TaxTMI 
TaxTMI 
2017 (8) TMI 292
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.... to the tune of Rs. 215.16 lakhs during the financial year under consideration. The return of the petitioner was taken in scrutiny. The Assessing Officer passed an order of assessment under Section 143(3) of the Act. On 02.12.2010, loss of the company was reduced to Rs. 53.20 lakhs. To reopen such assessment, the Assessing Officer issued impugned notice on 25.03.2015. In order to do so, he had recorded the following reasons: "In this case, the return of income for the A.Y. 2008-09 declaring income of Rs.(-)68,28,269/- was filed on 30.09.2008. Assessment u/s 143(3) of the Act was finalized on 02.12.2010, determining total income at Rs.(-)53,20,750/- after making additions on various counts. On verification of the assessment records, it is seen that during the year under consideration, assessee company had received unsecured loan totaling to Rs. 2,17,24,223/- from J P Infrastructure Pvt. Ltd. which include Rs. 1,65,66,504/- from J P Infrastructure Pvt. Ltd. in addition to Rs. 9,97,881/- received from J P Infrastructure Pvt. Ltd.(Rajkot Mall) and Rs. 41,59,838/- from J P Infrastructure Pvt. Ltd. (Surat Mall). On perusal of the return of income audited accoun....
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....h facts, the Assessing Officer desired to tax the said loan of Rs. 2.17 crores received by the assessee from J.P. Infrastructure as a deemed dividend under section 2(22)(e) of the Act. On the score of non disclosure, according to the Assessing Officer, the information regarding the share holding pattern of the Assessing Officer was not disclosed. Thus, according to him, the primary facts necessary for assessment were not disclosed by the assessee. 4. Learned counsel for the petitioner submitted that there was no failure on part of the assessee to truly disclose all material facts. Reopening of assessment beyond a period of four years was, therefore, not permissible. Even otherwise, the reasons lacked validity. He submitted that with the aid of Section 2(22)(e) loan or advance cannot be taxed in the hands of the petitioner company which was not a share holder of the lender company. In this context, he referred to the decision of Delhi High Court in case of Commissioner of Income-Tax vs. Ankitech Pvt. Ltd reported in [2012] 340 ITR 14 (Delhi). He also drew our attention to the decisions of this court in case of Commissioner of Income-Tax vs. Daisy Packers (P.) Ltd reported in [201....
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....vidend. This definition of a deemed dividend was extended to include any such payment by a company in form of a loan or advance to any concern in which such share holder is a member or a partner and in which he has substantial interest. 'A person who has substantial interest in the company' is defined under Section 2(22)(e) of the Act to mean a person who is beneficial owner of shares, not being shares entitled to a fixed rate of dividend carrying not less than 20% of the voting power. Clause (b) of Explanation 3 below Section 2(22)(e) of the Act provides that a person shall be deemed to have substantial interest in a concern, other than a company, if he is at any time during the previous year beneficially entitled to not less than twenty per cent of the income of such concern. 7. It is on the basis of such statutory provisions that the Revenue contends that Shri Gupta and Shri Kotak are beneficial owners of shares of J.P. Infrastructure carrying more than the prescribed per cent of voting power. These two gentlemen also have substantial interest in the assessee company since they hold 50% shares each of the said company. The assessee company therefore when received a loan from ....
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....to be a beneficial share holder and whether on that count also Section 2(22)(e) of the Act would apply. It was observed as under: "17. It is also found as a fact, from the audited annual return of the Company filed with ROC that the money towards share holding in the Company was given by the assessee/HUF. Though, the share certificates were issued in the name of the Karta, Shri Gopal Kumar Sanei, but in the annual returns, it is the HUF which was shown as registered and beneficial shareholder. In any case, it cannot be doubted that it is the beneficial shareholder. Even if we presume that it is not a registered shareholder, as per the provisions of Section 2(22) (e) of the Act, once the payment is received by the HUF and shareholder (Mr. Sanei, karta, in this case) is a member of the said HUF and he has substantial interest in the HUF, the payment made to the HUF shall constitute deemed dividend within the meaning of clause (e) of Section 2(22) of the Act. This is the effect of Explanation 3 to the said Section, as noticed above. Therefore, it is no gainsaying that since HUF itself is not the registered shareholder, the provisions of deemed dividend are not attracted. For ....