TaxTMI 
TaxTMI 
2021 (12) TMI 922
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....f accounting. It filed return of income on 18.10.2007 declaring total income at Rs.NIL, which was processed under section 143(1) of the Act. However, the case of the assessee was reopened upon recording of reasons with approval of the ld.CIT, Range-1, Ahmedabad by issuance of notice under section 148 of the Act dated 26.3.2014 followed by notice under section 143(2) dated 25.6.2014. Such reopening of the assessment was done on the basis of information received from the DCIT, TDS Circle, Ahmedabad that one J.P. Iscon Ltd. has provided inter-corporate deposit ("ICD" for short) of Rs. 3,53,01,765/- to the assessee-company; there were common share holders in both the companies viz. Shri Pravin Kotak, and Shri Amit Gupta. The ld.AO has noticed their shareholding ratio in both the companies in the assessment order as follows: Name Dhawani Infrastructure Pvt. Ltd. JP Iscon Ltd. Shri Pravin Kotak 90% 27.49% Shri Amit Gupta 10% 22.38% 3. In response to the notice under section 142(1) dated 19.12.2014 on the issue as to why the amount of Rs. Rs. 3,53,01,765/-, as provided by JP Iscon Ltd. should not be treated as deemed dividend under section 2(22)(e) of the Act....
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.... discussed Here we are concerned with case (ii) Scenario (a) Conditions to be satisfied in case(ii) are as under:- Loan or advance given to a concern (may be HUF/firm/Company/AOP/BOl) is treated as a deemed dividend u/s 2 (22) (e) if the fallowings condtions are satisfied:- (1) Loan or Advance is given by a company in which the public are not substantially interested; (2) Loan or Advance is given after Ma.y,31,1987; (3) The company should possess accumulated profits (Excluding Capitalized Profit) at the time it makes payment of Loan or Advance; and (4) Loan or Advance is given to a concern(i.e. a Hindu Undivided family or a firm or an association of persons or a body of individuals or a company) in which a shareholder (which is a registered shareholder as well as beneficially holding at least 10 Percent Equity Share Capital) of the company (giving loan or advance) has substantial interest. A Person shall be deemed to have a substantial interest in a concern, if he is at any time during the previous year, beneficially entitled to at least 20% of income of such concern (if such concern is a company, then he shoul....
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....ed herewith for your kind perusal Sr. No. Parties High Court/Tribunal Year Citation Remarks/ Evidence 1 Commissioner of Income Tax V/S Ankitech (P) Ltd. Delhi High Court 2011 (2011) 11 taxmann 1QQ/(2011) 199 taxmann 341/(2012) 340 ITR 14/(2011) 242 CTR 129 Enclosed Copy of Judgement as Exb. 1 2. Assistant Commissioner of Income Tax, Circle - 33, Mumbai V/S Bhaumik Colour(P) Ltd. ITATMumbni 2009 (2009) 118 ITD 1/(2000) 27 SOT 270/ (2009) 120 TTJ 865 Enclosed Copy of Judgement us Exb.2 3 Commissioner of Income Tax V/S Navyug Promoters(P) Ltd Delhi High Court 2011 (2011) 16 Tflxmcmn.com 292/(2011) 203 taxman 618 Enclosed Copy of Judgement as Exb. 3 4 Commissioner of Income Tax V/S MCC Marketing(P) Ltd Delhi High Court 2011 (2011) 16 Taxmann.com 411/(2012) 204 taxmann 56/(2012 343 ITR 350) Enclosed Copy of Judgement as Exb. 4 5 Commissioner of Income Tax V/S Impact Containers (P.) Ltd. High Court of Bombay 2014 (2014) 48 taxmann.com 294 (Bombay)/2014 225 Taxman 322(Bombay)/(2014) 367 ITR 346 (Bombay)(2014) 270 CTR 337 (Bombay)j Enclosed Copy of Judgement as Exb.5 6 Asstt. C....
