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2014 (7) TMI 714 - AT - Income TaxDeemed dividend u/s 2(22)(e) - loan and advance to another company for the benefit of shareholders – Held that:- The assesse is a beneficial owner of more than 10% shares in the payer companies and further has substantial interest of more than 20% in the recipient companies - when a company gives loan or advance to any concern covered under the second category, the divided is deemed as income in the hands of the shareholder and not such concern - Position is similar for the third category as well - If the amount is given to a third person, which is for the benefit of the shareholder, the dividend is not deemed in the hands of such recipient but the shareholder - In all the three categories, it is the shareholder whose income is affected with the deemed dividend – Relying upon COMMISSIONER OF INCOME TAX Versus ANKITECH PVT LTD. & OTHERS [2011 (5) TMI 325 - DELHI HIGH COURT] - Certain loans or advances were given by some companies to some other companies (concerns) of the same group and the assessee is having substantial shareholding in both the sets of the payer and the recipient companies - the case falls under the second category and the amount is deemed as dividend in the hands of the assessee shareholder. Whereas `payment by way of advance or loan’ is relevant in the first and second categories, the third category simply provides for `any payment’, which may or may not be by way of advance or loan - Since the third category encompasses any payment by such companies on behalf or for the individual benefit of any such shareholder, there can also be payment falling under this category de hors advance or loan - As the amounts under consideration are advances or loans by one set of companies to another set and the Revenue has not made out a case that these were for the individual benefit of the assessee-shareholder, naturally, the case does not fall in the third category - Once a case falls under the second category, there is no further need to show that it should also falls in the third category - the sums of ₹ 28,17,430/- for the AY 2007-08 and ₹ 2,96,060/- for AY 2008-09 are deemed dividend of the assessee-shareholder under the second category of section 2(22)(e) of the Act and ex consequential the CIT(A) was fully justified in sustaining these additions – Decided partly in favour of Assessee.
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