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2018 (8) TMI 374 - AT - Income TaxAddition u/s 2(22)(e) - loan given to shareholder - Held that:- Deemed dividend is chargeable to tax in the hands of the shareholder in case there is a loan to a shareholder or any other concern. It is also triggered in case of a company making any payment on behalf of or for the individual benefit of such shareholder. The maximum cap of such deemed dividend is the accumulated profit possessed by the company making the payment or giving the loan. Therefore according to that provision to attract provisions of section 2(22)(e) of the act in case of a loan given to shareholder following conditions must be satisfied. In the lender company M/s Beverly Park Maintenance Services Ltd., assessee holds shares without any voting rights. Therefore the condition of 10% of holding in the lender company fails. Secondly the assessee must hold more than 20% in M/s Madhur Housing and development Co. In fact the assessee holds 15% noncumulative preference shares of ₹ 10 each with a fixed rate of dividend in that company. Thus in our considered opinion assessee cannot be said to be holder of 20% or more in equity shares of the borrowing company. Further the shares held by assessee on behalf of the partnership firm are also without any voting right. No infirmity in the order of the Ld. CIT (A). Accordingly the grounds raised by revenue stands dismissed.
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