CK Ranganathan, CHENNAI v. ACIT, CHENNAI

ITA 2042/CHNY/2011 | 2008-2009
Pronouncement Date: 24-02-2012 | Result: Allowed

Appeal Details

RSA Number 204221714 RSA 2011
Assessee PAN AACPR1620B
Bench Chennai
Appeal Number ITA 2042/CHNY/2011
Duration Of Justice 2 month(s) 11 day(s)
Appellant CK Ranganathan, CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 24-02-2012
Assessment Year 2008-2009
Appeal Filed On 13-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NO. 2042/MDS/2011 (ASSESSMENT YEAR : 2008-09) SHRI C.K. RANGANATHAN 12 CAVINVILLE CENOTAPH ROAD TEYNAMPET CHENNAI - 600 018. PAN : AACPR 1620 B (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE I(3) CHENNAI - 600 034 . (RESPONDENT) APPELLANT BY : SHRI T. BANUSEKAR C. A. RESPONDENT BY : SHRI SHAJ I P. JACOB ADDL. CIT DATE OF HEARING : 22.02.2012 DATE OF PRONOUNCEMENT : 24.02.2012 2 O R D E R PER N.S. SAINI ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY ASSESSEE FOR THE ASSESS MENT YEAR 2008-2009 AGAINST THE ORDER DATED 15.11.2011 OF COM MISSIONER OF INCOME TAX [APPEALS] -IX CHENNAI. 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN TEN GROUN DS OF APPEAL. THE CRUX OF THE ISSUE INVOLVED IN ALL THE GROUNDS O F APPEAL TAKEN BY THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIR MING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 4.50 CRORES AS DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME-TAX ACT 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS CHAIRMAN CUM MANAGING DIRECTOR OF M/S CAVINK ARE PVT. LTD. ASSESSEES WIFE SMT. THENMOZHI IS THE WHOLE TIME DIRECTOR IN THE SAID COMPANY. THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 28.9.2008 SHOWING AN INCOME OF RS. 3 31 70 784/-. 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER FOUND THAT THE ASSESSEE RECEIVED RS. 4.50 CRORES FR OM HIS WIFE SMT. THENMOZHI. ON VERIFICATION OF THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE THE ASSESSING OFFICER FOUND THAT SHE HAD RECEIVED THE FUNDS FROM THE M/S CAVINKARE PVT. LTD. WHICH WERE SUBSEQUENTLY TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE. THE A SSESSING OFFICER ALSO OBSERVED THAT ON THE DATE OF ADVANCE BY THE WI FE OF THE ASSESSEE THE BALANCE IN HER BANK ACCOUNT WAS TOO L OW AND THAT THIS SHOWS THAT THE EXACT FUNDS OF M/S CAVINKARE PVT. LT D. WAS ONLY TRANSFERRED TO THE ASSESSEE. FROM THIS THE ASSESS ING OFFICER INFERRED THAT THE ADVANCE OR LOAN BY M/S CAVINKARE PVT. LTD. WAS GRANTED TO THE ASSESSEE AND THAT THE ASSESSEE WAS T HE ULTIMATE BENEFICIARY OF LOAN FUNDS AND THEREFORE HELD THAT THE ASSESSEE WAS LIABLE TO TAX U/S 2(22)(E) OF THE ACT ON THIS AMOUN T AS DEEMED DIVIDEND. ACCORDINGLY HE ADDED THE