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2018 (12) TMI 1835 - AT - Income TaxEstimation of income of capital work in progress - HELD THAT:- Assessee was having difficulty in realizing the dues from the aforesaid contractee which is evident from consent terms dated 21/02/2009 as approved by Hon’ble Bombay High Court and contempt petition filed by the assessee against the aforesaid entity for not honouring the terms of the consent terms by the contractee. These facts give credence to the arguments of Ld. AR that there was significant uncertainty as to the recovery of the final amount and the income, under the circumstances, could not be recognized with reasonable certainty. No defects have been found in the books and therefore, the action of the assessee in estimating the income @10% of capital work in progress could not be said to be without strong foundation. No infirmity in the order of Ld. first appellate authority in deleting the estimated additions as made by Ld. AO. - Decided in favour of assessee. Deemed dividend u/s 2(22)(e) - CIT(A) deleted the addition holding that deemed dividend would be attracted in the hands of the Directors being the shareholders and not in the hands of the assessee company, who is not a shareholder - HELD THAT:- Both the entities i.e. lender and the assessee company has certain individuals shareholders who hold threshold shareholding in the two entities within the meaning of Section 2(22)(e).- assessee itself does not hold any shareholding in the lender company either as registered shareholder or as a beneficial shareholder. This being the case, the ratio of decision of Special Bench of Mumbai Tribunal rendered in ACIT Vs Bhaumik Color (P) Ltd.. [2008 (11) TMI 273 - ITAT BOMBAY-E]as relied upon by first appellate authority becomes squarely applicable. Section 2(22)(e) does not extend the meaning of the term ‘shareholders’ and that the loan so granted could not be taxed as dividend income in the hands of the recipient company who was not the shareholder of the lender company.- Decided in favour of assessee.
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