TMI Blog2010 (3) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961. At the time of hearing before us, it is submitted by the learned counsel that the AO made the addition of ₹ 50,000/- on the ground that the assessee-company has taken loan of ₹ 50,000/- from Jewel Brushes Pvt. Ltd. ( JBPL for short); that Subir and Shrud Goradia are holding 20% share in JBPL and that the assessee company is not shareholder of JBPL . He therefore submitted that once the assessee is not a shareholder of JBPL , the deemed dividend, if any, cannot be assessed in the hands of the assessee. In support of the contentions, he relied upon the decision of the Special Bench of the ITAT in the case of Bhaumik Colours P.Ltd., 313 ITR 146 AT (Mum)(SB). He further pointed that the accumulated profit shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bhaumik Colours P. Ltd., (supra) held as under: That deemed dividend could be assessed only in the hands of the person, who is a shareholder of the lender company and not in the hands of a person other than a shareholder, i.e. the concern] From the above, it is evident that the Special Bench held that the deemed dividend could be assessed only in the hands of the person who is shareholder of the lending company. In the case before us, admittedly, the assessee-company is not the shareholder of the lender-company. Therefore, as per the above decision of the Special Bench of the ITAT, there would not be any addition in the hands of the assessee-company which is not the shareholder of the lender company. The learned DR vehemently contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the accumulated profit, then the entirety of the loan to the extent of the company has accumulated profit would be treated as dividend in the hands of the shareholder. Thus, none of the above decisions would support the contention of the Revenue that the deemed dividend under Section 2(22)(e) can be assessed in the hands of a person other than the shareholder. In view of the above, we, respectfully following the decision of the Special Bench of ITAT in the case of Bhaumik Colours Pvt. Ltd. (supra), hold that the assesseecompany not being the shareholder of the lending company, the amount borrowed by it cannot be assessed as the deemed dividend under Section 2(22)(e) of the Act in the hands of the assessee-company. Accordingly, we de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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