Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 445 - AT - Income TaxDeemed divided u/s.2(22)(e) - assessee-company as well as the lender-company are interconnected and has common shareholders holding ‘substantial interest’ in both the companies contemplated under s.2(22)(e) - Held that:- The assessee company in the instant case has received an amount of RS. 25 lakh from lender (Prima Transformers Pvt. Ltd.). In agreement with the contention of Mr. Pipara that where the assessee company was not a share holder of the lender- company per se, then notwithstanding a fact that both the companies have common share holder having substantial interest in both the companies, the taxability of deemed dividend in terms of provisions of s.2(22)(e) of the Act would not arise in the hands of the recipient-company (assessee) which is not the registered share holders of the lender company. In the absence of assessee holding the shares in lending-company, the money received by assessee is thus not qualified to be taxed as ‘deemed dividend’ in the hands of assessee-company. Hence, we do not see any reason to interfere with the order of the Ld. CIT(A) absolving the assessee from the clutches of s.2(22)(e) of the Act. Thus, we decline to interfere with the relief granted by the CIT(A). Trade advances stand excluded from the ambit of section 2(22)(e) of the Act. Reopening of assessment - Held that:- Protective assessment under s.147 to merely safe-guard the interest of the Revenue is not sustainable in re-assessment proceedings under s.147 of the Act. A protective assessment impliedly means that the AO is not sure about the escapement in the hands of this assessee but merely seeks to cover the possible revenue loss. This, in our view, is contrary to the mandate of section 147 which provides that it is incumbent upon the AO to have positive belief towards escapement (in contrast to probable escapement) based on the material available on record. Clearly, the action of the AO runs counter to the mandate of section 147 of the Act. Notably, the case of escapement of income qua assessee herein is not finally ascertained even at the assessment stage pursuant to notice for re-opening under s.147/148 of the Act.
|