Landmark ITAT Jaipur Bench decisions on Deemed Dividend

[shantanu]

Recently a number of pathbreaking judgments on Deemed Dividend have come from the Jaipur Bench of the Tribunal. The Hon'ble Bench has observed that for treating the payment of any sums by way of loans or advances to a share holder by a company , not being a company in which the public are substantially interested out of accumulated profits, as deemed dividend within the meaning of section 2(22)(e) of the I.T.Act, it is to be seen whether the company is in actual "control" and "posession" of the profits. It further observed that if the assessee comapny's profits get invested in the assets of the company then it can not be said that the company is in "possession" and "control" of the profits or accumulated profits. The Hon'ble Bench in the cirucmstances when profits were claimed to have been invested in the assets of the company held that the company was no more in possession of accumulated profits and hence the provisions of section 2(22)(e) are not applicable.

  Since the profits would always remain with the company in one or the other form of assets i,e, fixed assets or stock in trade or liquid asset,  in every case it can be safely argued that profits or acumulated profits are no more in possession or control as the same are held in the form of some assets and not as profits as such, the rigours of section 2(22)(e) may not be attracted. Thus the provisions of section 2(22)(e) of the Act can not be invoked in any case. some of the decisions are in ITA No 88/JP/2008 &89/JP/2008 in the case of Smt Madhuwanti Singh and Sh Bhim Singh respectively, the decision is dated 19/9/2008. These decisions have subsequently been followed in decision dt 27/11/2009 in ITA 1661/JP/2008.

[nikhileshbegani]

Can you please mail me a copy of these landmark judgments since it would be of great help for me in ITAT Appeals??

Regards
CA.NIKHILESH BEGANI
Raipur