2019 (7) TMI 168

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.... 2. Sh. A.S. Sriraman, the Ld.counsel for the assessee, submitted that the only issue arises for consideration is addition made by the Assessing Officer under Section 2(22)(e) of the Income-tax Act, 1961 (in short 'the Act'). The Ld.counsel submitted that that the Assessing Officer made addition of Rs. 74 lakhs being the amount received from M/s Souther Chromatics Pvt. Ltd. as deemed dividend under Section 2(22)(e) of the Act. According to the Ld. counsel, the loan received by the assessee-company from M/s Southern Chromatics Pvt. Ltd. cannot be construed to be deemed dividend in the hands of the assessee. According to the Ld. counsel, the assessee-company is not a registered shareholder of M/s Southern Chromatics Pvt. Ltd. On a qu....

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........ ....... ....... (b) ..... ..... ...... ...... ...... ...... ...... ...... (c) ...... ...... ....... ...... ...... ...... ...... ...... (d) ..... ...... ....... ...... ...... ...... ...... ...... (e) 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) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent. of the voting power, or to any concern in w....

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....ccordance with the provisions of section 77A of the Companies Act, 1956 (1 of 1956) ; (v) any distribution of shares pursuant to a demerger by the resulting company to the shareholders of the demerged company (whether or not there is a reduction of capital in the demerged company)." 5. As per Section 2(22)(e) of the Act as it stands today, if a shareholder having substantial interest in the company, received money or the company paid money to a concern in which the shareholder is interested or the money was paid for the benefit of shareholder, then it has to be deemed to be dividend. In this case, the Ld.counsel could not clarify who are the shareholders in the assessee-company and in the lender company. In view of the above, th....