Income Tax Appellate Tribunal - Jaipur
Deputy Commissioner Of Income Tax vs Rajasthan Wires (P) Ltd. on 17 February, 2003
Equivalent citations: (2003)81TTJ(JP)673
ORDER
B.R. Jain, A.M.
1. These cross-appeals have been preferred against the order dt. 1st March, 2001 passed by Shri B.S. Dhillon, the learned CIT(A) for asst. yr. 1995-96.
2. The Hon'ble Single Judge of the High Court of Judicature has directed the Tribunal in SB Civil Writ Petn. No. 9483/02 dt. 24th Jan., 2003 to dispose of the appeal within a period of 15 days from the receipt of the judgment after giving opportunity of being heard to the petitioner in accordance with law. The said order of the Hon'ble Judge was served on the Tribunal on 3rd Feb., 2003, and accordingly the case which had already been adjourned for hearing on 26th Feb., 2003 for taking a remand report from the AO has been directed to be preponed for hearing on 14th Feb., 2003. Notices were served on the parties who have been heard on two sittings i.e., on 14th Feb., 2003, and on 17th Feb., 2003, in compliance to the directions of the Hon'ble High Court.
3. The Tribunal on 23rd Jan., 2003 had given a direction to the assessee to produce the excise register containing entries of its stock of raw-material and manufactured goods etc. before the AO on 5th Feb., 2003 as he sought to adduce this register as evidence for the first time before the Tribunal. The AO was also directed to verify entries of the same and send his comments thereon on or before 26th Feb., 2003. The learned Departmental Representative Smt. Kavita Pandey has produced a report from the AO stating that the assessee did not make any appearance on the appointed day in spite of directions given to him by the Tribunal. On the contrary, the assessee's counsel Shri G.M. Mehta produced an affidavit from the assessee's counsel Shri Rakesh Gupta, C.A. in practice. He has deposed that he went to the office of the AO Shri D.L. Malhotra in room No. 208 on 2nd Floor of Central Revenue Bldg. on 5th Feb., 2003, along with the requisite register but the AO was not available in his office. The assessee's counsel Shri Mehta also makes a statement at Bar that on that day he has seen Shri Rakesh Gupta waiting outside the room of the AO between 12-12.30 noon and stands as a witness to his appearance in compliance to the directions of the Tribunal. When the case came for hearing again on 17th Feb., 2003, which was an adjourned date, the learned Departmental Representative Smt. Kavita Pandey produced on her own the AO Shri Malhotra and informed the fact that the AO was very much on duty on the appointed date i.e., 5th Feb., 2003 and was in his chamber throughout the day. However, it might be possible that he might have gone out for Bathroom etc. for a few minutes only. She, therefore, alleges that the assessee's counsel Shri Rakesh Gupta has filed a wrong affidavit before the Tribunal and a stringent action needs to be taken against him, besides rejection of the additional evidence sought to be placed on record.
4. After hearing the parties and careful consideration of the material brought on record and at this stage, we consider it unnecessary to delve deep whether there has really been wrong affidavit made by the assessee's counsel or that the AO was not available in his chamber on the appointed day, moreso when such an exercise is not going to resolve the real controversy before the T'ribunal. Even otherwise the allegation made by the learned Departmental Representative is not supported by any material evidence. No cognisance of such prayer is, therefore, being taken. The assessee's counsel, however, for the reasons stated in the affidavit did not produce the requisite register before the AO on the appointed day nor thereafter, He also did not make a prayer before the Tribunal for making modification in the directions prior to the date of hearing on 14th Feb., 2003. No attempt appears to have been made to produce the register between 5th Feb., 2003 to 17th Feb., 2003, though he has been seeking to introduce the excise register as an additional evidence, which was neither produced before the AO nor before the learned CIT(A). We are bound by the direction of the Hon'ble High Court. The issue cannot be kept pending beyond the limitation period, which is expiring on 18th Feb., 2003 and, therefore, on the basis of material available and the circumstances which have been brought before us, we are of the view that it is too late in the day to admit the stock register of excise of the assessee as an additional evidence. The prayer of the assessee for admitting such stock register as an additional evidence is, therefore, rejected.
