I. A Valuable Presentation:

1.  IND AS 24 - Related Party Disclosures

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II. A Useful Article:

1.  An Anatomy of Banking Fixed Deposit Frauds

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III. Direct Taxes Case Law: 

1.  M/s Exotica Housing & Infrastructure Company Vs. ITO, Appeal No. 5188/Del/2019, Date of Judgement: 24.06.2020, ITAT - Delhi

Whether transaction carried out with subsidiary company through current account for business purposes would fall within the definition of Deemed Dividend u/s 2(22)(e) of the Act ?

Held: No

Facts:
Assessee being a company engaged in the business of commission agent and property development. During the assessment year under consideration, assessee company received loans and advance from its subsidiary companies in which assessee company held 98% shares. During the assessment proceeding u/s 143(2), Ld. AO asked assessee company as to why the amount of loans and advances received from subsidiary companies should not be treated as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961. Assessee company submitted before Ld. AO that amount received as loan and advances from subsidiary companies was repaid within short span of time. The transaction between the assessee company and its subsidiary company are in the nature of current account transactions made in the ordinary course of business. Hence the amount of loans and advances received from subsidiary companies should not be treated as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961. The Ld. AO, however did not accept the contention of assessee company and made the addition on account of deemed dividend u/s 2(22)(e) of the Act.

Held:
Hon’ble ITAT by following the judgment of M/s. Saamag Developers Pvt. Ltd., New Delhi & Others (supra) held that “assessee company and its subsidiary company are in the same business of real estate and money have been used in the ordinary course of business of the assessee company. Therefore, it being the current account maintained between the assessee company and its subsidiary company, deeming fiction should not have been applied against the assessee. The above issue have been considered by the different Benches of the ITAT as reproduced above in which various decisions of different High Courts have been considered and it was held that when current account is maintained between the parties, provisions of Section 2(22)(e) of the I.T. Act, 1961, would not apply. Thus, the issue is covered by the aforesaid decisions of the Tribunal in favour of the assessee as well as various decisions considered by the Hon’ble jurisdictional Delhi High Court. In view of the above, we do not find any justification to sustain the addition.”

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IV. Headlines Today:   

1. Time limit of filing appeal, passing order, etc. falling in 20th Mar to 30th Aug extended to 31st Aug  (Click for detail)
   

2. Time limit for passing refund rejection order has been extended  (Click for detail)
   

3. Govt. promulgates Banking Regulation (Amendment) Ordinance, 2020  (Click for detail)
   

4. CBDT notifies certain exemptions to employees opting for lower I-T regime  (Click for detail)
   

5. CBIC extends validity of e-way bills in new set of relaxations  (Click for detail)
   

6. IRDAI introduces floating Rate Savings bond 2020  (Click for detail)
   

Golden Rules:

  "Be slow in choosing a good person
and much slower while loosing them
because relationship is not an opportunity,
it is a sweet responsibility"
                                        

Thanks & Regards

CA. Sanjay Kumar Agarwal

Founder - Voice of CA  

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