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2021 (5) TMI 653 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - Assessee argued that the assessee company is neither a registered nor a beneficial owner of shares of the lender companies - whether the case of the assessee falls under any of the 3 limbs provided u/s 2(22)(e)? - HELD THAT:- As the assessee case falls under the second limb of Section 2(22)(e) of the Act as there is a common shareholders amongst all the four companies having substantial interest and voting power of more than 10%. In the three lender companies Shri Punyapal Surana is having share holding at 23.36%, 39.87% and 36.90% as mentioned in Para 7 of this order. The concern referred in Second limb of Section 2(22)(e) of the Act, in this case is the assessee company where Shri Punyapal Surana is having share holding of 23.36% . Since all the conditions necessary for treating the deemed dividend of the amount received in the hands of concern (which in this case is the assessee) from other companies (three lender companies) stands fulfilled, in our considered view Ld. A.O has rightly invoked the provisions of Section 2(22)(e) of the Act and made addition for deemed dividend. However the addition for deemed dividend should have been made at ₹ 2,19,74,818/- as against the addition of ₹ 2,20, 87,842/- made by the Ld. A.O as the addition for deemed dividend cannot exceed the accumulated profits of the lender company as appearing in the books before giving such loan and advance. We thus set aside the finding of Ld. CIT(A), confirm the addition u/s 2(22)(e) of the Act at ₹ 2,19,74,818/- and partly allow Revenue’s Appeal Ground No.1.
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