TaxTMI 
TaxTMI 
2016 (3) TMI 454
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....1. Whether on the facts and circumstances of the case, the Ld. CIT(A) was correct in deleting the addition of Rs. 2,31,58,498/-, which was made u/s. 2(22)(e) of the I.T. Act, 1961. 2. Whether on the facts and circumstances of the case, deemed dividend u/s 2(22)(e) cannot be assessed in the receipt is not the registered share holder of company advancing loan or advance, although recipient person has beneficial interest by way of share holding in both the companies. 3. The appellant craves leave for reserving the light to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. The brief facts of the case are that the assessee entered into some transactions with its siste....
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....anies and there was a constant debit balance of assessee company in the books of the AMPL, the peak of the same amounting to Rs. 2,31 ,58,498/- was taxable as deemed dividend u/s 2(22)(e). Accordingly, he made the addition of above amount and assessed the income at Rs. 2,40,14,830/- vide his order dated 09.1.2013 passed u/s. 143(3) of the I.T. Act, 1961. 3. Against the aforesaid assessment order, the assessee appealed before the Ld. CIT(A), who vide impugned order dated 05.7.2013 allowed the appeal of the assessee and deleted the addition in dispute. 4. Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal. 5. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. I....
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....2)(e) on the ground that Sh. Amit Chopra has 38% shareholding in AMPL and 97% shares in the appellant company. On careful examination of the provisions of Section 2(22)(e) of the Act, I have find that Section 2(22)(e) reads as under: "dividend" includes- (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to....
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....p 313 ITR 116 Raj. The Jurisdictional High Court in the case of CIT V Ankitech Pvt. Ltd. and Ors. 314 ITR 14 has held that a concern which is given loan or advance by a company cannot be treated as shareholder / member of the latter simply because a shareholder of the lender company holding voting power of toper cent or more therein has substantial interest in such concern. The Hon'ble High Court has further held that if the intention of the legislature was to tax such loan or advance as deemed dividend at the hands of the deeming shareholder, it would have inserted deeming provision in respect of shareholder as well. It was held that deemed dividend u/s 2(22)(e) cannot be taxed in the hands of a nonshareholder. Respectfully following t....
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....hareholder / member of the latter simply because a shareholder of the lender company holding voting power of toper cent or more therein has substantial interest in such concern. We further note that the Hon'ble High Court has further held that if the intention of the legislature was to tax such loan or advance as deemed dividend at the hands of the deeming shareholder, it would have inserted deeming provision in respect of shareholder as well. It was held that deemed dividend u/s 2(22)(e) cannot be taxed in the hands of a nonITA shareholder. Respectfully following the judgment of the Jurisdictional High Court, as aforesaid, we are of the considered opinion that the assessee company (M/s AVA Merchandising (P) Ltd.) not being a shareholde....