COMMISSIONER OF INCOME TAX Vs. SATYANARAYAN NUWAL

JUDGEMENT

(1.) The Respondent - Assessee is a proprietor of M/s Solar Explosives Transport, Nagpur and is engaged in a business of transportation of explosives. The Assessee holds 19.94% shares in M/s Solar Explosives Limited (For short, SEL) a Company in which the public are not substantially interested.

(2.) For the assessment year 2004-05, the assessing officer held that the amount of Rs. 73,39,572/- (Rs. 47,99,572 + 40,000/-) constituted deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961 and added the same to the total income of the Assessee. The Commissioner (Appeal) partially allowed the appeal filed by the Assessee by deleting the addition of Rs. 25,00,000/- on the ground that the said amount paid by the SEL to the Assessee represented advance towards purchase of immovable property and therefore, falls outside the purview of Section 2(22)(e) of the Income Tax Act.

(3.) The first contention raised on behalf of the revenue is that the Tribunal committed an error in holding that the receipt of Rs. 25,00,000/- as advance towards sale of land falls outside the purview of Section 2(22)(e) of the Income Tax Act.