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2012 (5) TMI 480 - ITAT, KOLKATADeemed dividend u/s 2(22)(e) - Advance against rent or security deposit - During the course of hearing it is submitted that the assessee company received the said amount not as advance rent but a security deposit through journal entry and there was no actual movement of cash from the bank account - According to the assessee, this security deposit does not come under the ambit of sec. 2(22)(e) of the Act, whereas according to the A.O. this security deposit was nothing but deemed dividend inasmuch as two of the beneficial shareholders of lessee-company were also shareholders and substantially interested in the assessee - It is a principle of interpretation of statutes that where once certain words in an Act have received a subsequent statute, the legislature must be taken to have used them according to the meaning which a Court of competent jurisdiction has given them - 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 shareholder. The deeming provision as it applies to the case of loans or advances by a company to a concern in which its shareholder has substantial interest is based on the presumption that the loan or advances would ultimately be made available to the shareholders of the company giving the loan or advance - the provisions are not applicable to the present facts of the case the nature of transactions has no effect. - Decided in favor of the assessee
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