TaxTMI 
TaxTMI 
TaxTMI 
2012 (10) TMI 361
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....d with Section 56 (2) (i) of the Act. 3. The findings recorded by CIT (A) summarised by the ITAT are as follows:- "As to whether section 2 (22) (e) of the Act is applicable to the appellant's case is a finding of fact. it is seen that admittedly the two partners of the firm namely Shri Kailash Chand Gupta and Mithlesh Khandelwal have profit sharing ratio of 80:20 and are registered and beneficial shareholders of M/s Khandelwal Cables Limited with share4holding of 11.57% and 13.05% respectively. Hence, 2 out of 3 conditions of section 2 (22) (e) are undisputedly fulfilled in the appellant's case. Thus, only the nature of the receipts aggregating to Rs.48,20,549/- is in dispute insomuch that the Assessing Officer has trea....
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....and job work charges receivable from Khandelwal Cables Limited. Hence, the impugned advance by Khandelwal Cables Limited to the appellant are effectively repayment of the loans of the appellant's partners though ostensibly to the appellant firm. Thus, though, in form, the amounts drawn by the appellant from Khandelwal Cables Limited appear as advances/loans, in substance the appellant firm has received the impugned amounts of and from its own partners, though through Khandelwal Cables Limited. This is no different from repayment by Khandelwal Cables Limited of the deposits of the appellant's partners and introduction thereof by the partners in the appellant firm. The A.O. is of the view that the account of the appellant ....
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....he appellant's partners and introduction thereof by the partners in the appellant firm. 5. Shri Shambhu Chopra submits that the A.O. had recorded finding that the amount could not be treated as repayment as in the books of account of the company the payments were made for the job work and that the outstanding amount was not reduced by the amount of loans advance by the company to the assesse firm on respective dates. 6. The appeal has been preferred on the following questions of law:- "1. Whether the Hon'ble ITAT is justified in law in holding that the addition on account of deemed dividend, under section 2 (22) (e) of the IT Act, 1961, could only be made in the hands of the registered/beneficial shareholder, ignoring ....
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.... justified in holding that the basic condition for invoking section 2 (22) (e) was not satisfied since the assessee firm itself was not a shareholder in the Company from which it had received loan/advance, and thereby confirming the CIT (Appeal)'s action in deleting the addition of Rs.48,20,549/- despite the fact that CIT (Appeals) in his order had confirmed that the impugned addition was covered as deemed dividend U/s 2 (22) (e), although he had deleted the addition purely on the basis of facts of the case. 4. Whether the Hon'ble ITAT is justified in thus deciding the legal issue in favour of the assessee and dismissing the revenue's appeal without adjudicating the finding given by the CIT (A) on merit, which had been s....
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....as the main reason for enacting section 2(22)(e) of the Act." 9. The question as to whether deeming provision and dividend under Section 2 (22) (e) is attracted in the present case has to be seen in the light of the finding of fact recorded by CIT (A) with which ITAT did not interfere. 10. The deeming provision under Section 2 (22) (e) of the Act by which loans and advance have to be added back as income of the company was subject matter of consideration in ACIT v. Bhaumik Colour P. Ltd., (2009) 313 ITR (AT) 146 (Mumbai) and Exide Industries Ltd. v. Union of India, (2007) 292 ITR 470 (Cal). 11. The aforesaid two decisions were considered by the Bombay High Court in CIT v. Universal Medicare Private Ltd., (2010) 324 ITR 263 (Bom). The Bom....