Tribunal rules no deemed dividend as appellant not a shareholder. Legal interpretation crucial.

The Tribunal ruled in favor of the appellant, stating that no addition could be made on account of deemed dividend under section 2(22)(e) as the appellant was not a shareholder of the lending company. The decision was based on legal interpretations and precedents emphasizing the requirement of shareholding for invoking the provisions of deemed dividend.

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Issues:
- Addition of Rs. 90,70,143/- made u/s 2 (22) (e)
- Applicability of provisions of Section 2 (22) (e) to the Appellant company
- Money advanced in the course of normal business activity
- Consideration of money advanced during the year only as deemed dividend
- Consideration of additional evidence and grounds raised for the first time

Analysis:
1. Addition of Rs. 90,70,143/- made u/s 2 (22) (e): The appeal challenged an addition under section 2(22)(e) for deemed dividend. The AO found common shareholdings between the assessee and the lending company, concluding the loan attracted the provision. The assessee argued against this, citing legal precedents supporting non-shareholders not being liable for such additions.

2. Applicability of provisions of Section 2 (22) (e) to the Appellant company: The Appellate Tribunal noted that being a shareholder is a prerequisite for deeming a transaction as a dividend under section 2(22)(e). The Tribunal emphasized that the provision enlarges the scope of dividend only for shareholders, as confirmed by relevant High Court judgments.

3. Money advanced in the course of normal business activity: The Tribunal considered whether advances made in the normal course of business could be treated as deemed dividend under section 2(22)(e). It was argued that such advances were not loans and should not be considered as deemed dividend if they were not produced before the Assessing Officer.

4. Consideration of money advanced during the year only as deemed dividend: The issue of whether the opening balance should be excluded while computing deemed dividend under section 2(22)(e) was raised. The Appellant contended that only money advanced during the year should be considered for this purpose, excluding any opening balances.

5. Consideration of additional evidence and grounds raised for the first time: The Appellant raised the question of the Commissioner not considering additional evidence and grounds presented for the first time. However, the Tribunal's decision focused on the core issue of deemed dividend under section 2(22)(e) and its applicability to non-shareholders.

In conclusion, the Tribunal ruled in favor of the assessee, stating that no addition could be made on account of deemed dividend under section 2(22)(e) as the assessee was not a shareholder of the lending company. The decision was based on legal interpretations and precedents emphasizing the requirement of shareholding for invoking the provisions of deemed dividend.

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