SAME TO THE IN COME OF THE ASSESSEE AND FINALLY ASSESSED THE TOTAL INCOME OF T HE ASSESSEE AT RS. 7 25 38 430/-. BEING AGGRIEVED BY THIS ORDER THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 4 4. THE ASSESSEE CONTENDED THAT THE SUM OF RS. 4.50 CRORES WAS GIVEN TO HIS WIFE SMT. THENMOZHI WHO IS A WHOLE TI ME DIRECTOR FOR AND ON BEHALF OF M/S CAVINKARE PVT. LTD. TO PURCHAS E THE PROPERTY BEING LAND AND BUILDING SITUATED AT 69 HARRINGTON ROAD CHETPET EGMORE 600 031. THE ASSESSEE FURTHER SUBMITTED TH AT THE COMPANY M/S CAVINKARE PVT. LTD. AUTHORISED BY A BOARD RESO LUTION THE ASSESSEE AND HIS WIFE TO NEGOTIATE AND TO EXECUTE T HE DEED FOR PURCHASE OF THE SAID PROPERTY IN THE NAME OF THE AS SESSEE I.E. THE CHAIRMAN CUM MANAGING DIRECTOR OF M/S CAVINKARE PVT . LTD. OR IN THE NAME OF SMT. THENMOZHI WHOLE TIME DIRECTOR FOR AND ON BEHALF OF M/S CAVINKARE PVT. LTD. THEREFORE THE COMPANY TRANSFERRED RS. 4.50 CRORES TO SMT. THENMOZHI WHOLE TIME DIRECTOR S ACCOUNT. HOWEVER DUE TO HER PREOCCUPATIONS SMT. THENMOZHI TRANSFERRED THE FUNDS RECEIVED FROM M/S CAVINKARE PVT. LTD. TO THE ASSESSEE. THE ASSESSEE FURTHER CONTENDED THAT THE AGREEMENT T O SALE WAS EXECUTED ON 16.6.2007 BETWEEN SUGARCAHN SAJANMULL P VT. LTD REPRESENTED BY ITS MANAGING DIRECTOR SHRI KIRTI GUL ECHA AND M/S CAVINKARE PVT. LTD. REPRESENTED BY ITS CHAIRMAN CU M MANAGING DIRECTOR I.E. THE ASSESSEE FOR PURCHASE OF THE PRO PERTY AT 69 5 HARRINGTON ROAD CHETPET EGMORE 600 031 OWNED BY THE COMPANY SUGARCHAN SUJANMULL PVT. LTD AT TOTAL CONSIDERATION OF RS. 4.50 CRORES. IN ORDER TO FACILITATE PURCHASING THE PROP ERTY THE SAID SUM OF RS. 4.50 CRORES WAS TRANSFERRED TO THE ASSESSEE BY SMT. THENMOZHI THE WHOLE TIME DIRECTOR OF THE COMPANY. THE ASSESSEE FURTHER SUBMITTED THAT HOWEVER THE DEAL FOR PURCHAS E OF THE SAID PROPERTY DID NOT MATERIALISE IN VIEW OF CERTAIN LEG AL DISPUTE IN THE SAID PROPERTY. SINCE THE AGREEMENT DID NOT GO THROU GH THE SAME WAS CANCELLED ON 10.7.2007 AND THE ASSESSEE HAD TRA NSFERRED THE MONEY BACK TO SMT. THENMOZHI THE WHOLE TIME DIRECT OR WHO IN TURN RETURNED THE SAME TO M/S CAVINKARE PVT. LTD. 5. THE ASSESSEE ARGUED THAT AS THE FUNDS WERE TRANS FERRED TO THE ACCOUNT OF THE WHOLE TIME DIRECTOR AND SUBSEQUENTLY TO THE CHAIRMAN CUM MANAGING DIRECTOR BY THE COMPANY M/S C AVINKARE PVT. LTD. THE SAID TRANSFER OF FUNDS CANNOT BE TREA TED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT IN THE HANDS OF TH E ASSESSEE AS PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE INVOKED IN SUCH CIRCUMSTANCES. IT WAS FURTHER ARGUED THAT THE FUND S TRANSFERRED TO 6 THE ASSESSEE WERE FOR NORMAL BUSINESS TRANSACTIONS OF M/S CAVINKARE PVT. LTD. AND HENCE CANNOT