2010 (3) TMI 1096

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....O" for short) as deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. At the time of hearing before us, it is submitted by the learned counsel that the AO made the addition of Rs. 50,000/- on the ground that the assessee-company has taken loan of Rs. 50,000/- from "Jewel Brushes Pvt. Ltd. ("JBPL" for short); that Subir and Shrud Goradia are holding 20% share in "JBPL" and that the assessee company is not shareholder of "JBPL". He therefore submitted that once the assessee is not a shareholder of "JBPL", the deemed dividend, if any, cannot be assessed in the hands of the assessee. In support of the contentions, he relied upon the decision of the Special Bench of the ITAT in the case of Bhaumik Colours P.Ltd., 313 ITR 146 AT (M....

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.... before us. The Special Bench of the ITAT in the case of Bhaumik Colours P. Ltd., (supra) held as under: "That deemed dividend could be assessed only in the hands of the person, who is a shareholder of the lender company and not in the hands of a person other than a shareholder, i.e. the concern] From the above, it is evident that the Special Bench held that the deemed dividend could be assessed only in the hands of the person who is shareholder of the lending company. In the case before us, admittedly, the assessee-company is not the shareholder of the lender-company. Therefore, as per the above decision of the Special Bench of the ITAT, there would not be any addition in the hands of the assessee-company which is not the sharehol....