TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 697
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.... Income Tax Act, 1961 ("the Act"). 2. Briefly stated facts of the case are that assessment in this case was completed u/s. 143(3) r.w.s. 147 of the Act, vide order dt. 30-03-2016, wherein the AO brought to tax a sum of Rs. 9,73,306/- as deemed dividend u/s. 2(22)(e) of the Act. As per the AO, a Chevrolet Optra Car for Rs. 9,73,306/- was purchased in the name of the assessee and the payment for the same was made by Gopaldas Visram & Co. Ltd., wherein the assessee is a beneficial owner holding 11.95% of shares of the said company. As per the AO, the purchase of car in the name of the assessee amounts to advancing of loan by the company to the assessee and which triggers the provisions of section 2(22)(e) of the Act and hence, the same was ....
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....shareholder and reference was drawn to the provisions of section 2(22)(e) of the Act, which reads as under: "any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referre....
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....ccordingly held that the payment made by the company on behalf of the assessee for purchase of a car of Rs. 9,73,306/- falls within the ambit of section 2(22)(e) of the Act and the addition so made by the AO was confirmed. Against the said findings, the assessee is in appeal before us. 6. During the course of hearing, the Ld.AR reiterated the submissions made before the lower authorities and our reference was drawn to the submissions made before the Ld.CIT(A) and it was submitted that matter relating to claim of depreciation had come up in case of the company for impugned assessment year where the AO has disallowed the depreciation for precisely the same reason that the car has been registered in name of the shareholder, however there wa....
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....at the assessee has however brought the said order to the knowledge of the Ld.CIT(A), however, he has failed to consider the same. It was accordingly submitted that necessary relief be provided to the assessee by deleting the addition so sustained by the Ld.CIT(A). 7. The Ld. DR has been heard who has relied on the findings of the AO as well as that of the Ld.CIT(A). 8. We have heard the rival contentions and perused the material available on record. The issue under consideration relates to invocation of provisions of section 2(22)(e) of the Act. The factum of the assessee being a beneficial owner holding 11.95% shares in the company is not in dispute. It is also not in dispute that the company had accumulated profits at the time of p....
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....ebutted by the ld DR during the course of hearing. Further, we find that there is nothing on record which demonstrates that the motor car has been used for the personal benefit of the shareholder. 10. The provisions of section 2(22)(e) are in nature of deeming provisions and therefore, where it talks of payment made by the company during the relevant year, the benefit which accrued to the shareholder in his individual and personal capacity also have to be seen during the relevant year and not in future and only where both the conditions are satisfied, deeming provisions can be invoked. Where the shareholder also happens to hold certain managerial or administrative role and position in the company and uses the motor car for meeting his of....