BE TREATED AS DEEMED DI VIDEND IN THE HANDS OF THE ASSESSEE. THE ASSESSEE PLACED RELIANC E ON THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. HARSHAD V. DOSHI [2011] 130 ITD 137 [CHENNAI] AND S UBMITTED THAT IN A SIMILAR SITUATION THE TRIBUNAL HAS HELD THAT THE ASSESSEE MANAGING DIRECTOR HAVING RECEIVED ADVANCE FROM THE COMPANY PURSUANT TO RESOLUTION PASSED BY IT IS TO ENABLE TH E ASSESSEE TO PURCHASE THE LAND WHICH WAS TO BE DEVELOPED BY THE COMPANY IN ORDER TO BIFURCATE OWNERSHIP OF THE LAND FROM DEVEL OPMENT AND CONSTRUCTION OF FLATS THEREON IN ORDER TO REDUCE T HE INCIDENCE OF STAMP DUTY ON THE ULTIMATE CUSTOMERS THE TRANSACTIO N WAS MOTIVATED BY BUSINESS CONSIDERATION AND COMMERCIAL EXPEDIENCY AND THEREFORE ADVANCE CANNOT BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. FOR SIMILAR PROPOSITION THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMBASSADOR TRAVELS P. LTD [2009 318 ITR 376 [DEL] AND CIT VS. CREATIVE DYEING AND PRINTING LTD [2009] 318 ITR 476 [DEL]. 7 6. THE LD. CIT(A) CALLED FOR REMAND REPORT FROM TH E ASSESSING OFFICER ON THE WRITTEN SUBMISSIONS FILED BY THE ASS ESSEE AND THE ASSESSING OFFICER VIDE LETTER DATED 30.9.2011 HAS S TATED THAT IN ORDER TO CAMOUFLAGE THE TRANSACTIONS TO REMAIN OUTS IDE THE PURVIEW OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT THE ASS ESSEE HAD INVENTED CERTAIN DOCUMENTATION WHICH APPEARED TO BE DECEPTIVE AND TRIES TO MISLEAD THE REVENUE. THE PURPORTED RE SOLUTION DATED 30.4.2007 AND THE AGREEMENT OF SALE DATED 16.6.2007 ARE NOTHING BUT FALSIFICATION HAS BEEN ESTABLISHED IN THE ASSE SSMENT ORDER U/S 143(3) OF THE ACT DATED 24.12.2010. THE ASSESSEE RE ITERATES THE SAME CLAIM BEFORE THE LD. CIT(A) WITHOUT BRINGING A NY FRESH EVIDENCE ON RECORD. THE ASSESSING OFFICER FURTHER STATED IN THE REPORT THAT THE DECISION OF THE CHENNAI BENCH OF TH E TRIBUNAL IN THE CASE OF HARSHAD V. DOSHI [SUPRA] WAS NOT APPLICABLE TO THE ASSESSEE AS THE PROPERTIES PURCHASED AND TRANSACTIONS WERE R EFLECTED IN THE FINAL ACCOUNTS OF THE COMPANY WHEREAS THE TRANSACTI ONS WERE NEVER REPORTED BY M/S CAVINKARE PVT. LTD. IN ITS ANNUAL A CCOUNTS. PAGES 47 AND 48 OF THE ANNUAL REPORT FOR FINANCIAL YEAR 2 007-08 CONTAIN RELATED PARTY TRANSACTIONS FOR THE YEAR ENDING 31.3 .2008. 8 7. THE ASSESSING OFFICER FURTHER STATED THAT THOUGH THE LOAN TRANSACTIONS WERE SQUARED UP DURING THE YEAR THE C OMPANY OUGHT TO HAVE DISCLOSED IN ITS NOTES OF ACCOUNT THE SAME WAS NOT UNDERTAKEN WHICH CLEARLY ESTABLISH THE FACT THAT T HESE TRANSACTIONS WERE TO BE HIDDEN FROM SCRUTINY BUT FOR EXAMINATIO N OF BANK STATEMENT OF SHRI C.K. RANGANATHAN TRANSACTIONS IN VOLVING THE ASSESSEE WOULD NOT HAVE SURFACED. NEITHER