TMI Blog2015 (6) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... tion nothing can be read in between the unambiguous language of the provision of section 2(22)(e). Further it is not the case of more than one share holder complying the conditions of having not less than 10% voting power in the lending company and also having substantial interest in the borrowing company. From perusal of share holding pattern at page 141 of the paper book, we find that only the assessee is holding 15% of the voting power in the lending company and 45% of voting power in the borrowing company and no other person/share holder is common other than the assessee. Therefore, there is no question of any proportionate addition when the assessee is the only share holder who fulfills the condition prescribed u/s 2(22)(e). The decision relied upon by the Ld. Authorized Representative in the case of Shri Subrata Banik Vs. CIT (2014 (1) TMI 928 - ITAT KOLKATA ) is not applicable to the facts of the present case rather the said decision is on the question of change of opinion while exercising the jurisdiction/revisional powers u/s 263 of the Income Tax Act. - Decided in favour of revenue. - ITA NO.25/Mum/2011 - - - Dated:- 14-11-2014 - SHRI VIJAY PAL RAO AND SHRI B.R. BA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question received by Oryx Fisheries Pvt. Ltd., was treated as deemed dividend in the hands of the assessee as he is having substantial share holding in both the companies. Since the loan and advances in question was also treated as deemed dividend in the hands of the borrowed company and assessed as substantive basis, the said addition has been made in the hands of the assessee on protective basis. 3. On appeal, the CIT(A) deleted the addition made u/s 2(22)(e) on the ground that the loan has not been received by the assessee but by M/s Oryx Fisheries Pvt. Ltd., the addition made on substantive basis in the hands of M/s Oryx Fisheries Pvt. Ltd., has been confirmed by the CIT(A). 4. Before us, the Ld DR has pointed out that the addition made u/s 2(22)(e) in the case of M/s Oryx Fisheries Pvt. Ltd., has been deleted by this Tribunal by following the decision of Hon ble Jurisdictional High Court in the case of Bhaumik Colour Pvt. Ltd., 313 ITR 146, wherein it was held that no addition can be made u/s 2(22)(e) other than the beneficiary share holder of the company. The Ld. DR submitted that the assessee is having more than 10% share holding in the lending company and also havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipate in profits) holding not less than ten per cent of the voting power, or to any concern, in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for- the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits but dividend does not include-- (i) a distribution made in accordance with sub- clause (c) or sub- clause (d) in respect of any share issued for full cash consideration, where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets; (ia) 1 a distribution made in accordance with sub- clause (c) or sub- clause (d) in so far as such distribution is attributable to the capitalised profits of the company representing bonus shares allotted to its equity shareholders after the 31st day of March, 1964 , 2 and before the 1st day of April, 1965 ];] (ii) any advance or loan made to a shareholder 3 or the said concern] by a company in the ordinary course of its business, where the lending of money is a subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es any such payment by such company to any concern in which such share holder is member or partner and in which he has the substantial interest. The third scenario under which any payment by such company is on behalf, or for the individual benefit of any such shareholder. Therefore, there are three possible situation under which the payment by a company as specified u/s 2(22)(e) will be treated as dividend. Firstly by way of loan or advances to share holder who is having not less than 10% of the voting powers in the said company. Secondly, the advances or loan given by the said company to a concern in which a share holder having not less than 10% of the voting rights in the lending company is a member or a partner and in which he has a substantial interest. In the case in hand the advance/loan has been given by M/s MLPL to M/s Oryx Fisheries Pvt. Ltd which is not a share holder of the lender company but the assessee is holding 15% of the voting power in the lending company and 45% of the shares in the borrowing company. Therefore, the payment in question being loan has to be examined in the context of second situation, wherein, the payment is given to any concern in which the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that there was a defalcation seems to have been accepted since this amount was allowed as a business loss during the course of the assessment year 2006-07. Consequently, according to the Tribunal the first requirement of there being an advance or loan was not fulfilled. In our view, the finding that there was no advance or loan is a pure finding of fact which does not give rise to any substantial question of law. However, even on the second aspect which has weighed with the Tribunal, we are of the view that the construction which has been placed on the provisions of section 2(22) (e) is correct. Section 2(22)(e) defines the ambit of the expression dividend . All payments by way of dividend have to be taxed in the hands of the recipient of the dividend namely the shareholder. The effect of section 2(22) is to provide an inclusive definition of the expression dividend . Clause (e) expands the nature of payments which can be classified as a dividend. Clause (e) of section 2(22) includes a payment made by the company in which company in which the public are not substantially interested by way of an advance or loan to a shareholder or to any concern of which such shareholder is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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