5. In assessee's ground 1, the challenge is to sustenance of trading addition of Rs. 1,44,286 which was the loss shown by the assessee and reduced to NIL by the learned CIT(A).
6. Parties have been heard with reference to material on record. Before the AO, the assessee did not produce the stock register nor any bills and entries regarding purchase, sales, expenses and receipts, etc. However, some bills regarding consumption of power were produced. Since the assessee did not produce vouchers, the books of account were liable to be rejected. The genuineness of the purchases, receipts and expenses were not verifiable. The learned CIT(A) was, therefore, justified in not deleting the trading addition of Rs. 1,44,286 which was on account of gross loss of trading account and reduced to Nil by him. The assessee's ground, therefore, stands rejected.
7. Ground 2 has not been pressed by the assessee. The same also stands dismissed as not pressed.
8. In Revenue's appeal in ITA No. 352/Jp/2001, the appeal was filed on 31st May, 2001, by raising the following three grounds:
The CIT(A) has erred on facts and circumstances of the case and in law ;
(i) in deleting the addition of Rs. 8,22,806 to the trading account by holding that provisions of Section 145 were not attracted and there was no justification for the addition;
(ii) in deleting the disallowance of telephone expenses to the extent of Rs. 69,614 by holding that no disallowance can be made in the case of the company;
(iii) in deleting the disallowance of Rs. 4,78,702 made on account of foreign travel expenses by holding that the entire expenses were allowable under Section 37 of the Act."
9. No authorisation was placed on record. Shri Chopra, the learned CIT Departmental Representative joining Ms Kavita Pandey, stated that the appeal has been filed on 17th Aug., 2001 which is pursuant to the authorisation dt. 29/30th May, 2001 given by the CIT, Jaipur setting out the following two grounds :
"The CIT(A) Raj-I, Jaipur has erred in facts and the circumstances of the case and in law :
(i) in reducing the trading addition by Rs. 60,000 by admitting fresh evidence in violation of Rule 46A of the IT Rules, 1962;
(ii) in deleting the disallowance of Rs. 1,25,442 made under Section 43B of the Act by admitting fresh evidence without following the provisions of Rule 46A of the IT Rules, 1962."
This has been challenged by way of filing the fresh appeal memo on 17th May, 2001. The earlier AO had filed appeals with three grounds. These grounds did not relate to the assessee but were wrongly filed by the AO along with the assessee's appeal. The Revenue may, therefore, be heard on the grounds taken through the fresh appeal memo filed on 17th Aug., 2001 by treating it as amended appeal.
10. On the other hand, the learned counsel for the assessee has objected to hear the Revenue's appeal and prayed that the same needs to be dismissed in limine.
11. Parties have been heard with reference to material on record. M/s Kavita Pandey, the learned Departmental Representative has not pressed all the three . grounds taken by the Revenue in their appeal originally filed on 31st May, 2001. The learned CIT-Departmental Representative Shri Chopra has also narrated before us that these grounds do not relate to the assessee before us. The ground so raised in Revenue's appeal were also not supported by any authority from the learned CIT, Jaipur. On these facts, and as these have not been pressed, the Revenue's ground Nos. 1, 2 and 3 are dismissed as not pressed.
12. Before us, the Revenue has filed a fresh memo of appeal in Form No. 36 on 17th Aug., 2001. These grounds cannot be treated as additional ground also, as there is no such prayer on record for trading the same as additional ground. No explanation has been given by any amendment nor any letter has been placed before us for showing the nature of mistake, if any, committed by the AO which warranted any such amendment. Under such circumstances, the fresh memo of appeal so filed on 17th Aug., 2001 has to be treated as a new appeal. The order of the first appellate authority was communicated on 3rd April, 2001, as is borne out from the appeal memo. The appeal was due to be filed on 2nd June, 2001 but the same has been filed in this office on 17th Aug., 2001 and the appeal is barred by limitation. There is no application for condonation of delay. No reasons have also been advanced for filing the appeal late. The appeal of the Revenue, therefore, was dismissed by the order of the Bench.
13. As a result the Revenue's appeal in ITA No. 352 stands dismissed as also announced on the Bench at the time of hearing itself.