THE ASSE SSEE NOR THE COMPANY HAD EXHIBITED THE RELATED PARTY TRANSACTION S BEFOREHAND. THE ASSESSING OFFICER FURTHER STATED IN HIS REPORT THAT THE ASSESSEES CLAIM MAY BE APPRECIATED IF ANY OF THE FOLLOWING CO NDITIONS ARE SATISFIED: A) ON CANCELLATION OF AGREEMENT THE SAID AMOUNT OUGHT TO HAVE BEEN RETURNED TO THE COMPANY AND NOT UTILISED FOR EXPENDITURE OF PERSONAL NATURE OF THE MANAGING DIRE CTOR. B) SAME FUNDS WERE NOT UTILISED FOR THE PURCHASE OF TH E PROPERTY 9 8. BOTH THESE CONDITIONS WERE NOT SATISFIED AND THE ASSESSEE FAILED TO RETURN THE FUNDS AFTER CANCELLATION OF TH E SO CALLED SALE AGREEMENT. HE HAD UTILISED IT FOR PURCHASE OF THE PROPERTY IN HIS INDIVIDUAL NAME AND EXACTLY THE SAME FUNDS WERE UTI LISED. ON 2.7.2007 THE BALANCE IN THE ICICI ACCOUNT NO. 0009 01014646 OF THE ASSESSEE IS RS. 5 97 595/-. THE BALANCE AS ON 3.7. 2007 AFTER CREDIT OF RS. 4.50 CRORES IS RS. 4 55 97 595/- AFTER UTILI SATION OF FUNDS TOWARDS PURCHASE OF PROPERTY ISSUED THROUGH PAY ORD ER DATED 3.7.2007 BY DRAWING A SELF-CHEQUE NO. 254830 FOR PU RCHASE OF PROPERTY IN THE PERSONAL NAME. 9. FURTHER THE ASSESSING OFFICER ALSO STATED THAT I F THE PURPOSES WERE DIFFERENT AND WHILE THE COMPANY HAS RESOLVED A ND EMPOWERED BOTH SMT. THENMOZHI AND THE ASSESSEE TO NEGOTIATE A ND FINALISE THE PROPERTY WHAT WAS THE NECESSITY TO TRANSFER THIS A MOUNT OF RS. 4.50 CRORES FROM THE ACCOUNT OF SMT. THENMOZHI TO THE AS SESSEE? SIMILARLY WHEN BOTH WERE AUTHORISED THERE WAS NO NECESSITY ON THE PART OF SMT. THENMOZHI TO ACT AS CONDUIT OF FUN DS. IT HAD BEEN PURPORTED ONLY FOR THE PURPOSE OF DISTINGUISHING TH E TRANSACTIONS SO 10 AS TO IMPRESS THAT THE FUNDS OF THE COMPANY WERE NO T ADVANCED TO THE ASSESSEE TOWARDS PURCHASE OF PROPERTY. IN SUCH CIRCUMSTANCES RELIANCE MAY BE PLACED ON THE DOCUMENTATION IN THE FORM OF RESOLUTION AND SALE AGREEMENT WHICH HAS CLEARLY EST ABLISHED A CREATION OF AN AFTERTHOUGHT AND CLAIM MADE WITHOUT EVIDENTIARY VALUE MAY NOT BE ENTERTAINED. 10. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE CONFIRMED THE ORDER THE ASSESSING OFFICER FOR THE REASONS STATED BELOW IN THIS ORDER. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL ON RECORD. THE UNDISPUTED FACTS OF THE CASE AS OBSERVED BY THE LD. CIT(A) ARE CHR ONOLOGICALLY GIVEN AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R APPELLANTS WRITTEN SUBMISSIONS. I AM OF THE CONSI DERED OPINION THAT THE ASSESSEES ACTION IS JUSTIFIED IN TAKING THE ENTIRE AMOUNT OF RS. 4.50 CRORES RECEIVED BY THE AP PELLANT 11 U/S 2(22)(E) OF THE ACT OF THE ACT. THE EVENTS OCC URRED ARE GIVEN CHRONOLOGICALLY FOR BETTER UNDERSTANDING OF T HE FACTS ON 30.4.2007 THE BOARD OF DIRECTORS OF M/S CAVINKARE