TMI Blog2007 (4) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, are as under : Assessee filed the return on 31-10-2001 declaring nil income. The case was processed under section 143(1) on 24-12-2002 and subsequently, selected for scrutiny. Assessee is engaged in the business of financing, investments, placing deposits, leasing, etc. 4. It was noticed by the Assessing Officer that the assessee received unsecured loans of Rs. 41,30,000 under the head "Loan funds" from M/s. Surya Spices Vyapar (P.) Ltd. Assessee filed confirmation letters along with P L a/c and balance sheet of M/s. Surya Spices Vyapar (P.) Ltd. Assessee was asked to explain its shareholding pattern and that of M/s. Surya Spices Vyapar (P.) Ltd. From the shareholding pattern furnished by the assessee, it was noticed, Shri Shara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. He found that Shri Sharan P. Khanna was having percentage of beneficial ownership of equity shares of more than 20 per cent in the assessee company. The claim of the assessee was rejected by the Assessing Officer. The matter was carried before the CIT(A) by the assessee. 7. It was reiterated before the CIT(A) that Shri Sharan P. Khanna became the shareholder of the assessee company only on 9-4-2001 when 100 equity shares were transferred in favour of him. The chronology of the events relating to the transactions was also submitted before the CIT(A), which is reflected at p. 3 of his order. It reads as under : 28-3-2001 Mr. Sharan Khanna and Mr. Tapin Khanna became directors of Sagar. 29-3-2001 SSV ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd only the shareholder can be treated as member of the assessee. He held, the crucial issue would be whether Shri Sharan P. Khanna was a member of the assessee company on the date of advancing loan by the lender company. There is no evidence on record to show that Shri Sharan P. Khanna became member of the assessee company on or before 31-3-2001. He became the shareholder only on 9-4-2001. Assessing Officer only relied on the return of income for the allegation that Shri Sharan P. Khanna was beneficial owner of the shares of more than 100 per cent of the assessee company. CIT(A) further held, this was the position as on the date of filing of the return and not on the date of close of the assessment year under consideration. Hence, he allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on record, we are of the view that there is no material to disturb the order of the learned first appellate authority, particularly in the light of the decision of the Hon ble Supreme Court in the case of C.P. Sarathy Mudaliar ( supra ), wherein the Hon ble Supreme Court held that when the section speaks of "shareholder", it refers to the registered shareholder and not to the beneficial owner. In the instant case of the assessee, Shri Sharan P. Khanna became the registered shareholder of the assessee company much subsequent to the event of the loan. In view of the above, we have no reason to disturb the order of the learned first appellate authority. As such, the appeal of the revenue is liable to be dismissed. 13. In the result, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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