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2011 (10) TMI 177 - AT - Income TaxDeemed Dividend 2(22)(e) - Assessee has 69% shareholding in a Co. advanced loan to a concern in which he has 25% shares - Held That:- Before us, it is a case of a partnership firm which is not a shareholder rather Shri Purshottam Makhija who is a partner of assessee firm is shareholder of the company from whom loan was received. - To attract the provisions of Section 2(22)(e), the payment must be to a person who is registered holder of shares. - In the I.T. Act, 1961, the word "shareholder" in Section 2(22)(e) is followed by the words "being a person who is a beneficial owner of shares". This expression only qualifies the word "shareholder" and does not in any way alter the position that the shareholder has to be a registered holder not substitutes the requirement of merely holding a beneficial interest in shares without being a registered holder of shares. If a person is a registered shareholder but not the beneficial shareholder then the provisions of Section 2(22)(e) will not apply. Similarly, if a person is a beneficial shareholder but not a registered shareholder then also the first limb of provision of Section 2(22)(e) will not apply. In the present appeal, the assessee company is not a registered holder of shares, therefore, the provisions of Section 2(22)(e) would not be applicable at all to the case of the assessee firm. In view of CIT v. Hotel Hilltop (2008 -TMI - 33813 - RAJASTHAN HIGH COURT),CIT v. Moon Mills Ltd. (1965 -TMI - 49282 - SUPREME Court) the case is decided in favour of assessee.
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