IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “SMC” BENCH : MUMBAI BEFORE JUSTICE (RETD.) SHRI C.V. BHADANG, PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER Assessment Year : 2008-09 Mr. Mukund Vallabhdas Deputy Commissioner of Thakker, Income Tax, Ground Floor, vs. Central Circle-4(2)(1), Persian Apartments, Aayakar Bhavan, 434, VP Road, M.K. Road, Andheri (W), Mumbai-400020.

Mumbai-400058.

PAN : AAAPT3952A (Appellant) (Respondent)

For Assessee : Shri Rajiv Khandelwal (Virtually appeared)

For Revenue : Shri Anurag Tripathi Date of Hearing : 26-11-2025 Date of Pronouncement : 28-11-2025

O R D E R

PER VIKRAM SINGH YADAV, A.M :

This is an appeal filed by the assessee against the order of the Learned Addl/JCIT(A)-1, Delhi, dated 27-08-2025, pertaining to Assessment Year (AY) 2008-09, wherein the assessee has challenged the sustenance of addition of Rs. 9,73,306/- u/s. 2(22)(e) of the Income Tax Act, 1961 („the Act‟).

2. Briefly stated facts of the case are that assessment in this case was completed u/s. 143(3) r.w.s. 147 of the Act, vide order dt. 30-03-2016, wherein the AO brought to tax a sum of Rs. 9,73,306/- as deemed dividend u/s. 2(22)(e) of the Act. As per the AO, a Chevrolet Optra Car for Rs. 9,73,306/- was purchased in the name of the assessee and the payment for the same was made by Gopaldas Visram & Co. Ltd., wherein the assessee is a beneficial owner holding 11.95% of shares of the said company. As per the AO, the purchase of car in the name of the assessee amounts to advancing of loan by the company to the assessee and which triggers the provisions of section 2(22)(e) of the Act and hence, the same was brought to tax in the hands of the assessee.

3. The assessee thereafter carried the matter in appeal before the Ld.CIT(A) and it was contended that no advance is received by the assessee from the company during the year under consideration. Further referring to Balance Sheet so prepared for the assessee, it was submitted that the motor-car is not appearing in his Balance Sheet as the company has made payment for purchase of the car and the motor car has been shown as part of fixed asset schedule and balance sheet of the company and the company has claimed depreciation on the same. It was further submitted that the Ld.CIT(A) vide order of the AO, dt. 30-03-2016 for A.Y 2008-09 in the case of the company, has allowed the depreciation so claimed by the company after discussing the matter at length. It was submitted that the motor-car has been used by the company for the purposes of its business and merely because motor-car is registered in the name of the assessee, it cannot be held that the provisions of section 2(22)(e) of the Act get triggered.

4. The submissions so filed by the assessee were considered, but not found acceptable to the Ld.CIT(A). As per the Ld.CIT(A), the contention of the assessee that no advance is received during the year does not hold any ground as provision of section 2(22)(e) of the Act are deeming provisions and payment made by the company for purchase of car in the name of substantial shareholder on his behalf is equal to advancing money to the shareholder and reference was drawn to the provisions of section 2(22)(e)

of the Act, which reads as under:

“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 day of 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 shareholder 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, t