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2013 (10) TMI 460 - AT - Income TaxDeemed dividend u/s 2(22)(e) of the Income Tax Act – loans and advances - inter corporate deposits – CIT observed that ICDs received by the assessee cannot be considered along with loans and advances for the purpose of application of the provisions of section 2(22)(e) of the Act. - Held that:- Reliance has been placed upon the judgment in the case of Seamist Properties Pvt. Ltd. vs. ITO [2004 (8) TMI 323 - ITAT BOMBAY-G], wherein it has been held that legislature is clarified in circular issued by the CBIT as at the time of amendment of clause (e) of sub section (22) of sec. 2 is further fortified by the fact that for deduction of tax at source. Sec. 194 provide that such deduction of tax has to be made in the case of the payments of the nature mentioned in clauses (a), (b), (c), (d) and (e) of sub section (22) of Section 2 only in a case where such payments were made to a shareholder - The very fact that the provision for deduction of tax at source and adjustment of tax is only in respect of the payments to the' shareholder would clearly indicate that even after the amendment, the effect of clause (e) of sub section (22) of Sec. 2 would apply only when the payment is made to shareholder - Wherever, the tax is to be deducted at source from a dividend or deemed dividend and the consequential effect of giving effect to such deduction of tax at source, etc., reference was made only to the payments to the shareholder. This would indicate clearly that clause (e) would apply only in case of payments to the shareholder and not to others. In the present case, assessee is not a shareholder of the lender company - Hence, ICDs and the advances to the assessee cannot be treated as deemed dividend at the hands of the assessee – Decided against the Revenue.
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