TMI Blog2013 (5) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - ITA No.2579/Mum/2010 - - - Dated:- 8-4-2011 - Shri J. Sudhakar Reddy And Shri R. S. Padvekar,JJ. For the Appellant : None For the Respondent : Shri Shravan Kumar ORDE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the reserves and surplus. The assessee filed all the details before the A.O. as required by him. The A.O. has noted that Capt. Pramod M. Salvi who is a director of the assessee-company has held 99.92% shareholding. He is also Director in the M/s. Alfa Distilleries P. Ltd. having 77.15% of shareholding and in M/s. Vulcan Distilleries P. Ltd. having 69.39% shareholding. The A.O. has hold that the reserves and surplus position of M/s. Alfa Distilleries P. Ltd. as on 31.3.2006 was ₹ 1,02,95,970/- and M/s. Vulcan Distilleries P. Ltd. was Rs 73,34,041/-. From the Balancesheet of the assessee it was noticed by the A.O. that the assessee has received the advances/loans from the group companies:- i) Alfa Distilleries Pvt. Ltd. Rs 80,95, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural meaning. The ordinary and natural meaning of the term dividend would be a share in profits to an investor in the share capital of limited company. To the extent the meaning of the word dividend is extended to loans and advances to a shareholder or to a concern in which a shareholder is substantially interested deeming them as dividend in the hands of a shareholder the ordinary and natural meaning of the word dividend is altered. To this extent the definition of the term dividend can be said to operate. If the definition of dividend is extended to a loan or advance to a nonshareholder the ordinary and natural meaning of the word dividend is taken away. In the light of the intention behind the provisions of section 2(22)(e) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of the Act unless the context negatives that view. 5. The decision of Hon ble Special Bench in the case of Bhaumik Colours P. Ltd. (supra) has been affirmed by the Hon ble High Court of Bombay in the case of CIT vs. Universal Medicare (P) Ltd. 324 ITR 263 and the operative part of the said decision is as under:- 9. ..However, even on the second aspect which has weighed with the Tribunal, we are of the view that the construction which has been placed on the provisions of s.2(22)(e) is correct. Sec. 2(22)(e) defines the ambit of the expression dividend . All payments by way of dividend have to be taxed in the hands of the receipt of the dividend namely the shareholder. The effect of s.2(22) is to provide an inclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ld. CIT (A) tried to distinguish the case of the assessee with that of Bhaumik Colours P. Ltd. (supra). We may note here that judicial discipline require that all authorities below should follow the ratio and principles laid down by the higher courts and Tribunal in judicial spirit. We, therefore, delete the addition made by the A.O. in entirety and allow grounds taken by the assessee. 7. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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