TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1623
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....of deemed dividend in the hands of the assessee, since the requisite conditions prescribed in the section 2(22)(e) have been fulfilled in this case. 02. Whether in the facts and in circumstance of the case, the Id.CIT(A) is justified in deleting the addition on the basis of observation that no deemed dividend could be assessed in the hands of the assessee since the assessee firm itself was not a shareholder in the payer company, which is not in accordance with the provisions of section 2(22)(e) of the I.T.Act. 03. Any other matter, if any, shall be urged at the time of hearing. 2. Brief facts of the case are that the assessee is a partnership firm engaged in the business of labour contract in the brand name of M/s Mahimananda Mishra an....
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....ssessee filed an appeal with the CIT(A). In the appellate proceedings the ld. AR of the assessee appeared and argued the grounds and reiterated the submissions made before the lower authorities. Ld. CIT(A) on the disputed issue of deemed dividend has considered the facts that the assessee firm's major partner Shri Mahimananda Mishra is also director and having substantial interest in the company where he holds 36.95% shares and also holds 55% in the partnership firm, further, ld. CIT(A) has observed that since the assessee firm M/s Mahimannanda Mishra is not a share holder in M/s Orissa Stevedores Limited, the amount disbursed to the assessee firm by the said company should not be treated as deemed dividend in the hands of the assessee firm....
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....n the hands of partner as beneficial partner whereas the ld. DR relied on the decision of Hon'ble Supreme Court in the case of Gopal And Sons (HUF), 391 ITR 1 (SC), wherein the Hon'ble Supreme Court in para 15 & 16 held as under :- 15. Explanation 3(a) defines "concern" to mean HUF or a firm or an association of persons or a body of individuals or a company. As per Explanation 3(b), a person shall be deemed to have a substantial interest in a HUF if he is, at any time during the previous year, beneficially entitled to not less than 20% of the income of such HUF. 16. In the instant case, the payment in question is made to the assessee which is a HUF. Shares are held by Shri. Gopal Kumar Sanei, who is Karta of this HUF. The said Karta is....
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.... dividend within the meaning of Section 2(22)(e) of the Act. The assessee in that case was the HUF and the payment in question was made to the HUF. The shares were held by the Karta of the HUF. It is in this context that the Supreme Court came to the conclusion that HUF was the beneficial shareholder. 5.2.In the instant case, however, both the registered and beneficial shareholders are two individuals and not the assessee-company. Therefore, in our view, the judgment of the Supreme Court does not rule on the issue which has come up for consideration in the instant matter. 6.Accordingly, in so far as Questions Nos.3 and 4 are concerned, we find that no interference is called for with the view taken by the Tribunal via the impugned orde....
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....holder of the paying company. In the instant case, the appellant firm is not a share holder in the aforesaid paying company M/s Orissa Stevedores Limited. 5. I find prudence with the submission of the appellant that since the appellant firm M/s Mahimannanda Mishra is not a share holder in the paying company M/s Orissa Stevedores Limited, the amount disbursed to the appellant from the said company should not be treated as deemed dividend in the hands of the assessee firm, but the same amount should be treated as deemed dividend u/s.2(22)(e) of the Act in the hands of the individual director, Shri Mahimananda Mishra who is a director in the paying company M/s Orissa Stevedores Limited with substantial interest and is a holder of major shar....