2019 (2) TMI 459

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...., 'E' Bench, (for short the "ITAT") dated 20th February, 2015. The Assessment Year (for short "A.Y.") in the present appeal is with reference to the A.Y. 2009-10. 3. Mr. Pinto, the learned advocate appearing on behalf of the appellant - revenue, would submit that the impugned order gives rise to the following two questions of law which require consideration by us under Section 260A of the Income Tax Act, 1961 (for short the "I.T. Act") and read thus:- "(1) Whether in law and on the facts and in circumstances of the case, the Hon'ble ITAT was justified in upholding the order of the Ld. CIT(A) and thereby not sustaining the disallowance made by the Assessing Officer u/s 2(22)(e) of the Income Tax Act, 1961 without appreciating the fact ....

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....t these creditors have reserves and surplus in excess of the amounts advanced to the assessee company. In these circumstances, the A.O. came to the conclusion that the conditions for invoking of Section 2(22)(e) of the I.T. Act 1961 are complied with and which deal with the concept of 'deemed dividend'. Accordingly, the A.O. came to the conclusion that the loans given by the creditor companies were to be taxed as 'deemed dividend' in the hands of the assessee company. 5. Aggrieved by the order passed by the A.O., the assessee company filed an appeal before the Commissioner of Income Tax (Appeals) [for short "CIT(A)"]. On the issue of 'deemed dividend' under Section 2(22)(e) of the I.T. Act, 1961, the CIT(A) by its order dated 10th May, 2....

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....shareholder is a member or a partner and in which he has a substantial interest. He submitted that "any concern" would also include a company. He submitted that from looking to this definition it was apparent that the payment by a private limited company (like in the present case) by way of loans or advances to a shareholder or to any concern is deemed to be a dividend, if all the conditions and percentage of shareholding are satisfied. In the facts of the present case, Mr Pinto submitted that looking at the shareholding pattern of the assessee company as well as the creditor companies, it was clear that the company "Sunjewels India Pvt. Ltd." was holding 86.96 % of the shareholding in the assessee company as well as 99% shareholding in the....

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....terest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits." 9. What Section 2(22)(e) of the I.T. Act, 1961 stipulates is that any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) by way of an advance or loan to a shareholder, being a person who is the beneficial owner of shares, holding not less than ten per cent voting power, shall be deemed as dividend in the hands of such shareholder. Section 2(22)(e) further stipulates t....

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....e a loan not directly to its shareholder but to any concern in which such shareholder has a substantial interest. It is then that the same would attract the second limb of Section 2(22)(e) of the I.T. Act, 1961. That is certainly not the factual situation before us. In these circumstances we do not find any fault with the findings given by the CIT (A) as well as the ITAT. 12. We must mention that Mr Pinto has brought to our attention a decision of the Supreme Court in the case of National Travel Services Vs Commissioner of Income Tax, Delhi, VII dated 18th January, 2018, wherein the issue about the correctness of the Judgment of the Supreme Court in the case of C.I.T. Vs Ankitech Private Ltd. reported in (2012) 340 ITR 14 (Del.) has been....