TaxTMI 
TaxTMI 
2025 (3) TMI 1864
X X X X Extracts X X X X
X X X X Extracts X X X X
....73/PUN/2017, A.Y. 2008-09 : 4. The appellant has raised the following grounds of appeal :- "1] On the facts and in the circumstances of the case and in law that the re-assessment u/s 147 be held bad in law as reopening is based on the decision of CIT(A) in the case of Zetex Engineers Pvt. Ltd. and which is not accepted by the dept. 2] The learned CIT(A) erred in confirming the addition of Rs. 1,00,28,347/- as deemed dividend in the hands of the appellant on the ground that Hextech Engineering Pvt. Ltd. (Hextech) had given a loan to Zetex Engineers Pvt. Ltd. (Zetex) and the appellant is a common shareholder in both the companies with more than 90% shareholding. 3] The learned CIT(A) was not justified in taxing the above amount of Rs. 1,00,28,347/- as deemed dividend in the hands of the appellant as the funds given by Hextech to Zetex were for the purposes of its business and not as a loan and therefore, the question of taxing any deemed dividend on account of these transactions simply did not arise u/s 2(22)(e). 4] Without prejudice, the learned CIT(A) erred in sustaining the addition of Rs. 1,00,28,347/- while it should have been restricted on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lled matter and the appeal was recalled to decide only ground nos.1 to 6 raised in the memo of appeal. Accordingly, only above grounds are adjudicated. 6. With regard to ground no.1, Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) is unjustified. It was further submitted that reopening was based on the decision of Ld. CIT(A) in the case of M/s. Zetex Engineers Private Ltd. which was not accepted by the Department. 6.1 With regard to the ground no.1, Ld. DR appearing from the side of the Revenue submitted before us that the order passed by Ld. CIT(A) is correct. It was submitted that the reopening in the case of the assessee is not based on the decision of Ld. CIT(A) in the case of M/s. Zetex Engineers Private Ltd. instead it was an independent decision made by the Assessing Officer on the basis of facts of the case of the assessee. 6.2 With regard to ground no.1, we have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that the Assessing Officer independently was of the view that the addition is required to be made in the hands of the assessee being a benefici....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is dismissed. 7. With regard to ground no.2, Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) wherein he confirmed the addition of Rs. 1,00,28,347/- as deemed dividend in the hands of the appellant on the ground that the appellant is a common shareholder in both the companies with more than 90% shareholding is not correct. Accordingly, Ld. AR requested to delete the addition. 7.1 With regard to ground no.2, Ld. DR appearing from the side of the Revenue submitted before us that the order passed by Ld. CIT(A) is reasoned one and same should be upheld and the appeal filed by the assessee may kindly be dismissed. 7.2 With regard to ground no.2, we have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that Ld. CIT(A) in his order in para 5.6.6 has specifically referred the judgement in the case of Universal Medicare Private Limited, 324 ITR 263 wherein it has been held by Hon'ble Bombay High Court that deemed dividend can by assessed only in the hands of the beneficial shareholders only. It was further observed by Ld. CIT(A) that M/s. Zetex Engineers Private Ltd. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on. In this particular transaction between appellant and company the element of commerce or profit or remuneration is absent. Hence the transaction be termed as commercial transaction as no monetary consideration for the appellant is involved in the same. Hence the argument of Ld. AR that this is commercial transaction stands dismissed. 5.15 Reference is invited to the decision of Hon'ble ITAT, Mumbai in the case of Smt Shantidevi Mahavir Prasad Gupta where the addition on deemed dividend under section 2(22)(e) has been upheld holding that the advance given by the appellant to the company are not in nature of loan nor any interest have been charged by the Company from the appellant. The Hon'ble Tribunal has upheld the levy of penalty under section 271(1)(c) on the addition of deemed dividend in its order ITA No.7733/Mum/2010, Α.Υ. 2003-04 dated 05/02/2014. 5.16 The reliance of appellant in plethora of cases of jurisdictional High Court namely, Jignesh Shah, Impact Containers, Universal Medicare cannot come its rescue. In all these case the Hon'ble High Court has held that the deemed dividend can assessed only in the hands of shareholders ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red shareholder. The above order in the case of Bhaumik Colour Pvt. Ltd. (supra) has been followed by Pune Bench in ITA No.728/PUN/2008 order dated 31.03.2009 in the case of M/s Shivananda Electronics vs. JCIT. Therefore, we are of the considered opinion that the addition was not deleted by treating the transaction as business transaction but was deleted on the basis of Bhaumik Colour Pvt. Ltd. (supra) and on the basis of reasoning that the deemed dividend can only be taxed in the hands of the beneficial and registered shareholders and obviously M/s. Zetex Engineers Private Ltd. was not a beneficial and registered shareholder & therefore the addition was deleted. Therefore, ground no.3 raised by the assessee is dismissed. 9. With regard to ground no.4, Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) is unjustified. It was contended before the Bench that the addition should have been restricted only to the peak amount arising out of loans given during the financial year 2007-08 only. Therefore, it was requested to restrict the addition accordingly. 9.1 With regard to ground no.4, Ld. DR appearing from the side of the Reven....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is dismissed. 11. With regard to ground no.6, we find that the assessee has challenged the confirmations of interest u/s 234A, 234B and 234C as charged by the Assessing Officer. We find that the interest is consequential in nature and, therefore, there is no error in the order of Ld. CIT(A) wherein he confirmed the addition u/s 234A, 234B and 234C of the IT Act. Thus, ground no.6 raised by the assessee is dismissed. 12. Ground no.7 is general in nature and therefore needs no adjudication hence dismissed as such. 13. Apart from all the above grounds, it was also submitted before the Bench that in assessee's own case for assessment year 2010-11, the Tribunal has already held that the reopening of assessment in the hands of assessee as on 04.09.2013 was not valid & therefore on the same reasoning the notices issued for asstt. year 2008-09 were also not valid hence prayed to cancel the proceedings u/s 148 for this year also. 14. In this regard, we find that the Coordinate Bench of Tribunal while deciding the case of assessee for assessment year 2010-11 observed as under :- "14. The reopening of assessment in the hands of assessee as on 04.09.2013 could not be uphe....