TaxTMI 
TaxTMI 
2016 (8) TMI 1079
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....ERS PVT. LTD. 3. The order passed by the learned C I T (A) is erroneous and prejudiced since the submissions made regarding the carry forward loss and re-casted Balance Sheets are not taken into consideration to ascertain the fact that, the SBPL is having the accumulated loss position. 4. As mentioned in page 2, of the Assessment Order; "Bare reading of the sections 2(22)(e) implies the following Any payment made by a private limited company in form of loan or advance in the below three cases can be taxed in the hands of recipient as deemed dividend to the extent the company possesses accumulated profits..." It is very clear from the above that, the company should have accumulated profit to treat the loans and advances as deemed dividend u/s 2(22)(e). It is evident from the Balance Sheet of Shejawadkar Builders Pvt Ltd, that the Company is not having accumulated profit as per the provisions u/s 2(22)(e). As per the Balance Sheet as on 31/03/2011, the accumulated profit before depreciation is Rs. 36,47,236/- as on 31/03/2011. After claiming accumulated depreciation, the company has suffered loss. The company has filed a loss return with carry forward loss of Rs. 2,58,15,749/....
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....bmission of additional Grounds of Appeal and facts at the time of hearing. Your Honour is earnestly requested to delete the additions made by the Learned C I T (A) in the interest of the provisions of the Income Tax Act, 1961 and natural justice." 3. Briefly facts of the case are the assessee is a company duly incorporated under the provisions of the Companies Act,1956. It is engaged in the business of real estate and construction. Return of income for the assessment year 2011-12 was filed on 24/09/2011 declaring total income of Rs. 83,80,670/- and the same was revised on 5th May 2012 at a total income of Rs. 74,30,500/-. After processing return of income u/s 143(1) of the Income-tax Act,1961 ['the Act' for short], the case was taken up for scrutiny assessment and the assessment was completed u/s 143(3) of the Act vide ode dated 30th March 2014 at a total income of Rs. 1,11,23,740/-. While doing so, the AO made addition of Rs. 36,47,236/- on account of deemed dividend alleging that the assessee has received unsecured loans from following parties: i. Shejwadkar Builders Pvt.Ltd. ... Rs. 5,09,64,735/- ii. Shejwadkar Construction Co. Ltd. ... Rs. 25,25,000/- The AO wa....
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....eafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for- the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits; But "dividend" does not include- (i) a distribution made in accordance with subclause (c) or sub- clause (d) in respect of any share issued for full cash consideration, where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets; (ia) a distribution made in accordance with subclause (c) or sub- clause (d) in so far as such distribution is attributable to the capitalised profits of the company representing bonus shares allotted to its equity shareholders after the 31st day of March, 1964 , and before the 1st day of April,1965; (ii) any advance or loan made to a shareholder 3 or the said concern] by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company; (iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend wi....
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....nch Delhi in ITA No.6302/Del/2013 dated 10/06/2015 in the case of IAG Promoters and Developers Pvt. Ltd., Vs. ACIT , to which one of us is the author, held as follows: "5. We have heard the rival submissions and perused the material on record. Undisputedly, the appellant is not a shareholder of M/s Countrywide Promoters Pvt. Ltd. It is trite law that the provisions of Section 2(22)(e) have no application to non-registered shareholders. The Hon'ble Apex Court in the case of CIT Vs. C.P. Sarathy Mudaliar (1972) 83 ITR 170 (SC) while construing the provisions of Section 2(6A)(e) of the Act, 1922 which are in pari materia with the provisions of Section 2(22)(e) of the Income-tax Act, 1961, held that the provisions governing the deemed dividend can be made applicable only in the hands of the registered shareholders. Since, admittedly, in the present case, the appellant is not a shareholder of M/s Countrywide Promoters Pvt. Ltd. the amount of Rs. 1,73,262/- cannot be taxed in the hands of the appellant company. Hence the appeal filed by the assessee is allowed. " The Hon'ble jurisdictional High Court in the case of Bagmane Constructions (P) Ltd. vs. CIT (2015) (277 CTR 338)(Kar) h....