TaxTMI 
TaxTMI 
2021 (4) TMI 248
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.... Ld. CIT(A), Bangalore-5 is opposed to law, facts and circumstances of the case. 2. The Ld. CIT(A) has erred in holding that the Loan obtained by the Appellant of Rs. 81,67,625/- from the Company M/s. Fateh Agro Builders Pvt Ltd., amounts to Deemed Dividend u/s. 2(22)(e) of the Act without appreciating the fact that the Appellant Firm is not a Share Holder of the Company 37,89,293/- 3. Without prejudice to the Ground No.2, the Ld. CIT(A) ought to have appreciated the fact that the deemed dividend if any is chargeable to tax in the hands of the Shareholder and not in the hands of the Firm. Same as above 4. The Ld. CIT(A) has erred in confirming the addition of Rs. 7,18,628/- made by the AO u/s. 40(a)(ia) of ....
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....rayer for condoning the delay on the ground that it is in ordinate. 5. We have perused the submissions advanced by both sides in light of records placed before us. 6. In support of condonation of delay in filing the appeal, the Ld.AR reiterated the contents of the affidavit as above, and prayed for delay of 227 day being condoned in filing the present appeal. From the affidavit filed of the erstwhile authorised representative for assessee, it is clear that the delay cannot be attributed to assessee and in the interest of Justice and for principle that substantive right condonation should not be denied by technicalities. We therefore condone the delay in filing the present appeal before this Tribunal. Brief facts of the case on meri....
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....attracted in the present case. It was submitted that in the present case the transactions of loan is between a company and assessee firm. It was submitted that loan has been given by the company to the assessee. It was submitted that, provisions of deemed dividend are applicable only when the loan is given to a person having substantial interest in the lending company or to concern where the same person is either partner or substantial shareholder. The Ld.AR invited our attention to following judgments to contend that since the assessee was not a shareholder during the relevant period of M/s. Fateh Agro, from where assessee received monies, which are in the nature of loan or advances, such transaction are not covered by the definition of th....
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....tion do not apply to the issue since the closely held private limited company has advanced the said sum to the partnership concern which is not a shareholder or member of the lending company. The appellant submitted that it had borrowed unsecured loan of Rs. 81 67,625/- from Fateh Agro Builders Pvt. Ltd. for the real estate development business, The appellant was not a registered shareholder in the lending company and is closely held private limited company wherein Mr. Dinesh Bohra one of the partners of the appellant hold 20,58% equity share and has substantial interest of 60% share in the appellant firm. As per decided case the amount advanced by a closely held private limited company to a partnership firm wherein the beneficial ....
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....ed and surplus funds of the company and therefore the conditions of the provisions of Sec.2(22)(e) are clearly fulfilled and therefore I do not find any infirmity in the impounded order passed by the Assessing Officer. The grounds of appeal are not allowed." 13. Aggrieved by the observations of Ld.CIT(A) assessee is in appeal before us now. 14. The Ld.AR submitted that assessee is not registered shareholder of M/s Fateh Agro Builders Pvt.Ltd., and therefore the provisions of section 2(22)e) of the Act is not applicable in respect of loan received by assessee from M/s Fateh Agro Builders Pvt.Ltd. The Ld.AR submitted that Circular 495 issued by CBDT dated 22/09/1987 covers the fiction of deemed dividend only in the hands of a registered....
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....eficial owner of shares whose name does not appear in the Register of shareholders of the Company cannot be stated to be a shareholder. He may be beneficially entitled to the share but he is certainly not a shareholder. In other words, it is only the person whose name is entered in the Register of the shareholders of the Company as the holder of the shares who can be said to be a shareholder qua Company and not the person beneficially entitled to the shares. We are therefore, of the view that it is only where a loan is advanced by the Company to the registered shareholder and the other conditions set out in Section 2(22)(e) of the Act are satisfied, that amount of loan would be liable to be regarded as deemed dividend within the meaning of ....