TaxTMI 
TaxTMI 
2022 (6) TMI 474
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....Act" in short] dated 03.09.2014 was served on the assessee. After following due procedure and considering the submissions of the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 16.03.2016 assessing total income of the assessee at Rs..1,37,04,933/- after making disallowances under section 14A of the Act amounting to Rs..3,40,39,003/- and a sum of Rs..1,19,00,031/- was held as deemed dividend within the meaning of section 2(22)(e) of the Act and added to the total income of the assessee under the head 'income from other sources'. 2.1 On appeal, the ld. CIT(A) restricted the disallowance under section 14A of the Act to the extent of dividend income earned and partly allowed the ground of the appeal against which the Revenue preferred further appeal before the Tribunal. 2.2 We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the Assessing Officer made disallowance under section 14A r.w. Rule 8D of Rs..3,40,39,003/-. The assessee has claimed a sum of Rs..2,03,51,052/- as exempt income under section 10(34) of the Act and the assessee had apportioned....
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.... assessee company was also a shareholder, holding substantial interest of 99.35% of the shares of M/s. Aban Infrastructure Pvt. Ltd. The assessee was asked to explain as to why the second limb of provision of section 2(22)(e) of the Act would not be applicable in the assessee company's case. Before the Assessing Officer, the assessee has explained that the said loan of Rs..1.19 crores was received by the assessee from M/s. Aban Infrastructure Pvt. Ltd as ICD and the company had paid interest for the same. The interest was stated to have been fully offered to Income tax by the lender. It was also stated that this transaction was done in the normal course of business and cannot be attributed to deemed dividend under section 2(22)(e) of the Act. Since the interest income was fully offered to tax in the case of M/s. Aban Infrastructure Pvt. Ltd,, the assessee has submitted that the same should not be again disallowed under section 2(22)(e) of the Act. After considering the submissions of the assessee, the Assessing Officer has held that the loans and advances received by the assessee from M/s. Aban Infrastructure Pvt. Ltd. amounting to Rs..1,19,00,031/- were held as deemed dividend....
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....e, the ratio of the Hon'ble jurisdictional High Court in CIT v. Printwave Services P Ltd 373 ITR 665 (Mad) would apply squarely to its case. By elaborately discussing the above case law and in the present case, since the assessee is not the beneficial shareholder in M/s. Aban Infrastructure P. Ltd. or Aban Hotels & Resorts P. Ltd, the ld. CIT(A) has held that no deemed dividend can be brought to tax in the hands of the assessee under section 2(22)(e) of the Act. 4.5 By relying upon the decision in the case of ACIT v. Jakhau Salt Co. P. Ltd. for the assessment years 2004-05 & 2007-08 in ITA Nos.2284 & 2285(Mds)/2012 dated 19.6.2013, wherein, the Coordinate Benches of the Tribunal took a similar view by relying on the ratio in the case of ACIT vs. Bhaumik Color P. Ltd 118 ITO 1 Mumbai Special Bench, in which, it was held that the expression 'shareholder' referred to in section 2(22)(e) of the Act refers to both a registered shareholder and the beneficial shareholder. And further that if a person is a registered shareholder but not a beneficial shareholder, then the provisions of section 2(22)(e) of the Act would not apply and likewise if a person is a beneficial shar....
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....T v. C.P. Sarathy Mudaliar and M/s. Rameshwari Lal Sanwarmal v. CIT. Since the civil appeal preferred before the Hon'ble Supreme Court has not been attained its finality, the case law relied on by the Revenue has no application to the facts of the present case. 4. The next ground raised in the appeal of the Revenue relates to deletion of disallowance of interest income of Rs..64,501/-. The assessee company has advanced a sum of around Rs..105.5 crores to M/s. Aban Offshore Ltd. and earned interest income of Rs..8,47,64,125/- thereon. The assessee has advanced the above amount by utilizing the loans obtained. The assessee has incurred a total interest expenditure of Rs..11,74,63,766/- on the above loans. As per the provisions of section 14A of the Act, the direct interest expenses towards earning the exempt income is Rs..3,27,64,142/-. As a result, the net expenditure incurred by the assessee towards earning the interest income was Rs..8,46,99,624/-. Accordingly, the Assessing Officer determined the interest income of Rs..64,501/- [Rs..8,47,64,125 - 8,46,99,624] and brought to tax. On appeal, after considering the submissions of the assessee, the ld. CIT(A) allowed the ground rai....