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2015 (5) TMI 7

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..... ss than 10% of the voting power. It does not provide that any shareholder in the assessee-Company who had taken any loan or advance from another Company in which such shareholder is also a shareholder having substantial interest, Section 2(22)(e) of the act may be applicable. No error has been committed by the learned Tribunal in deleting the addition made by the Assessing Officer invoking Section 2(22)(e) of the Act. - Decided in favour of assessee. - Tax Appeal No. 253 of 2015 - - - Dated:- 16-4-2015 - M. R. Shah And S. H. Vora,JJ. For the Appellant : Mr Manish Bhatt, Adv. For the Respondent : Mrs Mauna M Bhatt, Adv. ORDER (Per : Honourable Mr. Justice M. R. Shah) 1.0 Feeling aggrieved and dissatisfied with the .....

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..... n perusal of the details subitted by the assessee, the Assessing Officer observed that the assessee-Company and M/s. Shree Ram Vessel Scrap Pvt. Ltd. had common shareholding pattern as below; Sr. No.Name of the shareholderNo. of shares % share in M/s. Shree Ram Vessel Scrap Pvt. Ltd. No. of shares % share in M/s. Shree Ram Vessel Scr 1Ranjanben Mukeshbhai Patel4,95,000 shares 44.2% 5,00,000 shares 2Mukeshbhai Balabhai Patel (AAPPP8456N)1,25,000 shares 11.16% 15,62,500 shares 52% 2.1 On perusal of the said chart, the Assessing Officer observed that Shri Mukeshbhai Balabhai Patel and Ms. Ranjanben M. Patel h .....

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..... he learned Tribunal relying upon the decision of the Bombay High Court in the case of CIT Vs. Impact Containers Pvt. Ltd and Ors. in ITA No.114/2012 and the decision of the Delhi High Court in the case of CIT Vs. Ankitech Pvt. Ltd. reported in 340 ITR 14 (Del.) allowed the said appeal and deleted the addition made by the Assessing Officer invoking Section 2(22)(e) of the Act. 2.4 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the revenue has preferred the present Tax Appeal with the aforesaid proposed substantial question of law. 3.0 We have heard Shri Manish Bhatt, learned Counsel appearing on behalf of the revenue at length. We have also considered and gone through the impugne .....

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..... f the Company giving the loan or advance. 25. 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 f .....

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..... ecipient to the Company, which has given the loan or advance. 27. Precisely, for this very reason, the Courts have held if the amounts advanced are for business transactions between the parties, such payment would not fall within the deeming dividend under Section 2(22)(e) of the Act. Considering the provisions of Section 2(22)(e) of the Act, we are in complete agreement with the view taken by the Delhi High Court. 4.0 Shri Bhatt, learned Counsel appearing on behalf of the revenue has as such tried to justify the decision of the Delhi Court in the case of Ankitech Pvt. Ltd. (Supra) and has vehemently submitted that the Delhi High Court has not considered the third category i.e. shareholder in the assessee-Company holding not less .....

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