14. Ground No. 3 in assessee's appeal relates to treating of Rs. 9,84,936 as dividend within the meaning of Section 2(22)(e) of the IT Act, 1961. Shri Mehta contends that the assessee is a shareholder having shares of the value of Rs. 5,50,000 out of the total paid up capital of Rs. 22,05,200 and admits that the assessee is having a substantial interest and voting power of more than 10 per cent in the company M/s Supreme Metprodes Ltd. That company was suffering heavy losses since 1992. It has received state capital investment subsidy for Rs. 8,37,000 out of sanctioned sum of Rs. 11,17,240 sanctioned by the director of industries vide their No. F13(246)/Sub/Actt/1990-91. This amount is not chargeable to tax. The AO has not taxed the receipt as revenue receipt in any of the year in the past nor in the year in which it was received earlier. This has been so stated at Bar by the learned counsel for the assessee. The reserve has been created for capital subsidy as is borne from the assessee's paper book under the head "Reserve and Surplus". The subsidy so received has been utilised for the purpose for which it was granted and is not refundable. In case of non-utilisation of the subsidy for the purpose for which it was granted, the Government could recall it prior to the year ended 31st March, 1995 only. This period has elapsed and the amount has not been recalled. The Hon'ble Andhra Pradesh High Court in the case of CIT v. Tirumala Bricks & Tiles Factory (1996) 217 ITR 547 (AP) has also taken a view that the incentive granted by the State was a capital receipt in the hands of the assessee as such not revenue receipt.
15. He further stated that the balance sheet of M/s Supreme Meprodes Ltd. reveals profit of Rs. 1,25,936 which were profits of the year under appeal. The same cannot be termed as accumulated profits for the purpose of deemed dividend. Reliance been placed on the decision of apex Court in the case of CIT v. V. Damodaran (1980) 121 ITR 572 (SC).
16. Further, it was contended that the depreciation as per income-tax assessment has to be set off and the assessee had unabsorbed depreciation and losses of Rs. 22,30,842 which will leave no accumulated profit with that company for the amount of alleged advance to the assessee. Reliance has been placed on the decision of Bombay High Court in the case of Navnitlal C. Jhaveri v. CIT (1971) 80 ITR 582 (Bom). The assessee's counsel has also relied on the decision of P.K. Badiani v. CIT (1976) 105 ITR 642 (SC) where accumulated profits have been defined in analogous provision as contained in Section 2(6A)(e) of the old Act of 1922. The assessee has not taken any advance or loan. He has incurred certain expenses which could not be treated as advance or loans so as to fall in the category of deemed dividend within the meaning of Section 2(22)(e) of the IT Act, 1961. Another plea made by the learned counsel for the assessee is that the income on account of subsidy is not chargeable to tax as it has also not been charged to tax, The same cannot be treated as accumulated profit in view of the decision of the apex Court in the case of Tea Estate India (P) Ltd. v. CIT (1976) 103 ITR 785 (SC).
17. On the other hand, the learned Departmental Representative contends that the decision of apex Court in P.K. Badiani, (supra) speaks of profits in commercial sense and not assessed profits as canvassed by the learned counsel for the assessee. No set off of depreciation as per income-tax, assessment can be given. Profits to be taken are in the commercial sense. The balance sheet of M/s Supreme Metprodes Ltd. reveals that the amount was noted under the head "advance". That being so, it cannot be said that the amount has been received by the assessee for any other purpose than what has been stated by the company Supreme Meprodes Ltd. The assessee's plea that it is not an advance is, therefore, incorrect. She further contends that the Hon'ble High Court in the case of CIT v. Roshanlal (1975) 98 ITR 349 (All), has held that the accumulated profits are those which are available for distribution. The subsidy amount was not refundable by the assessee and therefore, this was available for distribution amongst the shareholders. This has to be treated as accumulated profit. Another decision relied upon in that of CIT v. K. Srinivasan and Ors. (1963) 50 ITR 788 (Mad) where it has been stated that general reserves are also included in the accumulated profit unless the capitalisation in one form or the other. The amount of subsidy has to be treated as part of the general reserve. Reference has also been made to the decision of the Andhra Pradesh High Court in the case of CIT v. Jaldu Rama Rao (1983) 140 ITR 168 (AP) and in the case of 43 ITR 426 (sic). In any event, the learned Departmental Representative wants more time to verify the facts from the assessment record, as to whether the subsidy is chargeable to tax or not. Reference to the decision of Sahney Steel & Press Works Ltd. (1997) 228 ITR 253 (SC) has also been made. It was contended that whether the amount of subsidy is capital or revenue receipt has to be decided before accepting the assessee's plea. Another decision referred is of CIT v. Udaya Pictures (P) Ltd. (1997) 225 ITR 394 (Ker), where subsidy for production of films was held as taxable. It was, therefore, contended that the plea that the amount of subsidy is not chargeable to tax, cannot be accepted and the order of the authorities below needs to be upheld.
