Appeal dismissed; deemed dividend under section 2(22)(e) not attracted as assessee not shareholder of alleged companies

HC dismissed the Revenue's appeal. The court upheld the Tribunal's factual finding that the assessee was not a shareholder of the two companies alleged to give rise to intercorporate deposits or advances under section 2(22)(e), and therefore the deemed dividend provision did not apply. The HC found the Division Bench decision relied upon (Universal Medicare) applicable and declined the Revenue's invitation to reconsider it. Appeal dismissed.

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This Appeal under Section 260A of the Income Tax Act, 1961 challenges the Tribunal's order relating to assessment year 2006-2007. Revenue contended that sums characterized by the Tribunal as "inter-corporate deposits" are in truth advances or loans within the meaning of Section 2(22)(e) and therefore "the amount can be deemed as dividend" if other requirements are satisfied. The Bench accepted the Tribunal's factual finding that the assessee was not a shareholder of M/s. Subhkam Stocks and Shares Ltd and M/s. Sweet Solutions Ltd, and held the Division Bench decision in Commissioner of Income Tax v. Universal Medicare Pvt. Ltd. (324 ITR 263 (Bom)) to be applicable. After considering detailed arguments, the Court found no reason to reconsider Universal Medicare. The Tribunal's findings of fact were held not to be "perverse or vitiated by any error of law apparent on the face of record." The appeal was dismissed and "There will be no order as to costs."

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