Heena K. Trivedi v. DCIT, CC-2(2), Ahmedabad
[Citation -2016-LL-1006-43]

Citation 2016-LL-1006-43
Appellant Name Heena K. Trivedi
Respondent Name DCIT, CC-2(2), Ahmedabad
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 06/10/2016
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags assessment proceeding • deemed dividend • advance payment • credit balance • cash payment
Bot Summary: CIT(A)-III/98,99 1000/DCIT/CC-2(2)/13-14 passed against orders u/s 143(3) r.w.s. 153A of the IT Act, 1961 framed on 30.03.2013 by DCIT, CC-2(2), Ahmedabad. Since assessee has raised common grounds in all these three appeals against the addition u/s 2(22)(e) of the Act confirmed by the ld. On perusal of the ledger account it was observed that director s salary is monthly booked through journal entries and various payments on account of credit cards, travel expenses, personal expenses are paid by the company on behalf of the assessee. During the year at some particular date or at the close of the year there stood debit balance in the name of assessee in the books of account of Trivedi Corporation Pvt. Ltd. Ld. Assessing Officer invoked provisions of section 2(22)(e) of the Act and made addition for deemed dividend for the impugned debit balances in the ledger account at Rs. 2,25,180/-, 4,15,910/- and Rs.1,58,390/- for Asst. Ld. AR submitted by referring to the ledger account of the assessee in the books of account of Trivedi Corporation Pvt. Ltd. forming part of the assessment order that assessee is regularly earning salary/remuneration income from the company as a director which stands at Rs.18,520/- p.m. upto 31st July, 2004 and was further increased to Rs.39,920/- p.m. Regular monthly entries are provided for the director s remuneration. CIT(A) confirming the additions towards deemed dividends u/s 2(22)(e) of the Act for the maximum debit balance at any point of time of particular assessment year in the ledger account in the name of assessee in the books of account of IT(SS)A No. 426 to 427/Ahd/2013 4 Asst. Year 2005-06 to 2007-08 Trivedi Corporation Pvt. Ltd. We observe that there is no dispute to the fact that assessee is a director and getting salary from the company towards the services provided. Year 2005-06 to 2007-08 delete the additions for all the three years and allow the appeals of the assessee.


IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD Before Shri Rajpal YadavJM, & Shri Manish Borad, AM. IT(SS)A Nos.426 to 428/Ahd/2013 Asst. Years: 2005-06 to 2007-08 Smt. Heena K. Trivedi, D.K. Vs. DCIT, CC-2(2), Trivedi & Sons Premises, Ahmedabad. Khumbhariya Road, ambaji. Appellant Respondent PAN AAVPT 8482E Appellant by Jwalin Nanavati, AR Respondent by Shri Jagdish, CIT, DR Date of hearing: 4/10/2016 Date of pronouncement: 06/10/2016 ORDER PER Manish Borad, Accountant Member. These three appeals of assessee for Asst. Year 2005-06 to 2007-08 are directed against common order of ld. CIT(A)-III, Ahmedabad dated 27/8/2013 in appeal no. CIT(A)-III/98,99 & 1000/DCIT/CC-2(2)/13-14 passed against orders u/s 143(3) r.w.s. 153A of IT Act, 1961 (in short Act) framed on 30.03.2013 by DCIT, CC-2(2), Ahmedabad. Since assessee has raised common grounds in all these three appeals against addition u/s 2(22)(e) of Act confirmed by ld. CIT(A) at Rs. 2,25,180/-, 4,15,910/- and Rs.1,58,390/- for Asst. Years 2005-06, 2006-07 & 2007-08, these IT(SS)A No. 426 to 427/Ahd/2013 2 Asst. Year 2005-06 to 2007-08 appeals were heard together and being disposed of by this common order for sake of convenience. 2. Briefly stated facts of case are that assessee is individual and director of M/s Trivedi Corporation Pvt. Ltd. search action u/s 132(4) of Act was carried out in group cases of Trivedia Sompura on 21.04.2010. Notice u/s 153A of Act was issued to assessee. In compliance to which returns of income were filed by assessee for all three Asst. Years 2005-06, 2006-07 & 2007-08. During course of assessment proceeding, ld. Assessing Officer observed that M/s Trivedi Corporation Pvt. Ltd. having accumulated profits has advanced amount to assessee through her salary a/c. On perusal of ledger account it was observed that director s salary is monthly booked through journal entries and various payments on account of credit cards, travel expenses, personal expenses are paid by company on behalf of assessee. During year at some particular date or at close of year there stood debit balance in name of assessee in books of account of Trivedi Corporation Pvt. Ltd. Ld. Assessing Officer invoked provisions of section 2(22)(e) of Act and made addition for deemed dividend for impugned debit balances in ledger account at Rs. 2,25,180/-, 4,15,910/- and Rs.1,58,390/- for Asst. Years 2005-06, 2006-07 & 2007-08. 