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2022 (2) TMI 1397 - AT - Income TaxDeemed dividend u/s.2(22)(e) - AO treated the unsecured loan as deemed dividend - whether it is sine qua non that the assessee company, which is not a registered shareholder, obtains any loan from companies in which its shareholder also holding substantial share may brought under the scanner of deemed dividend? - HELD THAT:- Coming to the case on hand, admittedly the assessee company is not holding any shares or rights of M/s. JP Iscon Ltd. Thus considering the above discussion and judgment of Hon’ble jurisdictional court in case of Mahavir Inductomelt [2017 (1) TMI 1159 - GUJARAT HIGH COURT] AO was not justified in invoking the provision of section 2(22)(e) - CIT(A) rightly deleted the addition made by the AO. We note that in the case which arose before T. Abdul Wahid & Co.[2020 (9) TMI 977 - MADRAS HIGH COURT] the facts were that the assessee, a partnership firm, received unsecured loan from a company and the AO opined that one of partners of assessee-firm, being also a shareholder in the said company, holding 26.25 per cent shares had substantial interest in the firm and, consequently, concept of deemed dividend under section 2(22)(e) of the Act would apply. The High Court, on appeal by the Revenue, held that since payment had been made to the assessee, a partnership firm and assessee was not a shareholder in company, it was neither a loan nor an advance, but a deferred liability and, thus, section 2(22) (e) of the Act would not apply. The decision of Gopal and Sons (HUF) [2017 (1) TMI 331 - SUPREME COURT] was distinguished by the Madras High Court after observing that "as in the case before the Supreme Court the assessee was the beneficial shareholder, whereas on facts, it was not so, in the assessee's case. Admittedly, the assessee in the case on hand was neither the beneficial owner of the shares nor registered owners of the shares. Accordingly, in our humble understanding, the principles laid down by the Hon’ble Supreme Court in the case of Gopal and Sons (HUF) [2017 (1) TMI 331 - SUPREME COURT] are not applicable in the given facts and circumstances. Thus the ground of appeal raised by the Revenue is hereby dismissed.
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