TaxTMI 
TaxTMI 
2010 (3) TMI 323
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....section 2(22)(e) of the Income-tax Act, 1961, by stating that since the transactions are not reflected in the books of account, it cannot be treated as deemed dividend? 2. Whether, on the facts and in the circumstances of the case, the Tribunal in law, was right in holding that the Assessing Officer has not established that the money was advanced for the benefit of any shareholder and the same has to be taxed in the hands of such shareholder who obtained the benefit and not in the hands of the assessee-company, following the ratio of the decision in the case of Asst. CIT v. Bhaumik Colour P. Limited [2009] 313 ITR (AT) 146 (Mumbai) ; 27 SOT 270 [SB]? 3. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tr....
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....e Limited (CSPL) to the account of the assessee maintained in the Chembur branch of the State Bank of India. Mr. Vikram Tannan was a director of CSPL. He held over 10 per cent. of the equity capital of CSPL and over 20 per cent. of the equity capital of the assessee. The Assessing Officer, in the course of the order of assessment, relied on the provisions of section 2(22)(e) and treated the amount of Rs. 35,00,000 as deemed dividend in the hands of the assessee and directed that the amount be added back to its total income. The assessee contended that one Mr. Teredesai, Vice President (Finance) had misappropriated large sums of money by opening bank accounts and the transaction by which an amount of Rs. 32,00,000 was transferred from CSPL w....
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....r held that the loan was received from the bank account of CSPL ; the money was deposited in the bank account of the assessee and the subsequent defalcation of the funds after the receipt of moneys by the assessee was an extraneous circumstance which made no difference to the application of section 2(22)(e). The Assessing Officer found that Mr. Vikram Tannan who was a director of the assessee held more than 20 per cent. of the equity capital of CSPL. The Assessing Officer came to the conclusion that all the conditions for the application of section 2(22)(e) were fulfilled and the loan of Rs. 35,00,000 from CSPL would have to be treated as deemed dividend in the hands of the assessee. 5. In appeal, the Commissioner of Income-tax (Appeals) a....
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....any payment by a company, not being a company in which the public are substantially interested, or 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 share holder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or with out 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 (here after 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....
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....that the first part of clause (e) of section 2(22) is attracted, the payment by a company has to be by way of an advance or loan. The advance or loan has to be made, as the case may be, either to a shareholder, being a beneficial owner holding not less than ten per cent. of the voting power or to any concern of which such a shareholder is a member or a partner and in which he has a substantial interest. The Tribunal in the present case has found that as a matter of fact no loan or advance was granted to the assessee, since the amount in question had actually been defalcated and was not reflected in the books of account of the assessee. The fact that there was a defalcation seems to have been accepted since this amount was allowed as a busin....