2013 (10) TMI 709

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....the Revenue has to be dismissed in view of the decision of Delhi High Court in CIT Vs. Ankitech (P.) Limited, (2012) 340 ITR 14 (Delhi). 2. The accepted position is that the respondent assessee Bikaner Cuisine Pvt. Ltd. was not a shareholder of BIPS Systems Ltd. The latter company i.e. BIPS Systems Ltd. had granted unsecured loan of Rs.49,25,000/- to the respondent assessee. The Assessing Offic....

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....members, even though the company has accumulated profits would not distribute such profit as dividend because if so distributed the dividend income would become taxable in the hands of the shareholders. Instead of distributing accumulated profits as dividend, companies distribute them as loan or advances to shareholders or to concern in which such shareholders have substantial interest or make any....

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....al fiction created under section 2(22)(e) of the Act. We have to keep in mind that this legal provision relates to ''dividend''. Thus, by a deeming provision, it is the definition of dividend which is enlarged. Legal fiction does not extend to ''shareholder''. When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specified under section....

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.... Legislature would have inserted a deeming provision in respect of shareholder as well, that has not happened. Most of the arguments of the learned counsel for the Revenue would stand answered, once we look into the matter from this perspective.    26. In a case like this, the recipient would be a shareholder by way of deeming provision. It is not correct on the part of the Revenue to....