TMI Blog2014 (2) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... two appeals for adjudication – Decided against Revenue. - I. T. A. Nos. 196 of 2013and 16 of 2013 . - - - Dated:- 9-9-2013 - VIRENDER SINGH AND ALI MOHAMMAD MAGREY, JJ. JUDGMENT Since in both the appeals, identical issue(s) is involved, as such, taken together for consideration. These appeals are filed under section 260A of the Income-tax Act, 1961 ("the IT Act" for short), against the order dated July 27, 2012, and October 17, 2012, passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar ("the ITAT" for short) whereby two different appeals filed by the Deputy Commissioner of Income-tax/Assistant Commissioner of Income tax, Circle-2, Jammu ("the Revenue" for short) against two different orders of the Commissioner of Income-tax (Appeals), Jammu, dated September 29, 2011, and May 7, 2012, stand dismissed. I. T. A. No. 196 of 2013 relates to the assessment year 2003-04 of the respondent ("the assessee" for short) ; whereas I. T. A. No. 16 of 2013 relates to the assessment year 2004-05. For the assessment year 2003-04, the assessee declared a loss of Rs. 1,60,28,165 and a return was filed in this regard on November 27, 2003, accompanied with copies of ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 29, 2011. The Revenue being aggrieved of the said order, filed an appeal before the learned Income-tax Appellate Tribunal, which stands dismissed, vide the impugned order dated July 22, 2012, holding that the issue involved has already been adjudicated upon and decided by the jurisdictional High Court (High Court of Punjab and Haryana) in case of CIT v. Sharman Woolen Mills Ltd. reported in 2011-TIOL-639-HC-P H-IT on September 28, 2011. Hence, I. T. A. No. 196 of 2013 by the Revenue. With regard to the assessment year 2004-05, the original return declaring a loss of Rs. 35,54,222 was filed by the assessee, which was also processed under section 143(1) of the Income-tax Act and ultimately notice under section 148 of the Income-tax Act was issued to the assessee, to which, reply was filed in which a specific plea was taken by the assessee that the assessee-company is not the shareholder of M/s. G. I. Power Corporation, as such, section 2(22)(e) of the Income-tax Act is not attracted. Another objection was also raised by the assessee regarding reopening of the assessment proceeding. However, the Department did not accept the plea(s) of the assessee and treated an amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be treated as dividend in terms of section 2(22)(e) of the Act ? (ii) Whether the judgment relied upon by the learned Income-tax Appellate Tribunal was applicable in the facts and circumstances of the case in hand, particularly when the positive case of the appellants was that there was a common shareholder holding more than 10 per cent. share in both the companies ?" (iii) Whether the Income-tax Appellate Tribunal was right in interpreting the provisions of section 2(22)(e) of the Act ?" Mrs. Thakur, learned counsel for the appellant-Revenue, vehemently contended that the Income-tax Appellate Tribunal has failed to appreciate that the unsecured loan advanced by M/s. G. I. Power Corporation to the assessee (M/s. GTZ Securities Ltd.), in fact, was deemed dividend as shareholder of the lending company and the assessee-company were the same. Since the common shareholder was holding 10 per cent. share in both the companies, therefore, unsecured loan advanced by the lending company to the assessee has attracted the provisions of section 2(22)(e) of the Incometax Act. Mrs. Thakur contends that the ratio of Sharman's case (supra) is not applicable to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. Further, it is an admitted case that under the normal circumstances, such a loan or advance given to the shareholders or to a concern, would not qualify as dividend. It has been made so by a legal fiction created under section 2(22)(e) of the Act. We have to keep in mind that this legal provision relates to 'dividend'. Thus, by a deeming provision, it is the definition of dividend which is enlarged. Legal fiction does not extend to 'shareholder'. When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specified under section 2(22)(e) of the Act would also be treated as dividend. The fiction has to stop here and is not to be extended further for broadening the concept of shareholders by way of legal fiction. It is a common case that any company is supposed to distribute the profits in the form of dividend to its shareholders/members and such dividend cannot be given to non-members. The second category specified under section 2(22)(e) of the Act, viz., a concern (like the assessee herein), which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties conceded that the issue involved in the present appeal has already been adjudicated and decided by the hon'ble High Court of Punjab and Haryana in the case of CIT v. Sharman Woollen Mills Ltd. reported in 2011-TI0L-639HC-P H-IT on September 28, 2011. The hon'ble jurisdictional High Court, has held that the loan advanced to the assessee-company cannot be treated as dividend in terms of section 2(22)(e) of the Act, if the assessee is not a shareholder of the lending company." So far as the assessment year 2004-05 is concerned, the learned Tribunal, while dismissing the appeal of the Revenue, simply took note of the fact that the issue in dispute already stands decided by the learned Tribunal in favour of the assessee's in his own assessment year 2003-04. That apart, the judgments on which Mr. Kaushik, learned counsel for the assessee, is relying, are squarely applicable on the issue. The present two appeals, otherwise, do not warrant our indulgence on facts, which aspect has been duly taken care of by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. Viewed thus, we do not find any substantial question of law arising in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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