2017 (12) TMI 598

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....Act relevant to Assessment Year (AY) 2004-05. 2. The grounds of appeal raised by the Revenue read as under:- The CIT(A) has erred in law and on facts by deleting the addition of Rs. 1,99,78,921/- towards deemed dividend u/s.2(22)(e) despite the fact that the advance given by Cadila Pharmaceuticals Ltd. to ass company is covered by definition of deemed dividend and such a loan is required to be treated as deemed dividend in the hands of the assessee as per the provisions of section 2(22)(e) of the Act. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income/book ....

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....mpany, notwithstanding the fact that both the companies (lender-company and assessee-company) had common shareholders having substantial interest in both the companies. 6.1 As observed by the Hon'ble Supreme Court in the case of Gopal And Sons (HUF) vs. CIT (Supreme Court) in Civil Appeal No. 12274 of 2016 arising out of SLP (C) No. 22059 of 2015, section 2(22)(e) of the Act creates a fiction thereby bringing any amount paid otherwise than as a dividend into the net of dividend under certain circumstances. It gives an artificial definition of 'dividend'. It does not take into account that dividend which is actually declared or received. The dividend taken note of by this provision is a deemed dividend and not a real dividend. Loans....