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2015 (10) TMI 1467 - ITAT CHENNAI

2015 (10) TMI 1467 - ITAT CHENNAI - TMI - Deemed dividend u/s.2(22)(e) - CIT(A) deleted the addition - Held that:- Similar issue was considered by the Tribunal in assessee's own case [2013 (9) TMI 1051 - ITAT CHENNAI] wherein held that deemed dividend under s. 2(22)(e) of the I.T. Act, 1961 can be assessed only in the hands of a shareholder of the lender company and not in the hands of any other person. Here admittedly the assessee-company was not holding any shares in the lender company at all. .....

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22)(e) of the I.T. Act. 3. The facts of the case are that the assessee has received a loan of ₹ 29,69,000/- from M/s. Pugazh Chemical Plant and Equipment Pvt. Ltd. According to the Assessing Officer, the shareholding of the assessee company is a concern in which the shareholders of M/s. Pugazh Chemical Plant and Equipment Pvt. Ltd. have substantial interest, being so, the provisions of sec.2(22)(e) of the Act is applicable. However, the Commissioner of Income-tax(Appeals) observed that the .....

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l on record. We find that similar issue was considered by the Tribunal in assessee's own case in ITA No.818/Mds/2013 dated 6.9.2013 and decided the issue in favour of the assessee by observing as follows: 7. We have perused the orders and heard the rival submissions. No doubt, ld. CIT(Appeals) was justified in coming to a finding that assessee could not show the commercial nature of the transactions entered by it with the lender company, M/s Pugazh Chemical Plant & Equipments (P) Ltd. Ex .....

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(P) Ltd. as a dealer. Assessee has also not brought on record as to whether any similar deposits were received from other dealers for same purpose. The amount received by the assessee was ₹ 1,44,38,000/- from M/s Pugazh Chemical Plant & Equipments (P) Ltd., out of which, ₹ 76,68,000/- was repaid. Had it been deposit of trading nature, as reiterated by the assessee, there would not have been any repayment. But, at the same time, it is an admitted position that assessee-company as .....

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ld be assessed only in the hands of a person who was a shareholder of the lender company and not in the hands of a person other than a shareholder. It was held by the Tribunal at paras 39 and 40 of its order as under:- "39. In the decision of the Tribunal in the case of Nikko Technologies (I) (P) Ltd. (supra), reliance has been placed on Circular No.495 dated 22nd September, 1987 which states as follows:- "Further deemed dividend would be taxable in the hands of the concern, where all .....

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pany against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of subcl. (e) to the extent to which it is so set off." In the event of the payment of loan or advance by a company to a concern being treated as dividend and taxed in the hands of the concern then the benefit of set off cannot be allowed to the concern, because the concern can never receive dividend from the company which is only paid to the shareholder, who has substantial inte .....

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