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IN THE HIGH COURT OF DELHI
Manmohan, Navin Chawla, JJ.
Pr. Commissioner of Tax - Appellant
Versus
Anumod Sharma - Respondent
ITA 1 of 2021
Decided On : 20-09-2021
The court affirmed that the advance received in a business context does not constitute a loan under Section 2(22)(e) of the Income Tax Act, 1961, thus supporting concurrent findings of fact from lower courts.
Headnote:(A) Income Tax Act, 1961 - Section 2(22)(e) - Appeal challenging the ITAT's order - Revenue contended the deletion of the addition of Rs. 10,57,01,194/- by the CIT(A) was erroneous - Concurrent findings of CIT(A) and Tribunal establish the advance received was a trade advance and not a loan - Dismissed appeal based on established facts. (Paras 3, 5, 19)
(B) Appellate Jurisdiction - The court reiterates that it should not interfere with factual findings of lower courts unless perverse. (Para 6)
Facts of the case:
The appellant challenged the deletion of an addition under Section 2(22)(e) alleging improperly categorized advance received by the assessee as a loan, while it was determined to be a trade advance.
Findings of Court:
The CIT(A) and Tribunal found no conclusive aspects supporting the Revenue's claims, leading to the deletion of the addition in question.
Issues: Whether the ITAT erred in its findings related to the nature of the advance received and its implications under Section 2(22)(e).
Ratio Decidendi: The findings illustrated that facts support business advancement rather than a loan, which aligns with the exceptions under Section 2(22)(e).
Result: Appeal dismissed.
JUDGMENT
Manmohan, J. (Oral)--Present appeal has been filed challenging the order dated 26th February, 2019 passed by the ITAT in ITA No. 6892/DEL/2015. In the present appeal, the Principal Commissioner of Income Tax (`PCIT') has proposed the following questions of law:-
"i. Whether on facts and in the circumstances of the case the Hon'ble ITAT has not erred in law in dismissing the appeal filed by the revenue and upholding the order of CIT(A) in deleting the addition of Rs. 10,57,01,194/- made by AO under section 2(22)(e) of the Income Tax Act, 1961 in contravention of the law laid down by the Hon'ble Supreme Court in the case of Vikram Krishna Vs. PCIT (2020) 114 taxmann.com 197 (SC)?
ii. Whether in law and on facts of the case the order of the Hon'ble ITAT is not erroneous and not perverse?"
2. During the course of hearing, learned counsel for the appellant submits that the finding of the Commissioner, Income Tax Appeal [`CIT(A)'] and Tribunal are incorrect and bad in law and the finding of the Assessing Officer must be accepted, inasmuch as, the agreement between the parties was not registered and was made only on a stamp paper of Rs. 100/-.
3. Having heard learned counsel for the appellant, this Court finds that the issue canvassed during the hearing is not one of the proposed questions of law. In fact, the proposed question of law is that whether the Tribunal erred in deleting the addition of Rs. 10,57,01,194/- made by the Assessing Officer under Section 2(22)(e) of the Income Tax Act, 1961 (`the Act') in contravention of the law laid down by the Supreme Court in the case of Vikram Krishna Vs. PCIT (2020), 114 taxmann.com 197 (SC).
4. A perusal of the paper book reveals that the Supreme Court dismissed the Special Leave Petition in limine against the judgment of this Court in Vikram Krishna (supra). It is settled law that summary dismissal of Special Leave Petition does not mean approval by the Supreme Court of the view taken by the High Court. Further, the Division Bench had dismissed the appeal filed by the assessee holding that in view of the peculiar facts in that case, the agreement to sell and cancellation of such agreement was merely a cover up with the camouflage for giving loan to the assessee by the company to avoid contravention under Section 2(22)(e) of the Act.
5. In the present case, both the CIT(A) as well as Tribunal have given findings of the fact that the advance received from the company by the assessee was in the nature of trade advanced booking of commercial place being built by the assessee. Both the CIT(A) as well as the Tribunal have further held that in the present case, it was the company which owed money to the assessee rather than the other way round. The relevant findings of the CIT(A) as well as Tribunal are reproduced hereinbelow:-
Finding of the CIT(A):-
"12. The AO had further highlighted in the assessment order at page no 9 that the appellant had taken loans and advances from Apra Auto (India) P Ltd in earlier years as well. In this regard, the appellant was directed to file his ledger account with Apra Auto (India) P Ltd and vice- versa so as to see if the facts were as highlighted by the AO in the assessment order. It is seen that for the FY 11-12 i.e. preceding FY, the appellant had a outstanding from Apra Auto (India) P Ltd as on 01.04.2010 to the tune of Rs 1,11,43,224 and during the entire year, various payments have been made either by the company or by the appellant but at no point of time, there is any net outstanding by the appellant towards Apra Auto (India) P Ltd. In view of this, the observations of the AO as mentioned above does not seem to have factual legs.
13. The perusal of AO/JCIT's comments in the remand report clearly shows that no distinction between the two deals has been pointed out either during assessment proceedings or the appellate proceedings. It has been the claim of the appellant that both the deals were entered into during the year under considerat
