TaxTMI 
TaxTMI 
2015 (9) TMI 386
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....41 from Biotech Vision Care Pvt Ltd. (BVCPL, in short) It was also noted that Shri Mehul P Asnani, one of the major shareholders in the assessee company, holding 40% of its equity, is also holding 90% shareholding in BVCPL. The Assessing Officer further noted that BVCPL is having accumulated profits of Rs. 10,15,76,665, i.e. far in excess of the loan advanced to the assessee. On these facts, and without anything else, the Assessing Officer treated the amount of Rs. 70,57,941 as deemed dividend under section 2(22)(e) of the Act. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) deleted this addition by observing, inter alia, as follows: Appellant is not a shareholder in the lender company. However, the Assessing Officer has treated the same as deemed dividend in the hands of the appellant company. Appellant's main objection was that in view of the various decisions, including the special bench of ITAT Mumbai and Bombay High Court referred to in assesse's submissions, the addition of deemed dividend can only be made in the hands of the shareholder. If the recipient of loan is not a shareholder and the transaction is covered by this provisio....
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....ent for invoking Section 2(22)(e) of the Act, and that condition is admittedly not satisfied. For this short reason alone, the impugned additions should have been deleted by the CIT(A). We approve the conclusions arrived at by the CIT(A) in this respect and decline to interfere in the matter so far as the relief given by the CIT(A) is concerned. 8. In the result, the appeal is dismissed. 9. The assessee has also moved a cross objection which seeks to expunge CIT(A)s directions to bring this deemed dividend to tax in the hands of Shri Mehul P Asnani, director in assesses company. 10. Learned counsel submits that while deciding appeal of the assessee before him, it was not open to the CIT(A) to give adjudication on taxability of this income in the hands of a person other than this assessee. He has clearly exceeded his jurisdiction in holding that the amount in question is taxable in the hands of Shri Mehul P Asnani. He urges us to expunge these observations. In support of his prayer, learned counsel for the assessee invites our attention to a decision of the coordinate bench in the case of Jagat Minerals Pvt Ltd v. DCIT and vice versa (ITA Nos 2110, 2403 and 2750/Ahd/11; dat....
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.... provisions of sub-section (2A) be completed at any time where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order, under sections 250, 254, 260, 262, 263 or 264 1535 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act". In other words, when effect of a finding or direction of an revisionary, appellate or judicial authority is to be given, that exercise can be carried out any point of time de hors the time limits specified in section 153(1). However, even this relaxation of time limits is subject to certain riders, including rider contained in Explanation 3 to Section 153(3) which provides that, where by a revisionary, appellate or judicial order of the above nature, an income is excluded from the income of one assessee and held to be income of the other assessee, the assessment of such an income in the hands of another assessee "be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard bef....
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....e taxed as A's income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B. then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regards the expression "direction" in s. 153(3)(ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or Court. It must also be a direction which the authority or Court is empowered to give while deciding the case before it. 18. Let us now, in the above light, revert to the facts of the case before us. The authorities below were dealing with a deeming fiction, i.e. deemed dividend, about an income. The case of the assessee was that this deeming fiction of deemed dividend could not be invoked in the present case because th....