2019 (1) TMI 589

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....22)(e). Ground Number-1 has not been pressed during hearing before us and therefore, the same stand dismissed in limine. 2.1 Facts in brief are that the assessee being resident corporate entity was subjected to re-assessment proceedings for impugned AY u/s 143(3) read with Section 147 on 18/03/2016 wherein the income of the assessee was determined at Rs. 86.43 Lacs after sole addition of deemed dividend for Rs. 10 Lacs u/s 2(22)(e). 2.2 During assessment proceedings, it transpired that the assessee obtained loan of Rs. 10 Lacs from one of its sister concern namely Alpha Pneumatics Pvt. Ltd. It was observed that both these entities had one common shareholder namely Mr. Dierdre Dcunha who held more than 20% shareholding in both these en....

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....that the assessee company was registered shareholder or beneficial shareholder of the lender company, in any manner. The fact that emerges are that both the entities i.e. lender and the assessee company has certain individuals shareholders who hold threshold shareholding in the two entities within the meaning of Section 2(22)(e). However, the assessee itself does not hold any shareholding in the lender company either as registered shareholder or as a beneficial shareholder. This being the case, the ratio of decision of Special Bench of Mumbai Tribunal rendered in ACIT Vs Bhaumik Color (P) Ltd. [118 ITD 1] as relied upon by first appellate authority becomes squarely applicable. Further, we find that aforesaid ratio has already attained final....

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....e money was advanced. 4.3 As indicated above, there is no dispute that the assessee did receive capital advance from Indev Logistics Pvt. Ltd. There is also no dispute that there are common shareholders both in the assessee-company and Indev Logistics Pvt. Ltd. Therefore, quite correctly, as noted by the Tribunal, though, the advance received by the assessee company may have been for the benefit of the aforementioned registered shareholders, it could only be assessed in the hands of those registered shareholders and not in the hands of the assesseecompany. 4.4 In our view, on a plain reading of the provisions of Section 2 (22)(e) of the Act, no other conclusion can be reached. As a matter of fact, a Division Bench of this ....

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....n that case, was a HUF entity and the issue was as to whether the loans and advances received by the Hindu Undivided family [HUF] could be treated as 'deemed dividend' within the meaning of Sec. 2(22)(e) of the Act. Notably, in the case before the Hon'ble Supreme Court, the payment was made by the company to the HUF and the shares in the company were held by the karta of the HUF. It is in this context that the Hon'ble Supreme Court upheld the addition in the hands of the HUF as factually the HUF was the beneficial shareholder. The fact-situation in the case before us stands on an entirely different footing inasmuch as the assessee-recipient of money is neither the registered nor the beneficial shareholder of the lender compa....