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2022 (4) TMI 173 - AT - Income TaxDisallowance u/s 14A r.w.s. Rule 8D - HELD THAT:- CIT(A) has rightly restricted the disallowance to the extent of exempt income earned by the assessee in view of the decision of Joint Investments P. Ltd.[2015 (3) TMI 155 - DELHI HIGH COURT]. We find no infirmity in the order of the ld. CIT(A) and accordingly, the ground raised by the Revenue is dismissed for both the assessment years. Disallowance made under section 57(iii) - HELD THAT:- Assessee is engaged in the business of investment and finance and has obtained loan from Industrial Finance Corporation of India (IFCI) and was utilized fully to fund M/s. Aban Offshore Ltd. by way of loan and the interest income earned was fully offered to tax. Moreover, the AO has not disputed the total interest expenditure incurred by the assessee. However, the Assessing Officer has no justification by reducing the same from earning of except income by reckoning the direct interest expenditure for the purposes of section 14A - CIT(A) has held that the disallowance does not have any merit and accordingly directed the Assessing Officer to delete the addition. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for all the assessment year under appeal. Disallowance of deemed dividend income - HELD THAT:- A similar view by relying on the ratio in the case of ACIT vs. Bhaumik Color P. Ltd [2008 (11) TMI 273 - ITAT BOMBAY-E] in which, it was held that the expression 'shareholder' referred to in section 2(22)(e) of the Act refers to both a registered shareholder and the beneficial shareholder. And further that if a person is a registered shareholder but not a beneficial shareholder, then the provisions of section 2(22)(e) of the Act would not apply and likewise if a person is a beneficial shareholder but a registered shareholder then also the provisions of section 2(22)(e) of the Act would not apply. While in the case at hand the ITAT noted that the assessee was not a shareholder at all and hence the provisions of section 2(22)(e) of the Act would not apply. DR could not controvert the above decisions of the Tribunal, which were relied upon by the ld. CIT(A) - we are of the considered opinion that the ld. CIT(A) has rightly rejected the view taken by the AO in bringing the loans and advances received by the assessee as deemed dividend within the meaning of section 2(22)(e) of the Act. Thus, the ground raised by the Revenue is dismissed for the assessment year 2012-13.
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