2026 (1) TMI 462

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e u/s 2(22)(e) of the Act. The facts in brief are that the assessee received an unsecured loan of Rs. 85,65,720/- from one M/s IGCAP Compliance Ltd. (hereafter "Lender Company"). The Lender Company has only one shareholder-Mr. Praveen Tyagi. Shri Tyagi is also a beneficial owner of 49% shares in the assessee company. Considering the fact that there were accumulated profits in the Lender Company the impugned loan amount was considered to be a deemed dividend by the Ld. AO u/s 2(22)(e) of the Act. 1.1 The assessee approached the Ld. CIT(A), where also he could not succeed on the basis of the reasoning that Shri Praveen Tyagi is a 100% shareholder in the LenderCompany and a 49% shareholder in the assessee company. The Ld. CIT(A) distinguish....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hi High Court in case of CIT vs. Ankitech P. Ltd. 340 ITR 14 (Del) which was approved by Hon'ble Apex Court in case of CIT vs. Madhur Housing & Developing Company 401 ITR 152 (SC) where there is an arrangement where entity has borrowed a loan from another entity than it is a lender which holds share of borrower which should be held to be liable to pay tax on such deemed dividend and not the borrower itself. Any company is supposed to distribute the profits in the form of dividend to its shareholders/members and such dividend cannot be given to non-members. The second category specified u/s 2(22)(e) of the Act, viz., a concern (like the appellant herein), which is given the loan or advance is admittedly not a shareholder/member of t....