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The Assistant Commissioner of Income Tax, Company Circle VI (4) , Chennai Versus M/s Sphera Minerals Pvt. Ltd.

2015 (10) TMI 1438 - ITAT CHENNAI

Deemed dividend u/s 2(22)(e) - Held that:- It is not in dispute that the assessee-company is not a shareholder in M/s Trimex Industries Private Limited. Section 2(22)(e) of the Act clearly says that any payment made by a company by way of advance or loan to a shareholder or to the benefit of the shareholder, it has to be treated as deemed dividend under Section 2(22)(e) of the Act. Dividend has to be assessed only in the hands of the shareholders. If the payment was made on behalf of the shareho .....

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whose benefit the advance was made. Since the assessee-company is not a shareholder in M/s Trimex Industries Private Limited, this Tribunal is of the considered opinion that the provisions of Section 2(22)(e) of the Act is not applicable. - Decided in favour of assessee. - ITA No.2000/Mds/2013 - Dated:- 26-6-2015 - Shri N.R.S. Ganesan and Shri A. Mohan Alankamony, JJ. For the Petitioner : Sh. Joe Sebastian, CIT For the Respondent : Sh. B.S. Purushotham, CA ORDER PER N.R.S. GANESAN, JUDICIAL MEM .....

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eceived 6,42,25,343/- from its sister concern M/s Trimex Industries Private Limited. According to the Ld. D.R., both, the assessee-company as well as its sister concern M/s Trimex Industries Private Limited, have common shareholders and Directors. Therefore, according to the Ld. D.R., the provisions of Section 2(22)(e) of the Act is squarely applicable. Referring to the assessment order, the Ld. D.R. pointed out that the assessee-company entered into agreement with third parties and the sister c .....

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he receipt of advance of 6,42,25,343/- has to be considered as deemed dividend. Hence, the CIT(Appeals) is not justified in allowing the claim of the assessee. 3. On the contrary, Shri B.S. Purushotham, the Ld. representative for the assessee, submitted that the assessee company is not a shareholder in M/s Trimex Industries Private Limited. Therefore, according to the Ld. representative, there is no question of applying the provisions of Section 2(22)(e) of the Act in the hands of the assessee. .....

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