TaxTMI 
TaxTMI 
2018 (1) TMI 1157
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....e Tax Act, 1961 (hereinafter called 'the Act') 2. Brief facts of the case are that the return of income was filed declaring income of Rs. 1,41,66,720/- on 30.07.2010. Subsequently, information was received by the Assessing Officer wherein it was informed that during the course of assessment proceedings in the case of M/s Beehive Systems Private Limited for assessment year 2010-11, it was noticed that this company had advanced Rs. 10 lakh to its Director Shri Tushar Kothari (assessee) who was holding 46% of the shares in the said company. Based on this information, notice u/s 148 of the Act was issued after duly recording the reasons. During the course of re-assessment proceedings, the assessee submitted that he was not covered by the pro....
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....case, the Learned CIT(A) erred in confirming the order of the A.O., where the A.O. erred in treating the amount of Rs. 10,00,000/- given to assessee by M/s. Beehieve Technologies (P) Ltd. as deemed dividend in the hand of assessee ignoring the fact that assessee was not the shareholder of M/s. Beehieve Technologies (P) Ltd. 7) THAT in the facts and circumstances of the case, the Learned CIT(A) had erred in ignoring the fact that no payment was made by M/s. Beehive Systems (P) Ltd. Company in which assessee is a Shareholder, to assessee; the payment was made only by M/s. Beehieve Technologies (P) Ltd. to assessee. 8) THAT the appellant craves leave to add, alter, amend or drop any of the above grounds at the time of hearing....
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....e material available on record. The fact that the amount had been advanced as loan from M/s Beehive Technologies Private Limited is undisputed. It is also undisputed that the assessee is not a shareholder in M/s Beehive Technologies Private Limited. The Assessing Officer has also noted that on perusal of bank statement, it was found that Shri Tushar Kothari i.e. the assessee had received payment of Rs. 10 lakh in his HDFC account from M/s Beehive Technologies Private Limited. Thus, it is very much evident that the impugned amount has not been given by M/s Beehive Systems Private Limited in which the assessee is a shareholder. Hon'ble Delhi High Court in the case of Commissioner of Income Tax(A) vs Ankitech (P) Ltd. (supra) has held in Para ....
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.... that this legal provision relates to "dividend". Thus, by a deeming provision, it is the def inition of dividend which is enlarged. Legal f iction does not extend to "shareholder". When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specif ied under Section 2(22)(e) of the Act would also be treated as dividend. The f iction has to stop here and is not to be extended further for broadening the concept of shareholders by way of legal f iction. It is a common case that any company is supposed to distribute the prof its in the form of dividend to its shareholders/members and such dividend cannot be given to nonmembers. The second category specif ied under Section 2(22)(e) of the A....