Question 1

What are the key legal issues in Purnendu Roy vs. Income Tax Officer, Ward 22(2), Kolkata?

Accepted Answer

1. Whether the addition of deemed dividend under section 2(22)(e) of the Act is justified. 2. Whether the transactions between the assessee and the company are in the nature of loans or advances.

Question 2

What are the facts of Purnendu Roy vs. Income Tax Officer, Ward 22(2), Kolkata?

Accepted Answer

Purnendu Roy, a doctor and owner of Genesis Hospital in Kolkata, filed an income return declaring total income of Rs. 1,29,38,170/-. His case was selected for scrutiny, and valid notices were issued under sections 143(2) and 142(1) of the Income Tax Act, 1961. The Assessing Officer (AO) issued an assessment order under section 143(3) determining the total assessed income of Rs. 4,29,25,970/- after making an addition of Rs. 2,99,87,804/- under section 2(22)(e) of the Act. The addition was made on the ground that Roy had taken a loan of Rs. 3,33,60,000/- from East India Health Care Pvt. Ltd., in which he is a 66.22% shareholder. The addition was confirmed by the Commissioner of Income-tax (Appeals). Roy appealed against this order, arguing that the addition was arbitrary and not in accordance with the provisions of the Income Tax Act. The sole issue in the appeal was the addition of deemed dividend under section 2(22)(e) of the Act amounting to Rs. 2,99,87,804/-. The Tribunal examined the facts and found that the transactions between Roy and East India Health Care Pvt. Ltd. were regular business transactions for commercial expediency and not in the nature of loans or advances.

Purnendu Roy vs. Income Tax Officer, Ward 22(2), Kolkata

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