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2009 (3) TMI 633 - ITAT DELHIDeemed dividend - engaged in the business as general sales agent for passenger sales and cargo - AO observed that since shares of M/s. Jetair Pvt. Ltd. stood registered in the name of the assessee-firm through its partners, it was the assessee’s firm, who was the only registered owner of the shares - According to him, the partnership firm was not a legal person, and, therefore, whenever it enters into any transaction relating to any property such a transaction invariably has to be entered through the partners only - AO invoked the provisions contained in section 2(22)(e) and treated the loan given by M/s. Jetair Pvt. Ltd. to the assessee-firm as deemed dividend, and added the same to the assessee’s total income as deemed dividend assessable under the head "Income from other sources" - CIT(A) held that the assessee-firm was not a shareholder as per law and, therefore, the loan received by it from the company M/s. Jetair Pvt. Ltd. cannot be treated as deemed dividend within the meaning of section 2(22)(e). HELD THAT:- In the present case, Shri Naresh Goyal, Shri Surender Goyal and Jet Enterprises Pvt. Ltd. are the registered shareholders of M/s. Jetair Pvt. Ltd. They are the partners in the present assessee partnership firm having share in profit of 35 per cent, 15 per cent and 50 per cent respectively. M/s. Jetair Enterprise Pvt. Ltd. is holding shares in Jetair Pvt. Ltd. only to the extent of 8.77 per cent, which is less than the 10 per cent of voting power. Similarly, Shri Surender Goyal is a shareholder in M/s. Jetair Pvt. Ltd. to the extent of 7.02 per cent, which is also less than 10 per cent of the voting power. However, Shri Naresh Goyal is a registered shareholder in M/s. Jetair Enterprise Pvt. Ltd. with 51 per cent of shareholding satisfying the first limb of section 2(22)(e). Insofar as the new category of payment which has been considered as dividend by the Finance Act, 1987 with effect from 1-4-1988, Shri Naresh Goyal is holding more than 20 per cent of shares in the present partnership firm to which the loan has been granted by M/s. Jetair Pvt. Ltd. However, we are not concerned with the question as to whether deemed dividend within the meaning of section 2(22)(e) can be assessed in the hands of Shri Naresh Goyal or other partner of the assessee firm in respect of the loan granted by M/s. Jetair Pvt. Ltd. to the present assessee partnership firm, but we are called upon to decide as to whether the deemed dividend within the meaning of section 2(22)(e) can be assessed in the hands of the present assessee firm in respect of the loan given to the assessee firm by M/s. Jetair Pvt. Ltd. Since the present assessee firm is not a registered shareholder of M/s. Jetair Pvt. Ltd., the condition necessary to invoke section 2(22)(e) is not satisfied. The Special Bench in Bhaumik Colour (P.) Ltd.[2008 (11) TMI 273 - ITAT BOMBAY-E] has taken a view that the deemed dividend can be assessed only in the hands of a person, who is a shareholder of the lender company and not in the hands of a person other than a registered shareholder. Respectfully following the decision of Special Bench in the case of Bhaumik Colour (P.) Ltd.[2008 (11) TMI 273 - ITAT BOMBAY-E], we are inclined to uphold the order of ld. CIT(A) in deleting the addition made by AO on account of the deemed dividend u/s 2(22)(e). Similarly in the AY 2004-05, the order of ld. CIT(A) in deleting the addition made by AO on account of loan treating the same as deemed dividend u/s 2(22)(e) on identical facts is upheld. It is pertinent to know that the ld. CIT(A) has decided this issue in the AY 2004-05 by following his decision for the year 2003-04. We order accordingly.
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