TMI Blog2012 (9) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... Undoubtedly the assessee had business relations with M/s V and over and above the sales amount, the said company had given cheques to the assessee. The said transactions though were in the nature of advances or loans, but no shareholding was held by the assessee partnership concern in the Indian company and in the absence of the same, the provisions of section 2(22)(e) were not attracted, which comes into operation only when there is shareholding of more than 10% of voting power and there is interchange of funds for non-business purposes - Decided in favor of assessee. - ITA No.831 /Chd/2011 C.O.No.74/Chd/2011 - - - Dated:- 27-6-2012 - SHRI T.R. SOOD, AND Ms. SUSHMA CHOWLA, JJ. Appellant by : Shri Manjit Singh, DR Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(22)(e) of I.T. Act, 1961 and assessed to tax accordingly." 4. The ground of appeal raised by the assessee in C.O.No.74/Chd/2011 is as under: "1. The Learned CIT (A) erred in law and on facts in upholding the addition of Rs.5 lacs on account of Deemed Gift u/s 2(22)(e) of the Income Tax Act." 5. The only issue arising in the present appeal is against the invoking of the provisions of section 2(22)(e) of the Act. The Assessing Officer had made addition of Rs.27 lacs on account of deemed dividend in the hands of the assessee by invoking the provisions of section 2(22)(e) of the Act. The CIT (Appeals) applied the ratio laid down in ACIT Vs. Bhaumik Color Pvt. Ltd. (2009) 18 DTR 451(Mum) (Tribunal) and CIT Vs. Hotel Hill Top (2008) 5 DTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er concern by the name of M/s Arora Knitfab Pvt. Ltd. in which Mrs. Harvinder Kaur has 58.84% shareholding. M/s Arora Knitfab Pvt. Ltd. had received loan from M/s Arora Fabrics Pvt. Ltd. of Rs.4.43 crores. The addition was made on account of the accumulative holding of the partners by invoking the provisions of section 2(22)(e) of the Act. The Tribunal relying upon the ratio in Bhaumik Colors Pvt. Ltd. [313 ITR (AT) 146 (Mum) (SB)], CIT Vs. Hotel Hill Top (2009) [313 ITR 116 (Raj)] and also CIT Vs. Universal Medicare Pvt. Ltd. (2010) [190 Taxman 144 (Mum)] held that where the conditions laid down in section 2(22) of the Act with regard to minimum shareholding by the shareholders in the assessee company were not fulfilled, the shareholding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of voting power and there is interchange of funds for non-business purposes. We find that the issue is squarely covered by the ratio laid down by the Hon'ble Bombay High Court (supra) and Hon'ble Rajasthana High Court (supra) and also by Hon'ble Punjab Haryana High Court in the case of CIT Vs. Arora Knitfab Pvt. Ltd.(supra). In the absence of any payment being made on behalf of or for the individual benefit of the shareholder, the transaction in question would not fall within the domain of the deemed dividend, i.e. in the hands of the assessee before us. Consequently, we find no merit in the application of the provisions of section 2(22)(e) of the Act in the present case. We direct the Assessing Officer to delete the addition of Rs.27l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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