PVT. LTD. AUTHORIZED THE APPELLANT [CHAIRMAN AND MANAGING DIRECTOR] AND HIS WIFE [WHOLE TIME DIRECTOR] TO PURCHASE A PROPERTY FOR AN D ON BEHALF M/S CAVINKARE PVT. LTD. A RESOLUTION TO THI S EFFECT WAS PASSED ON THIS DAY. FOR THIS PURPOSE A SUM OF RS. 4.50 CRORES WAS TRANSFERRED FROM M/S CAVINKARE PVT. LTD. TO APPELLANTS WIFES ACCOUNT. ON 16.6.2007 A SALE AGREEMENT WAS EXECUTED FOR PURCHASE OF PROPE RTY FOR A TOTAL CONSIDERATION OF RS. 4.50 CRORES FOR PURCHASE OF PROPERTY SITUATED AT NO. 69 HARRINGTON ROAD CHETPET. HOWE VER THE SALE AGREEMENT WAS CANCELLED ON 10.7.2007 DUE TO LE GAL DISPUTES TO THE SAID PROPERTY. ON 3.7.2007 THE ABOVE SAID AMOUNT OF RS. 4.50 CRORES WAS TRANSF ERRED FROM THE WIFES ACCOUNT TO THE APPELLANTS ACCOUNT. ON THE 12 SAME DAY WITH THE AMOUNT THE APPELLANT PURCHASED A PROPERTY IN HIS NAME I.E. SESHADRI AVENUE INJAMBA KKAM CHENNAI 41. ON 11.7.2007 3.8.2007 19.11.2007 AND 28.12.2007 THE APPELLANT RETURNED THE ENTIRE SUM OF RS. 4.50 C RORES TO THE COMPANY ON THESE DATES. 12. ON THE ABOVE FACTS THE LD. CIT(A) HAS CONFIRME D THE ACTION OF THE ASSESSING OFFICER IN TREATING RS. 4.50 CRORES A S DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE FOR THE FOLLOWING REAS ONS: 6.1 AFTER GOING THROUGH THE SEQUENCE OF EVENTS IT CAN BE CLEARLY UNDERSTOOD THAT AL ETH ABOVE TRANSACTIONS A RE DESIGNED TO DIVERT THE ATTENTION FROM ATTRACTING TH E PROVISIONS OF SEC 2(22)(E) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS THE LD. A.R. OF THE APPELLANT COULD NOT SUBSTANTIATE WH Y THE ABOVE TRANSACTIONS DO NOT FALL U/S 2(22)(E) OF THE ACT. WHEN THE BOARD OF DIRECTORS AUTHORIZED THE APPELLANT AND HIS WIFE 13 TO PURCHASE AN IMMOVABLE PROPERTY FOR AND ON BEHALF OF THE COMPANY THE APPELLANT FAILED TO FOLLOW THE RESOLUT ION AND INSTEAD HE HAS PURCHASED THE PROPERTY WITH THE FUND S OF THE COMPANY IN HIS NAME DEFEATING THE VERY PURPOSE OF T HE BOARD RESOLUTION. 6.2 WHEN THE SALE AGREEMENT WHICH AS ENTERED ON 16. 6.2007 WAS CANCELLED ON 10.11.2007 THE APPELLANT COULD HAV E RETURNED THE SAID AMOUNT OF RS. 4.50 CRORES TO THE COMPANY THEN ITSELF INSTEAD OF KEEPING THE SAID AMOUNT WITH HIM AND UTILIZING IT FOR ACQUIRING THE PROPERTY IN HIS NAME . 6.3 IT IS ALSO NOT KNOWN WHAT HAS PREVENTED THE APP ELLANT FROM REGISTERING THE ABOVE MENTIONED PROPERTY IN TH E NAME OF THE COMPANY AS THE FUNDS BELONG TO THE COMPANY O NLY. IN OTHER WORDS THE COMPANY HAS NOT GOT THE BENEFIT FR OM ITS FUNDS. HENCE THE TRANSACTION WILL NOT FOR ANY COMM ERCIAL EXPEDIENCY REGULAR COURSE OF BUSINESS AS CONTENDED BY THE LD. A.R. OF THE APPELLANT. FURTHER THE APPELLANT HAS GIVEN 14 THE PROPERTY PURCHASED BY HIM FOR RENT TO M/S CAVIN KARE PVT. LTD. THE COMPANY IN TURN HAS ALLOTTED THE SAME HOU SE TO THE APPELLANT FOR HIS STAY PURPOSES. 