18. In rejoinder the assessee's counsel Shri Mehta contends that the Revenue is using delaying tactics by seeking more time. The AO present in the Court room is also assessing M/s Supreme Metprodes Ltd. He personally is present without bringing the records. In case the Revenue sought to rely on the record or it had anything adverse against the assessee, that could have been done at least on the adjourned date today. He, therefore, contends that no adverse view can be taken against the assessee for the inabilities on the part of the Revenue more particularly when there is no adverse material available on record. He, therefore, prays that the assessee's ground needs to be decided on the basis of material evidence on record at the time of hearing of appeal by the Tribunal.
19. Parties have been heard with reference to material on record and case laws cited. The Revenue's prayer that some more time may be granted to locate the fact as to whether the amount of subsidy has been brought to tax as revenue receipt or chargeable to tax in the hands of Supreme Metprodes Ltd. cannot be accepted at this stage, as also because the AO has not brought any record in spite of Revenue being aware that the issue is to be concluded and decided before 18th Feb., 2003, being a limitation matter in the light of the directions of the Hon'ble High Court. We, therefore, proceed to decide the issue on the basis of available material before us.
20. It is not disputed that the assessee is holding substantial interest and voting power in the company namely Supreme Metprodes Ltd. as required under Section 2(22)(e) of the IT Act, 1961, A perusal of the balance sheet of that company placed at APB pp 4-15 reveals that in Schedule G to the balance sheet placed at p. 12 the amount has been shown under the head 'advances'--the other advance at Rs. 16,06,683. Copy of account of the assessee in their books has been placed at APB 27-29 which shows debit balance of Rs. 16,07,738. On the other hand, the assessee's balance sheet reveals that it has shown under the head 'current liabilities'--other creditor at Rs. 15,96,867. The books of account have not been produced when asked to do so at the time of hearing nor any details of other advances or other liabilities so stated have been filed nor the differences reconciled between the amount of other advances at Rs. 16,06,683 and that the copy of account showing debit balance at Rs. 16,07,738 in the name of the assessee in the books of M/s Supreme Metprodes Ltd. In view of the fact that M/s Supreme Metprodes Ltd. has disclosed the amount under their head 'loans and advances' and for want of production of books or any other reconciliation etc. the assessee's plea that the amount paid is for expenses and a current account cannot be accepted. The amount so outstanding in the name of the assesses in the accounts of the company Supreme Metprodes Ltd. under the head 'loans and advances' has necessarily to be treated as the amount of advance/loan to shareholders as envisaged under Section 2(22)(e) of the IT Act, 1961.
21. The AO however, restricted the amount to Rs. 9,48,922 standing to the credit under the head 'Reserve and Surplus' in the books of Supreme Metprodes Ltd. as against the advance/loan of Rs. 16,06,683 as disclosed in their balance sheet at the close of the year ended on 31st March, 1995. The aforesaid amount of Rs. 9,84,936 includes current profits for the year ended 31st March, 1995, at Rs. 1,25,036 as is evident from the copy of the audited accounts placed before us. The assessee's counsel contends that current profits cannot be included in accumulated profits as has been held by the Supreme Court in the case of CIT v. Damodaran (supra). It is seen that the Hon'ble Court decided the issue in the context of the Indian IT Act, 1922, and Section 2(6A)(e) of this Act was interpreted for coming to such a conclusion. The relevant Section 26{A)(e) of 1922 Act reads as under :
"(6A) 'Dividend' includes -
"(e) any payment by a company, not being a company in which the public are substantially interested within the meaning of Section 23A of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits."
