2018 (1) TMI 990

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....os.352/Coch/2013 and 353/Coch/2013 were filed by the Department before the Tribunal. The only ground that was raised by the Department before the Tribunal in both the appeals was regarding deletion of addition u/s 2(22)(e) of the Income-tax Act, 1961. The CIT(A) deleted the addition made u/s 2(22)(e) of the I.T.Act as deemed dividend by following the order of the Tribunal in assessee's own case for assessment year 2005-2006 in ITA No.382/Coch/2011 (order dated 11.01.2013). The CIT(A) held that since the firm is not a shareholder of the lender company, deemed dividend cannot be assessed in the hands of the assessee-firm. 2.2 In ITA Nos.352/Coch/2013 and 353/Coch/2013, the Revenue had admitted that no further appeal has been filed by the D....

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....it by the Company to the share holder concerned. None of these requirements were gone into before making the above observation. The basic condition is that the Company should pay any sum by way of advance or loan to a share holder. The share holder should be a person who holds not less than 10% of the voting power, or to a concern in which such shareholder is a member or a partner or in which he has substantial interest or any payment by any such Company should be on behalf of or for the individual benefit of such a share holder and the Company in either case must possess accumulated profits. 9. Without examining the existence of these facts, the observation made as above would not be sustainable. 10. Great hardship and pr....

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....end cannot be assessed in the hands of the assessee-firm and but only in the hands of the partners of the assesseefirm, who are the beneficial shareholders of the lender company, viz., M/s.KTC Automobiles Private Limited. The relevant finding of the Tribunal in its order dated 30.08.2013, while dismissing the appeal of the Revenue in ITA No.352 & 353/Coch/2013, reads as follow:- "4. It is not in dispute that the beneficial shareholders of KTC Automobiles Pvt. Ltd. are partners in the assessee firm. Therefore, when the money was received by the firm on behalf of the partners, the deemed dividend has to be assessed only in the hands of the partners and not in the hands of the firm. This is for the simple reason that the firm is not a....