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2017 (10) TMI 1623 - AT - Income TaxDeemed dividend u/s 2(22)(e) - deemed dividend has to be taxed in the hands of the partnership firm OR in the hands of partner as beneficial partner - CIT(A) deleted the addition on the basis of observation that no deemed dividend could be assessed in the hands of the assessee since the assessee firm itself was not a shareholder in the payer company - HELD THAT:- Provisions of Section 2(22)(e) of the Act are applicable in respect of transaction of unsecured loans and further ld. AR could not substantiate the reasons of obtaining unsecured loan by the assessee firm from the M/s Orissa Stevedores Limited. We find that the CIT(A) has dealt on the disputed issue and also the provisions of law applicable and directed the AO to treat the dividend in the hands of partner Shri Mahimananda Mishra. On the query from the bench whether this deemed dividend was taxed in the hands of Shri Mahimananda Mishra, the ld. AR and DR could not substantiate with any convincing answer, which is proved that the transaction comes within the purview of deemed dividend and the question now before us to be taxable in the hands of firm or in the hands of partner. Also it is not clear as to whether it is taxed in the hands of assessee’s partner and the ld. AR could not substantiate the fact that the shares invested by the director are not out of funds of partnership firm and CIT(A) mistook the fact of taxing in the hands of director, therefore, in the interest of substantial justice, we remit the disputed issue to the file of CIT(A) to verify the fact and decide the issue after providing opportunity of hearing o the assessee and grounds of appeal of revenue are allowed for statistical purpose.
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