Pukhraj Shreemalji Jain vs. ITO Ward 19(2)(4)

Parties Involved

Facts Summary

The assessee, Pukhraj Shreemalji Jain, filed a return of income on 22.09.2016 declaring total income at Rs.10,97,760/-. The return was selected for scrutiny assessment, and statutory notices under the Income-tax Act, 1961 were issued. During scrutiny proceedings, the Assessing Officer observed that the assessee had taken a loan of Rs.10,04,41,107/- from M/s Allied Ferromet Pvt. Ltd., in which he had a substantial shareholding. The Assessing Officer deemed this loan as a dividend under section 2(22)(e) of the Act and issued a show cause notice. The assessee did not respond, leading to the Assessing Officer imposing the deemed dividend up to the accumulated profit of the company as on 31.03.2016, amounting to Rs.44,05,577/-. The assessee appealed against this order, raising several grounds. The Commissioner of Income-Tax (Appeals) upheld the addition, and the assessee further appealed to the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the Assessing Officer erred in making the addition of Rs. 44,05,577/- under section 2(22)(e) of the Act.
• 2. Whether the business of M/s Allied Ferromet Pvt. Ltd. was money lending.
• 3. Whether the transaction between M/s Rico Steel and M/s Allied Ferromet Pvt. Ltd. was a business transaction.

Judgment Outcome

Decided in favour of Assessee.

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