6.4 IN VIEW OF THE DISCUSSION MADE ABOVE THE APPEL LANT GOT BENEFITTED FROM THE ABOVE TRANSACTION AND THE COMPA NY DID NOT DERIVE ANY BENEFITS. HENCE THE AMOUNT OF RS. 4 .50 CRORES RECEIVED BY THE APPELLANT INDIRECTLY AND UTILIZED F OR PERSONAL BENEFIT THEREBY ATTRACTING THE PROVISIONS U/S 2(22) (E) OF THE ACT. 6.5 THOUGH THE APPELLANT HAS RECEIVED THE SAID AMOU NT INDIRECTLY THE PROVISIONS OF SECTION 2(22)(E) OF TH E ACT WILL BE APPLICABLE IN VIEW OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF ALAGASUNDARAM 109 ITR 508 [MAD]. THIS DECI SION WAS CONFIRMED BY THE HON'BLE APEX COURT REPORTED IN 252 ITR PAGE 893. HENCE THE ACTION OF THE ASSESSING OFFICER IN TREATING THE SAID AMOUNT OF RS. 4.50 CRORES AS DEEMED DIVIDEND U /S 15 2(22)(E) OF THE ACT IS CORRECT AND THE ADDITION MAD E OF RS. 4.50 CRORES IS HEREBY CONFIRMED. 13. BEFORE US THE LD. A.R. OF THE ASSESSEE SUBMITT ED THAT IT IS NOT IN DISPUTE THAT THE PAYMENT MADE BY M/S CAVINKARE P VT. LTD. WAS NOT IN THE NATURE OF LOAN OR ADVANCE TO THE ASSESSE E. IT IS AN ACCEPTED FACT ON RECORD THAT THE SAID AMOUNT OF RS. 4.50 CRORES WAS PAID BY THE SAID COMPANY TO THE ASSESSEE FOR PURCHA SE OF GUEST HOUSE FOR THE BUSINESS REQUIREMENTS OF THE SAID COM PANY. IT IS ALSO NOT IN DISPUTE THAT BECAUSE OF A LEGAL DISPUTE PRO PERTY COULD NOT BE PURCHASED AND THE ENTIRE AMOUNT WHICH WAS RECEIVED BY THE ASSESSEE WAS RETURNED BACK TO THE COMPANY WITHIN TH E FINANCIAL YEAR ITSELF. HE ALSO CONTENDED THAT THE DECISION R ELIED UPON BY THE LD. CIT(A) IN THE CASE OF CIT VS. ALAGASUNDARAM CHE TTIAR [1977] 109 ITR 508 [MDS] IS NOT APPLICABLE AND DISTINGUISHABLE ON FACTS. IN THAT CASE IT WAS FOUND THAT THE LOAN WAS GIVEN BY THE C OMPANY TO VARIOUS EMPLOYEES FOR THE BENEFIT OF THE ASSESSEE W HO WAS A SUBSTANTIAL SHAREHOLDER REGULARLY AND GIVEN AS AND WHEN AMOUNT WAS NEEDED BY THE SHAREHOLDER WHEREAS IN THE INSTANT C ASE NO LOAN OR 16 ADVANCE WAS GIVEN TO THE ASSESSEE FOR HIS BENEFIT. RATHER M/S CAVINKARE PVT. LTD. FOR ITS OWN BUSINESS EXPEDIENC Y HAS GIVEN MONEY TO THE ASSESSEE. THUS IT WAS A PURE BUSINES S TRANSACTION WHICH THE M/S CAVINKARE PVT. LTD. ENTERED INTO FOR ITS BUSINESS EXPEDIENCY. HE ALSO POINTED OUT THAT THE LD. CIT(A ) HAS OPINED THAT HAD THE ASSESSEE RETURNED THE MONEY BACK TO THE COM PANY IMMEDIATELY ON CANCELLATION OF AGREEMENT TO PURCHAS E THE GUEST HOUSE PROPERTY THEN THE AMOUNT WOULD NOT HAVE BEEN TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. HE A LSO POINTED OUT THAT OUT OF RS. 4.50 CRORES RS. 4 CRORES WAS RETUR NED TO THE COMPANY IMMEDIATELY ON 11.7.2007 ON CANCELLATION OF THE AGREEMENT FOR PURCHASE OF GUEST HOUSE PROPERTY ON 1 0.7.2007. THEREFORE THE LD. CIT(A) ON HIS OWN FINDING OUGH T NOT HAVE TREATED AT LEAST RS. 4 CRORES AS DEEMED DIVIDEND U/ S 2(22)(E) OF THE ACT IN THE HANDS OF THE ASSESSEE. 