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2013 (5) TMI 148 - ITAT MUMBAIDeemed dividend u/s. 2(22)(e) - assessee-company is engaged in the Processing and Trading of Iron Ore taken loans from M/s. Alfa Distilleries P. Ltd. & M/s. Vulcan Distilleries P. Ltd. - Held that:- As decided in case of Bhaumik Colours P. Ltd [2008 (11) TMI 273 - ITAT BOMBAY-E] in the light of the intention behind the provisions of section 2(22)(e) to extend the legal fiction to a case of loan or advance to a non-shareholder also, loan or advance to a non-shareholder cannot be taxed as deemed dividend in the hands of the a non shareholder. As in the present case nowhere it is a case of the A.O. that the assessee-company is a shareholder of M/s. Alfa Distilleries P. Ltd. or M/s. Vulcan Distilleries P. Ltd. and as the assessee is not the shareholder of those companies, no addition can be made in the hands of the assessee treating the advances / loans borrowed by the assessee company from those two companies. The CIT (A) tried to distinguish the case of the assessee with that of Bhaumik Colours P. Ltd. (supra) but judicial discipline require that all authorities below should follow the ratio and principles laid down by the higher courts and Tribunal in judicial spirit - assessee’s appeal is allowed.
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