2014 (11) TMI 694

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.... assessee company as per provisions of Section 2(22)(e) of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that para 10.3 of circular No.495 dated 22.9.1987 issued by CBDT is not applicable?" 2. The assessment in this case relates to the assessment year 2005-06. The respondent/assessee, Printwave Services P. Ltd. received a sum of Rs. 41,46,588/- from another private limited company, namely, Front Line Printers P. Ltd., which is stated to be sister concern of the assessee company. On the date on which the above amount was received, the assessee paid a sum of Rs. 42,96,677/- to one Shri.T.R.Jawahar, who is said to be the Director in both the companies and was having ....

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....edings, the Assessing Officer noted that the assessee company have received a sum of Rs. 41,56,588 from a sister concern Front Line Printers Private Limited. On the same date of receipt, an amount of Rs. 42,96,677 was paid by the assessee company to Shri T.R.Jawahar. The Assessing Officer also noted that Shri T.R.Jawahar owned 10% of the shares of the assessee company and also 43.95% of the shares of Front Line Printers. Shri T.R.Jawahar was also a director in both these companies. Even though the amount received by the assessee company from Front Line Printers was shown as trade advance, the same had effectively been utilized by Shri T.R.Jawahar towards repayment of housing loan. On these facts, the Assessing Officer brought to tax an amou....

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....dividend would arise. In this regard, the Tribunal relied upon the earlier decision of the Tribunal reported in 118 ITD 1 (ACIT V. Bhoumik Colour (P) Ltd.) The Tribunal, on a plain reading of Section 2(22)(e) of the Income Tax Act, came to the conclusion that the assessee not being a registered or beneficial owner of the shareholdings, is not liable to be taxed and hence the Tribunal placing reliance on the Explanatory Notes to Finance Act stating that it cannot override the provisions of the Act rejected the appeal filed by the Department. 5. Aggrieved by the order of the Income Tax Appellate Tribunal, the Revenue has filed the present appeal. 6. We have heard Mr.T.R.Senthilkumar, learned Standing Counsel appearing for the Revenue at len....