as "deemed dividend" are fulfilled in the present case. For better clarity, the said portion of the order is extracted hereinbelow:

(3.) The Assessing Officer also held that in the books of account, the assessee has shown two separate accounts, one for the loan taken from the company, viz., KIPL and one for the loan given. Accordingly, the Assessing Officer held that irrespective of the amount paid by the assessee to KIPL, the entire amount received by the assessee from KIPL under the head loans and advances amounting to Rs. 76,86,829 is to be treated as "deemed dividend" under section 2(22)(e) of the Act.