However, the provisions of Section 2(22)(e) inserted in the IT Act, 1961, and as applicable in the year under consideration, Expln. 2 has also been added where the expression "accumulated profits" appearing in Sub-clause (e) of Section 2(22) includes all profits of the assessee upto the date of distribution or payment referred in this sub-clause. Section 2(22)(e) reads as under :
'dividend'-
(a) xxxxxx
(b) xxxxxx
(c) xxxxxx
(d) xxxxxx
(e) any payment by a company, not being a company in which the public are substantially interested of any sum whether as representing a part of the assets of the company or otherwise made after the 31st May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholders is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits;"
Explanation 2--The expression "accumulated profits" in Sub-clauses (a)(b)(d) and (e) shall include all profits of the company upto the date of distribution or payment referred to in those sub-clauses, and in Sub-clause (c) shall include all profits of the company upto the date of liquidation, but shall not, where the liquidation in consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place."
The present definition of accumulated profits by Expln. 2 to Section 2(22) of the IT Act, 1961, only clarifies that the words "accumulated profits" shall also include current profits of the company which are upto the date of distribution or payment referred in Section 2(22)(e) of the IT Act, 1961. This explanation was not available in the old Act and, therefore, the relevant provisions being different, the decision of the Supreme Court that current profits cannot be included in accumulated profits shall not apply in the present provisions of law. M/s Supreme Metprodes Ltd. made payment to the extent of Rs. 10,07,738 (APB p. 29) as is borne out from the copy of account upto 31st March, 1995, and a date of arriving at current profits of the year under consideration. This amount, therefore, is held to be part of the accumulated profits, liable to be treated as deemed dividend within the mischief of Section 2(22)(e) of the IT Act, 1961.
22. The assessee has contended that he has unabsorbed depreciation and losses as per income-tax assessment at Rs. 22,30,842. These are required to be set off before calculating accumulated profit. Reliance has been placed on the decision of Hon'ble Bombay High Court in the case of Navneet Lal Jhaveri v. CIT (supra). In this case the Malegaon Electric Co. prepared its balance sheet on the basis of depreciation allowance as calculated under the Electricity Supply Act '1948' for the purpose of making certain calculations under that Act. It has resulted in not correctly representing the position of the Malegaon Electricity Co. insofar as amount of depreciation. It is under such circumstance the Hon'ble Bombay High Court came to the conclusion that an allowance for depreciation should be made by way of deduction at the rates provided for by the IT Act itself. In the assessee's case before us, however, depreciation has been set apart as per Indian Companies Act, 1956 so as to replace the actual assets which is lost by the reason of the wear and tear of the machinery and plant and like assets and the profits so drawn as per Indian Companies Act cannot be said to have not been correctly representing the position of M/s Supreme Metprodes Ltd., under which such balance sheet statutorily required to be made. Even the Supreme Court in the case of P.K. Badiani v. CIT (supra) accepted the view of the Gujarat High Court in the case of CIT v. Viramgam Mills Co. Ltd. (1961) 43 ITR 270 (Guj) that the normal depreciation reserve of the company does not form part of the accumulated past profits. It also came to the conclusion that the expression "accumulated profits" occurring in Clause (e) of Section 2(6A) of 1922 Act means profits in the commercial sense and not assessable or taxable profits liable to tax as income under that Act. Before us it is also not the case of the assessee that the profits arrived at by the company is not per depreciation provided in its accounts to the extent specified under Section 350 of the Indian Companies Act, 1956; or that it is not in the manner as prescribed under Section 205 of that Act for the purpose of dividend to be paid only out of profits. Keeping in view the aforesaid position, Expln. 2 to Section 2(22)(e) of the IT Act, 1961, under which the issue has come for consideration in contra-distinction to the provisions contained in old Act and the concept of commercial profits as set out in the aforesaid judgment of the Supreme Court, unabsorbed depreciation and losses as per IT Act cannot be allowed to be set off against the accumulated profits arrived at by the assessee after making provision of depreciation and charging expenses which has given rise ultimately to the profits in the books of the assessee at Rs. 1,25,936. The assessee's plea to allow set off of such assessed unabsorbed depreciation and loss, therefore, does not find favour.