3. Assessee went in appeal before ld. CIT(A). Ld. CIT(A) confirmed additions for all three years. IT(SS)A No. 426 to 427/Ahd/2013 3 Asst. Year 2005-06 to 2007-08 4. Aggrieved, assessee is now in appeal before Tribunal. 5. Ld. AR submitted by referring to ledger account of assessee in books of account of Trivedi Corporation Pvt. Ltd. forming part of assessment order that assessee is regularly earning salary/remuneration income from company as director which stands at Rs.18,520/- p.m. upto 31st July, 2004 and was further increased to Rs.39,920/- p.m. Regular monthly entries are provided for director s remuneration. In very same ledger a/c payments are made towards salary either by paying in cash, by bank or by making direct payments to various agencies for personal travel and credit card expenses of assessee which are adjusted against salary payable. Ld. AR further submitted that all these transactions are in regular course of business and closing balances are some- times debit and some-times credit but certainly no inference should have been drawn for treating debit balance as deemed dividend u/s 2(22)(e) of Act. 6. On other hand ld. DR relied on orders of lower authorities. 7. We have heard rival contentions and perused material on record. Solitary grievance of assessee in all these three appeals is against order of ld. CIT(A) confirming additions towards deemed dividends u/s 2(22)(e) of Act for maximum debit balance at any point of time of particular assessment year in ledger account in name of assessee in books of account of IT(SS)A No. 426 to 427/Ahd/2013 4 Asst. Year 2005-06 to 2007-08 Trivedi Corporation Pvt. Ltd. We observe that there is no dispute to fact that assessee is director and getting salary from company towards services provided. This fact is evident from ledger account of assessee in books of account of Trivedi Corporation Pvt. Ltd. shown in assessment order itself. clear picture which comes out from going through ledger account is that as on 1.4.2004 there was credit balance and during year monthly entries of salary have been provided and salary payments have been made either in cash payment of credit cards dues & travel expenses. TDS deducted and payment by bank. During Asst. Year 2005-06 balance remained credit at various points of time. Similar is situation for Asst. Year 2006-07 2007-08. 8. We further observe from judgment of Hon. Allahabad High Court in case of Shyama Charan Gupta vs. CIT 377 ITR 511 (All) wherein it has been held that advance payment of salary or commission to managing director is trade advance ordinarily made in course of business so that such advance is not covered under section 2(22)(e) of Act. We find that facts of present case are quite similar to facts adjudicated by Hon. Allahabad High Court in case of Shyama Charan Gupta vs. CIT (supra) so much so that in case of assessee also debit balance at certain point of time are in nature of advance salary. We, therefore, are of view that impugned debit balances cannot be termed as advance in form of deemed dividend u/s 2(22)(e) of Act as they are trade advance ordinarily made in regular course of business. We IT(SS)A No. 426 to 427/Ahd/2013 5 Asst. Year 2005-06 to 2007-08 delete additions for all three years and allow appeals of assessee. 9. In result, all three appeals of assessee are allowed. Order pronounced in open Court on 6th October, 2016 Sd/- sd/- (Rajpal Yadav) (Manish Borad) Judicial Member Accountant Member Dated 6/10/2016 Mahata/- Copy of order forwarded to: 1. Appellant 2. Respondent 3. CIT concerned 4. CIT(A) concerned 5. DR, ITAT, Ahmedabad 6. Guard File BY ORDER Asst. Registrar, ITAT, Ahmedabad 1. Date of dictation: 5/10/2016 2. Date on which typed draft is placed before Dictating Member: 6/10/2016 other Member: 3. Date on which approved draft comes to Sr. P. S./P.S.: 4. Date on which fair order is placed before Dictating Member for pronouncement: __________ 5. Date on which fair order comes back to Sr. P.S./P.S.: 6. Date on which file goes to Bench Clerk: 7/10/2016 7. Date on which file goes to Head Clerk: 8. date on which file goes to Assistant Registrar for signature on order: 9. Date of Despatch of Order: Heena K. Trivedi v. DCIT, CC-2(2), Ahmedabad
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