TMI Blog2015 (2) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... o limitation is prescribed. An added reason why the submission of the Revenue is unacceptable is that had the Parliament indeed intended to overrule or set aside the reasoning in NHK Japan (supra), it would have, like other instances and more specifically in the case of Section 201 (1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring Section 201 (3) in the first instance in 2010 and later in 2014 fortifies the reasoning of the Court. - Decided against the Revenue. Deemed dividend - Merits the applicability of Section 2 (22) (e) - Held that:- If a person is a registered shareholder but not the beneficial shareholder then the provision of section 2 (22) (e) will not apply. Similarly, if a pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The Assessing Officer (AO) sought to bring them to tax under Section 2 (22) (e) reasoning that since she had more than 10% stake in the assessee company, and that the other conditions spelt out in Section 2 (22) (e) were satisfied, it had to be treated as deemed dividend. The assessee contended in the appeal that the initiation of proceedings under Section 201 was barred; it was contended on merits that Harjit Kaur was a shareholder in M/s Pure Drinks (New Delhi) Ltd. and could not be considered as a shareholder in C.J. International Hotels Pvt. Ltd. The other contention was that the said individual could not be considered even as a beneficial shareholder of the assessee. Both the contentions were accepted by the CIT (A) and the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... National Travel Service, (2012) 347 ITR 305 (Del) and CIT Vs. Ankitech (P) Ltd. (2012) 340 ITR 14 to say that the requirement of Section 2 (22) (e) is fulfilled only if both the pre-conditions are met with. 6. It is evident from the above discussion that the assessee was sought to be proceeded against Section 201 as one in default, after the period of four years. This Court is conscious that the text of the provision nowhere limits the exercise of powers. Equally, there are several provisions of enactment, i.e., Sections 143 (2), 147, 148 and 263, and even through introduction of specific provisions in Section 153 of the Act, where the time limit is specifically prescribed. At the same time, this Court in NHK Japan (supra) was of the opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue s appeal that the question is left open, the mere circumstance that the Parliament did not spell out any time limit before it did eventually in 2009 - and subsequently in 2014 - would not lead to the sequitur that this Court s ruling in NHK Japan requires consideration. In that judgment, the Division Bench had given various reasons, including the application of the rationale in Bhatinda District (supra). In NHK Japan, the Court had noticed that the facts in Bhatinda District (supra) judgment concern exercise of jurisdiction by a statutory authority in the absence of specific period of limitation. The Court in Bhantida District (supra) held as follows: 17. It is trite that if no period of limitation has been prescribed, statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 10. An added reason why the submission of the Revenue is unacceptable is that had the Parliament indeed intended to overrule or set aside the reasoning in NHK Japan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 given the loan or advance is admittedly not a share holder/member of the payer company. Therefore, under no circumstances, it could be treated as shareholder/member receiving dividend. If the intention of the Legislature was to tax such loan or advance as deemed dividend at the hands of deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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