COMMISSIONER OF INCOME TAX-I Vs. AMRIK SINGH

JUDGEMENT

(1.) BY way of this order, we shall decide ITA Nos. 92, 323 of 2013, 5, 62 and 64 of 2014 as they relate to the same question of law. Counsel for the parties also agree that in case, the question of law framed in ITA No. 5 of 2014 is answered against the revenue, ITA Nos. 601 and 762 of 2010 shall be rendered infructuous. Facts relevant for adjudication are being taken from ITA No. 5 of 2014. Counsel for the appellant submits that Section 2(22)(e) of the Income -tax Act, 1961 (hereinafter referred to as 'the Act') has to be construed strictly without any exception or consideration for the nature of the transaction between the assessee and the company in which the assessee holds a substantial share holding. Counsel for the appellant further submits that as it is admitted that the assessee obtained advances from the company in which he holds a substantial share holding, his failure to prove business expediency, was rightly considered by the Assessing Officer and the CIT to warrant addition of the amount advanced as deemed dividend, under Section 2(22)(e) of the Act etc. The Income Tax Appellate Tribunal has deleted this addition without assigning any cogent reasons. Counsel for the appellant submits that the following substantial question of law arises for adjudication: - -

(2.) COUNSEL for the assessee submits that a perusal of the material on record particularly facts referred to by the Assessing Officer proves business expediency. The amount advanced, therefore, could not have been treated as dividend under Section 2(22)(e) of the Act. The finding recorded by the Income Tax Appellate Tribunal in favour of the assessee after referring to relevant facts is neither perverse nor arbitrary and therefore, may be affirmed. Counsel for the appellant further submits that the question of law is covered against the revenue by the judgment of Delhi High Court in CIT v. Creative Dyeing & Printing (P) Ltd. : [2009] 318 ITR 476/184 Taxman 483. We have heard counsel for the parties and perused the impugned order.

(3.) AFTER setting out the nature of Section 2(22)(e) of the Act, the Tribunal proceeded to examine the factual matrix of the case and held that as a tangible business expediency has been established between the assessee and company, Section 2(22)(e) of the Act cannot be invoked. A relevant extract from the order passed by the Income Tax Appellate Tribunal would be appropriate.