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2023 (12) TMI 408 - ITAT AHMEDABADRevision u/s 263 - Deemed dividend u/s 2(22)(e) - loans received from another company - beneficial ownership - HELD THAT:- Since as per the finding of the CIT himself, the assessee’s beneficial ownership of the shares in MAP Ltd. alongwith voting power fall below the criteria specified for invocation of section 2(22)(e) of the Act, the said section was not applicable to the facts of the present case. Therefore, finding of error by the CIT in the assessment order for non-invocation of section 2(22)(e) of the Act on the loans received by the assessee from MAP Ltd. palpably fails on facts recorded by the Ld.PCIT himself. Accordingly, we hold that considering the facts noted by the ld.Pr.CIT himself, provisions of section 2(22)(e) of the Act were not attracted to the transaction of amounts/loan received by the assessee from MAP Ltd, and finding of the error by the ld.PCIT in this regard is, therefore, held to be not sustainable. Finding of error by the ld.Pr.CIT with regard to the loans received from MAP Cotton P.Ltd. qualifying as deemed dividend under section 2(22)(e) of the Act is against the principles of natural justice enshrined in section 263 of the Act itself, which categorically requires the assessee to be heard on the errors noted by the ld.Pr.CIT in the assessment orders for valid exercise of revisionary jurisdiction u/s 263 of the Act. Section 263(1) of the Act requiring powers of revision to be exercised by PCIT’s/CIT’s after giving opportunity of hearing to the assessee is reproduced - the finding of the error by the ld.Pr.CIT of non-invocation of section 2(22)(e) of the Act to the transaction of loan received by the assessee from MAP Cotton Ltd.is also held not sustainable in law. Assessee appeal allowed.
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