23. The Revenue before us has, however, relied on the decision of Hon'ble Allahabad High Court in CIT v. Roshanlal (decd.) (supra) contending that the amount of capital reserve has to be taken as profits available for distribution. In this judgment, we find that the AO treated Rs. 82,642 as the accumulated profit and deemed dividend to the extent of Rs. 74,642 advanced to one of its shareholders, whereas the Tribunal took the view that only Rs. 8,082 could be treated as accumulated profit which was a sum left over after deducting the sum of Rs. 74,560 declared as dividend by the company. The Hon'ble Allahabad High Court did not agree with the view of the Tribunal for the reason that the profits can accumulate even within a single year, "Accumulated" means earned bit by bit and accumulated. The entire amount which is available for distribution as profits on a particular date would be the accumulated profit and any amount paid as advance or loan to the shareholder to the extent of this amount of accumulated, profit will be dividend within the meaning of Section 2(6A)(e) of the 1922 Act. The Hon'ble High Court, therefore, has referred to the earned profit and not any other amount like receipts provided by the State Government. We, therefore, do not agree that such capital receipts can be said to be available with the assessee as earned profits available for distribution.
24. By another judgment referred by the Revenue in the case of CIT v. K. Sreenivasan (supra) it was contended that accumulated profits included a general reserve. In this case the Hon'ble Court opined that the mere transfer of profits to any other reserve account will not take away from the profits the character of accumulated profits. It is for this reason, the Hon'ble Court came to the conclusion that for the purpose of Section 2(6A)(e) of the 1922 Act, accumulated profits include general reserve. Before us, the capital reserve on account of state capital investment subsidy, lab equipment subsiay and ISI subsidy provided by the State Government is not a profit earned by the assessee and transferred to capital reserve account so as to say it as "accumulated profits" in the light of aforesaid judgment.
25. The Revenue has also relied on the decision of Sahney Steel & Press Works Ltd. v. CIT (supra) and also another decision in the case of CIT v. Udaya Pictures (P) Ltd. (supra) saying that the subsidy was taxable. Sufficient time was available with the Revenue to bring material on record to show as to whether the said amount of Rs. 8,37,000 received on account of state capital investment subsidy, on account of lab equipment subsidy and Rs. 2,000 out of ISI subsidy received from the State Government by the assessee was charged as revenue receipt in the hands of M/s Supreme Metprodes Ltd. which was being assessed by the same AO who assessed the appellant before us also but was present in the hearing without bringing any such record. The assessee's counsel Shri Mehta has, however, also made statement at Bar that the amount of subsidy has not been charged to tax in any year. In the absence of any material contrary to the statement made by the assessee's counsel, and also because it is not the issue before us whether the receipt on this account is revenue receipt or not in the hands of Supreme Metprodes Ltd., no adverse inference can be drawn against the assessee by treating the amount of subsidy so received as accumulated profits available with that company. Accordingly the decisions cited by the Revenue are of no consequence at this stage. Since the Revenue has not treated the amount of subsidy as revenue receipt in any of the earlier years, nor it was shown that the amount of these subsidies has been credited as its profits in the accounts of M/s Supreme Metprodes Ltd. in any of the earlier years, the assessee's plea that the amounts of subsidy were capital receipt of the company of which assessee is a shareholder has to be accepted. The subsidy amount on capital account is, therefore, outside the scope and ambit of word "profits" nor this can be termed as capitalized profits of the company. M/s Supreme Metprodes Ltd, cannot be said to possess any "accumulated profits" to that extent for the purpose of Section 2(22)(e) of the IT Act, 1961. It, therefore, leaves only Rs. 1,25,936 as accumulated profit on account of current years profit as decided hereinbefore to be treated as deemed dividend within the mischief of Section 2(22)(e) of the IT Act, 1961 r/w Expln. (2) thereof. We, therefore, modify the order of the learned CIT(A) accordingly which results into treating the amount of Rs. 1,25,936 as a deemed dividend in the hands of the assessee. Accordingly, the assessee's ground stand partly allowed.
26. In the result the Revenue's appeal stands dismissed and that of the assessee stands partly allowed.