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....t can also be assessed in the hands of person who is shareholder of the lender company and not in the hands of person other than shareholder. On this aspect, the appellant, before us, relied on the judgment of the Hon'ble jurisdictional High Court in the case of CIT Vs. Daisy Packers P.Ltd., 40 taxamnn.com 48 (Guj) wherein issue has been decided in favour of the assessee by relying upon the decision passed by the Hon'ble Delhi High Court in the matter of CIT Vs. Anitech P.Ltd., reported in 340 ITR 14 (Del). Finally, it was submitted by the ld.AR that the issue is squarely covered by the judgment and order dated 11.2.2021 passed in the assessee's own case in ITA No.2232/Ahd/2016 and CO No.157/Ahd/2016 wherein addition of ICD to the tune of Rs. 3,30,50,859/- under section 2(22)(e) of the Act has been deleted. 6. On the other hand, the ld.DR relied upon order passed by the Ld. AO. It was contended by him before us that while making addition, the ld.AO applied his mind which is clearly evident from paragraph-5.7 of the order passed by the ld.AO. Payer-company was closely held company; it has accumulated profit on the date of such payment and the payment was made to the appellant-com....
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....1 (Mum.) (SB) and jurisdictional High Court decision in the case of CIT v/s Daisy Packers (P.) Ltd [2013] 40 taxmann.com 480 (Gujarat) and other decisions (supra), the addition of deemed dividend cannot be made in the hands of the company. The view taken by the I.T.A.T. Mumbai Special Bench in the case of ACIT Mumbai vs. Bhaumik Colour (P) Ltd has been approved by the Hon'ble Bombay High Court in the case of CIT vs. Universal Medicare Private Limited (2010) 324 ITR 263 (Bom.) The Gujarat High Court in the case of CIT v/s Daisy Packers (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)t 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 ....
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....owing observation was made by the Ld. ITAT on the issue: "6. Heard both the sides and perused the material on the record. During the year under consideration, the J. P. Escon Ltd. has given inter corporate deposit to the assessee company. The case of the assessee was reopened for the reasons that J.P. Escon Ltd. had provided loan of Rs. 68,35,2624/- to the assessee company which attracts the provision of section 2(22)(e) of the Act. At the assessment stage, the assessee has categorically explained after referring various judicial pronouncements that the amount received from J.P. Escon Ltd. cannot be taxed as deemed dividend in its hand as it was not the registered share holder of J.P. Escon Ltd. The Assessing Officer after considering the substantial common share holding of Shri Pravin Kotak and Shri Amit Gupta, treated the amount of Rs. 3,30,50,859/- upto the accumulated profit received by the assessee company from J.P. Escon Ltd. as deemed dividend u/s. 2(22)(e) of the act. The ld. CIT(A) has deleted the addition holding that assessee company was not a registered share holder of J.P. Escon Ltd. after placing reliance on the various judicial pronouncements as elaborated i....
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....ntatives fairly agree that the issue in appeal is now covered by Hon'ble jurisdictional High Court's judgment in the case of CIT Vs Mahavir Inductomelt Pvt Ltd (TA No. 890 of 2011; judgment dated 13th January 2017) wherein Their Lordships have extensively reproduced from Hon'ble Delhi High Court's judgment in the case of Anitech Pvt Ltd (supra), and concurred with the same. Thus, in a case in which an amount is received from a person other than the shareholder, as is the admitted position in this case, the provisions of Section 2(22)(e) cannot indeed be invoked. The CIT(A) was thus justified in granting the impugned relief in respect of the addition under section 2(22)(e). We, therefore, approve the conclusion arrived at by the learned CIT(A) in this regard, and decline to interfere in the matter on that count." We have also through the decision of Hon'ble Gujarat High Court in the case of Pr. CIT vs. Mahavir Inducto Pvt. Ltd. supra wherein the identical issue on same facts was decided in favour of the assessee after following the decision of Bombay High Court in the case of CIT vs. Impact Containers Pvt. Ltd. and others vide IT Appeal No. 114 of 2012 a....
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....2)(e), it is required that the assessee company must be a shareholder in the company from whom the loan or advance has been taken and it does not provide that any shareholder in the assessee company who had taken any loan or advance from another company in which such shareholder is also a shareholder having substantial interest. Since the facts of the case of the assessee are squarely covered by the aforesaid decisions of Hon'ble High Court and Coordinate Bench of the ITAT, the impugned addition is deleted. Accordingly, this ground of the assesse is allowed." After taking into consideration, the aforesaid facts and judicial findings as referred above, it is undisputed fact that assessee company was not a registered share holder in J.P. Escon Ltd. from whom it has obtained loan during the year under consideration. Therefore, the addition made by the Assessing Officer as deemed dividend u/s. 2(22)(e) of the Act is not justified. In the light of the above facts and findings, we do not find any infirmity in the decision of ld. CIT(A), therefore, this appeal of the revenue is dismissed." 9. We have also perused the judgments passed by different judicial forums as relied ....