14. FURTHER HE SUBMITTED THAT MERELY BECAUSE THERE WAS A BIT DELAY IN RETURNING RS. 50 LAKHS THE SAME CANNOT BE TREATED A DEEMED DIVIDEND WHEN IT WAS ACCEPTED BY THE LD. CIT (A) THAT AT THE 17 POINT OF TIME WHEN THE ASSESSEE RECEIVED MONEY FROM M/S CAVINKARE PVT. LTD. THE SAME WAS FOR BUSINESS PURP OSES OF THE COMPANY AND THEREFORE NOT LEGALLY ASSESSABLE AS DE EMED DIVIDEND U/S 2(22)(E) OF THE ACT. HE ALSO PLACED RELIANCE O N THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS . VENKATARAMAN [G] [1975] 101 ITR 673 [MDS] FOR THE SUBMISSION THA T WHEN A COMPANY HAS NOT GIVEN ANY LOAN OR ADVANCE TO THE AS SESSEE SHAREHOLDER AND THE UTILIZATION OF MONEY OF THE COM PANY BY THE SHAREHOLDER WAS NOT WITH THE CONSENT OF THE COMPANY FOR OWN PURPOSES THEN THE SAME CANNOT BE TREATED AS DEEMED DIVIDEND. HE ALSO SUBMITTED THAT THE ISSUE UNDER CONSIDERATION I S SQUARELY COVERED ALSO BY THE DECISION OF THE CHENNAI BENCH O F THE TRIBUNAL IN THE CASE OF HARSHAD V. DOSHI [SUPRA]. 15. LASTLY HE ARGUED THAT THE MONEY OF THE COMPANY WAS UTILIZED FOR PURCHASING PROPERTY WHICH WAS USED BY THE COMPA NY IN ITS BUSINESS PURPOSES BY TAKING THE SAME ON LEASE FROM THE ASSESSEE IS ALSO NOT IN DISPUTE. THEREFORE THE UTILIZATION OF THE FUND BY THE ASSESSEE WAS FOR BUSINESS PURPOSES OF THE SAID COMP ANY. THEREFORE 18 BY NO STRETCH OF IMAGINATION THE SAID AMOUNT COULD BE LEGALLY TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT IN THE HANDS OF THE ASSESSEE. 16. ON THE OTHER HAND THE LD. D.R. SUPPORTED THE O RDER OF THE LD. CIT(A). HE CONTENDED THAT THE MONEY TAKEN BY THE ASSESSEE WAS NOT USED FOR PURPOSES FOR WHICH IT WAS GIVEN BY M/S CAVINKARE PVT. LTD. TO THE ASSESSEE AND THE ASSESSEE USED THE SAME FOR PURCHASE OF PROPERTY IN HIS OWN NAME AND THEREFORE THE LD. CIT (A) WAS JUSTIFIED IN CONFIRMING THE ADDITION U/S 2(22)(E) OF THE ACT. 17. WE FIND THAT SECTION 2(22)(E) OF THE ACT PROVID ES FOR DEEMING OF AMOUNT AS INCOME WHICH IS OTHERWISE NOT AN INCOM E. THEREFORE IT IS A SETTLED POSITION OF LAW THAT THE PROVISIONS SHOULD BE STRICTLY CONSTRUED. IN THE INSTANT CASE WE FIND THAT IT IS NOT HE IN DISPUTE THAT THE SUM OF RS. 4.50 CRORES WAS GIVEN BY M/S CA VINKARE PVT. LTD. TO THE ASSESSEE FOR THE BUSINESS PURPOSES OF M/S CA VINKARE PVT. LTD. IT WAS NOT IN THE NATURE OF LOAN OR ADVANCE TO THE ASSESSEE OR FOR BENEFIT OF THE ASSESSEE. THE REVENUE HAS BROUGHT N O MATERIAL ON 19 RECORD TO SHOW THAT THE AGREEMENT DATED 16.6.2007 E NTERED INTO BY THE ASSESSEE