TaxTMI 
TaxTMI 
2019 (12) TMI 1252
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.... income of Rs. Nil. Return was processed u/s 143(1) of the I T Act. The case was reopened for assessment u/s 148 and re-assessment was done u/s 143(3) r.w.s. 147 of the I T Act making addition of Rs. 3,45,59,000/- on account of deemed dividend u/s 2(22)(e). 3. The copy of reason for reopening was provided to the appellant vide letter dated 19/06/2015. On receiving the reasons for reopening, the appellant raised the objections by its letter dated 20/07/2015. However the Ld. ITO 4(1)(4), Ahmedabad on 22/09/2015 passed the order rejecting the objection raised by the appellant. 4. Thereafter show cause notice dated 02/02/2016 was issued requiring the appellant to explain as to why an amount of Rs. 3,45,59,000/- provided by the JPIL to appellant should not be treated as deemed dividend u/s 2(22)(e). In response the appellant filed a detailed reply dated 15/02/2016. However the ITO disregarded the reply and made addition of Rs. 3,45,59,000/-on account of deemed dividend u/s 2(22)(e). 5. The fact is that there are common share holder between JIPL (ICD giver) and the appellant company (ICD receiver) having Shri Shri Amit Gupta as common share holders during the year and as on 31/0....
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....sment order the A.O. has mentioned that Mr. Amit Gupta is having 50% shareholding in Vidhi Infrastructure Pvt. Ltd. which is factually wrong as we have already mentioned the shareholding pattern of Vidhi Infrastructure Pvt. Ltd. herein above, wherein Mr.Amit Gupta is not a shareholder. Similarly, in the assessment order the AO has wrongly stated that Mr. Am.it Gitpta has 20% shareholding in JP Iscon Ltd. as we have already mentioned above that Amit Gupta is holding 15% shareholding in JP Iscon Ltd. " 5.2 This position of share holding was examined by the AO from the material available for the assessment record and stated during hearing on 26.12.2016 that the details as per books of the appellant and also the details of balance sheet of JP Iscon Limited, Shri Amit Gupta is not a share holder in Vidhi Infrastructure. It is only in the capacity of nominee of JP Iscon Limited that 1000 shares are held by Shri Amit Gupta. The total share holding of JP Iscon Limited in the appellant company is 7000 shares. And the correct number of equity shares of JP Iscon Limited held by shri Amit Gupta is 15% not 20% as quoted by the AO. 5.3 The A.O. has held that the assessee compan....
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.... when the money is finally received by that share holder. The AR of the appellant has further stated that the second category specified under section 2(22)(e ),viz., a concern, which is given the loan or advance is admittedly not a shareholder/member of the payer company and therefore, under no circumstance, it can be treated as shareholder/member receiving dividend. If the intention of the Legislature would have been to tax such loan or advance as deemed dividend at the hands of'deeming shareholder', then the Legislature would have inserted deeming provision in respect of shareholder as well, that has not happened. Therefore, under no circumstances, the provisions of section 2(22)(e) could be invoked. The AR has heavily relied on the following decisions: 1. CIT v/s Daisy Packers (P) Ltd [2013] 40 taxmann.com 480 (Gujarat) 2. ACIT v/s. Bhaumik Colour P. Ltd. 313 ITR 146 (ITAT-Mum.)(SB)(2009) 3. Bombay High Court in the case of CIT vs. Impact Containers (P) Ltd 367 ITR 346 [2014] (Bombay) and other case laws of various jurisdictional Tribunal and High Courts (supra). 5.6 After careful perusal of the assessment order, material on r....
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....rs (P) Ltd decided the issue in favour of the assessee, relying on the decision of the Division Bench of the High Court in CIT v. Ankitech (P.) Ltd. (2012) 340 ITR 14 (Del) wherein it was held that if the assessee-company does not hold a share in other company from which it had received deposit then it cannot be treated to be a deemed dividend under Section 2(22)(e) of the Act. From the reading of the provisions of section 2(22)(e), it is seen that the provision is intended to tax the dividend in the hands of a shareholder and the deeming provision as it applies to the case of loan or advance by a company to a concern in which is shareholder and has substantial interest, is based on the presumption that the loan or advance would ultimately be made available to the shareholder of the company giving loan or advance. Various court decisions e.g. ACIT v/s. Bhaumik Colour (P.) Ltd.[2009] 118 ITD 1 (Mum.) (SB) & jurisdictional High Court decision in the case of CIT v/s Daisy Packers (P.) Ltd [2013] 40 taxmann.com 480 (Gujarat), CIT vs. Impact Containers (P.) Ltd 367 ITR 346 [2014] (Bombay)/and other various decisions (supra) support this view that the deemed dividend u/s 2(22)(e....