TMI Blog2013 (7) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... n. See ACIT Versus Bhaumik Colour (P) Limited [2008 (11) TMI 273 - ITAT BOMBAY-E] & Commissioner of Income-tax versus Universal Medicare Private Limited [2010 (3) TMI 323 - BOMBAY HIGH COURT]. Against revenue. - ITA No. 6897/Mum./2010 - - - Dated:- 30-4-2013 - Shri B. Ramakotaiah And Shri Amit Shukla,JJ. For the Petitioner : Mr. B. V. Jhaveri For the Respondent : Mrs. Parminder ORDER Per Amit Shukla, J. M. This appeal has been preferred by the revenue against order dated 16.7.2010, passed by CIT(A)-6, Mumbai for the quantum of assessment passed under section 143(3), for the assessment years 2007-08, on the following grounds of appeal: 1. The order of the CIT(A) is opposed to law and facts of the case. 2. On the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired the assessee to furnish all the details of the loans and advances, interest income and copies of the assessment order of M/s. Agrawal Galvanising Pvt. Ltd. On the perusal of the same, he found that, out of loans and advances of Rs 12.36 crores, only 6.26 crores pertained to loans and advances and balance consists of other advances. Besides this most of the loans and advances given to the directors of the group companies were interest free loan or less interest was charged. Further the major income of Agrawal Galvanising Pvt. Ltd. comprised of dividend income and capital gains. Thus, the substantial part of the business of Agrawal Galvanising Pvt. Ltd. was not lending of money. Accordingly he treated the entire loan of Rs 1,88,83,665 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Authorized Representative. In the absence of the necessary shareholding by the appellant in the lender company, there could be no deemed dividend as per the ratio of the above decision. Hence, the addition made by AO is deleted". 5. Before us the learned counsel submitted that this issue now stands covered by the decision of Hon'ble Jurisdictional High Court in the case of CIT v. Universal Medicare Pvt. Ltd., reported in (2010) 324 ITR 263, as the assessee admittedly is not a shareholder of M/s. Agrawal Galvanising Pvt. Ltd. from whom assessee has received the loan. On the other hand, learned DR relied upon the findings of the AO. 6. We have heard the rival submission and gone through the order of the AO as well as CIT(A). It is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot substantially interested), which are controlled by a group of members, even though the company has accumulated profits would not distribute such profit as dividend because if so distributed the dividend income would became taxable in the hands of the shareholders. Instead of distributing accumulated profits as dividend, companies distribute them as loan or advances to shareholders or to concern in which such shareholders have substantial interest or make any payment on behalf of or for the individual benefit of such shareholder. In such an event, by the deeming provisions such payment by the company is treated as dividend. The intention behind the provisions of section 2(22)(e) is to tax dividend in the hands of shareholder. The deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of income. Therefore the deeming fiction can be applied only in the hands of the shareholder and not the non- shareholder, viz., the concern. 37. The definition of 'Dividend' under section 2(22)(e) of the Act is an inclusive definition. Such inclusive definition enlarges the meaning of the term "Dividend" according to its ordinary and natural meaning to include even a loan or advance. Any loan or advance cannot be dividend according to its ordinary and natural meaning. The ordinary and natural meaning of the term 'dividend' would be a share in profits to an investor in the share capital of a limited company. To the extent the meaning of the word "Dividend" is extended to loans and advances to a shareholder or to a concern in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend have to be taxed in the hands of the recipient of the dividend namely the shareholder. Consequently, the effect of clause (e) of section 2(22) is to broaden the ambit of the expression "dividend" by including certain payments which the company has made by way of a loan or advance or payments made on behalf of or for the individual benefit of a shareholder. The definition does not alter the legal position that dividend has to be taxed in the hands of the shareholder." 8. Thus respectfully following the principle and ratio laid down by the Hon'ble Special Bench in the case of ACIT vs. Bhaumik Colour (P) Ltd. (supra) and Hon'ble Jurisdictional High Court in the case of CIT vs. Universal Medicare Pvt. Ltd. (supra), the order of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