IN THE CAPACITY OF CHAIRMAN AND MANAGI NG DIRECTOR AND FOR AND BEHALF OF M/S CAVINKARE PVT. LTD. WITH SUG ARCHAN SUJANMULL PVT. LTD WAS NOT GENUINE OR BONAFIDE. THUS WE ARE OF THE CONSIDERED OPINION THAT THE AMOUNT IN QUESTION WAS GIVEN BY THE SAID M/S CAVINKARE PVT. LTD. OUT OF COMMERCIAL EXP EDIENCY AND FOR ITS OWN BUSINESS PURPOSES AND SUCH AN AMOUNT RECEIV ED BY THE ASSESSEE CANNOT BE TREATED AS DEEMED DIVIDEND U/S 2 (22)(E) OF THE ACT IN THE HANDS OF THE ASSESSEE. FURTHER IT IS N OT IN DISPUTE THAT OUT OF THE SAID RS. 4.50 CRORES RS. 4 CRORES WAS I MMEDIATELY RETURNED TO M/S CAVINKARE PVT. LTD. ON CANCELLATIO N OF AGREEMENT ON 10.7.2007. FURTHER BALANCE AMOUNT OF RS. 50 LA KHS WAS ALSO FULLY RETURNED BACK TO M/S CAVINKARE PVT. LTD. DUR ING THE PERIOD 3.8.2007 TO 28.12.2007. FURTHER NO MATERIAL WAS B ROUGHT ON RECORD TO SHOW THAT THE COMPANY ALLOWED THE ASSESSEE CONSC IOUSLY TO USE THE SAID AMOUNT FOR ITS PERSONAL BENEFIT. IT IS AL SO OBSERVED THAT THE PROPERTY WHICH WAS ACTUALLY PURCHASED BY THE ASSESS EE WAS ALSO TAKEN ON LEASE BY THE SAID COMPANY AND USED FOR ITS BUSINESS PURPOSES BY WAY OF PROVIDING IT TO ITS CHAIRMAN CUM MANAGING 20 DIRECTOR. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE AND FIND THA T THE ISSUE IS COVERED BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VENKATARAMAN [G] [SUPRA] AS WELL AS THE DEC ISION OF THIS TRIBUNAL IN THE CASE OF HARSHAD V. DOSHI [SUPRA]. 18. THE DECISION RELIED UPON BY THE LD. CIT(A) IN T HE CASE OF ALAGASUNDARAM CHETTIAR [SUPRA] IS FOUND DISTINGUISH ABLE AS IN THAT CASE THE COMPANY HAD REGULARLY GIVEN LOAN TO ITS EM PLOYEES FOR THE BENEFIT OF A PERSON WHO WAS A SUBSTANTIAL SHAREHOLD ER THEREIN WHEREAS IN THE INSTANT CASE IT IS NOT THE CASE OF THE REVENUE THAT M/S CAVINKARE PVT. LTD. HAS GIVEN ANY LOAN TO THE ASSESSEE OR ANY OTHER PERSON FOR THE BENEFIT OF THE ASSESSEE. 19. IN OUR CONSIDERED OPINION AS THE AMOUNT IN QUE STION WAS GIVEN TO THE ASSESSEE IN HIS CAPACITY AS CHAIRMAN C UM MANAGING DIRECTOR OF THE SAID COMPANY AND FOR BUSINESS PURPO SES OF THE SAID COMPANY THE SAME CANNOT BE TREATED AS DEEMED DIVID END U/S 2(22)(E) OF THE ACT IN THE ABSENCE OF ANY FINDING T HAT THE PURPOSE 21 FOR WHICH THE AMOUNT WAS GIVEN WAS NOT BONAFIDE OR WAS NOT FOR BUSINESS PURPOSES OF THE SAID M/S CAVINKARE PVT. LT D. WE THEREFORE DELETE THE ADDITION OF RS. 4.50 CRORES A ND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 20. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 24.02.201 2. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 24 TH FEBRUARY 2012. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-IX CHENNAI-34 (4) CIT CHENNAI CHENNAI (5) D.R. (6) GUARD FILE