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2022 (2) TMI 606 - AT - Income TaxTDS u/s 194A - TDS on deemed dividend - loan advanced by the assessee company to the other group companies - whether TDS is to be made where loan has been advanced from one company to other group company in which there are common shareholders? - HELD THAT:- As decided in the case of ANZ Reality Pvt. Ltd. [2008 (10) TMI 268 - ITAT JAIPUR-B] holding that TDS under Section 194 is not required to be made unless the loan and advances are given to shareholder. Law does not expect the payer company to deduct TDS when the payment is made to a non-shareholder. Section 194 requires TDS when payment made to a registered shareholder only. We have further considered the alternative plea made by the appellant before us that the observation of the ITO to this effect that the appellant company hold 10% share in Amit Intertrace Pvt. Ltd., Dhanlaxmi Infrastructure Pvt. Ltd. and Palitana Sugar Mills Pvt. Ltd. whom loans and advances were given is deemed dividend is wrong per se. The same is factually incorrect since the appellant company does not owned 100% share in these companies and even if, the appellant company hold 100% shares in these companies the deemed dividend would arise when these companies give loans to the appellant holding company and not other way around when holding company gives loan to subsidiary company. Thus, we find the observation made hereinabove by the ITO(TDS) is not on the correct proposition of law. No justification in interfering with the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO holding that under this particular facts and circumstances of the matter under Section 194 is not required to be made by the assessee - Decided in favour of assessee.
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