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2019 (2) TMI 990 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - addition made towards loan u/s 2(22)(e) as the shareholders of the assessee company holding more than 20% shareholding are the major shareholder of M/s Shivsmruti Investment & Services Pvt. Ltd. - Held that:- In this case, there is no dispute with regard to the fact that as on date of loan, the company i.e. M/s Shivsmruti Investment & Services Pvt. Ltd. is having reserves and surplus in excess of loans and advances given to the assessee company. Admittedly, the assessee is not the beneficial ownership in the lending company, but two common shareholders are owned more than 40% equity shares in the above company. When the assessee is neither beneficial nor registered in lending company, then loans and advances received from the said company cannot be brought to tax within the ambit of provisions of section 2(22)(e) of the Act. This legal proposition has been laid down in the case of CIT vs Impact Containers Pvt. Ltd. [2014 (9) TMI 88 - BOMBAY HIGH COURT] held that when the recipient of the loan was not a shareholder in any of the entities which have advanced loans and advance, then the addition is required to be deleted . As assessee was neither the beneficial nor the registered shareholder of the company, the amount so received is not liable to be taxed as deemed dividend. No error in the reasons recorded by the Ld. CIT(A), while deleting the addition towards the deemed dividend u/s 2(22)(e) of the Act. Hence, we are inclined to uphold the order of the Ld. CIT(A) and dismissed the appeal filed by the Revenue. - Decided in favour of assessee.
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