TMI Blog2016 (8) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, AM : This is an appeal filed by the assessee directed against the order of the CIT(A), Hubli, dated 31/07/2015 for the assessment year 2011-12. 2. The assessee raised the following grounds of appeal: 1. The order passed by the learned C I T (A) is against the facts of the case, erroneous, prejudiced and against the provisions of Section 2(22)(e) of the Income Tax Act, 1961 2. The CIT(A) order is against the facts of the case as mentioned in the Statement of Facts which has not taken into consideration the nature of relation between Shejawadkar Builders Pvt. Ltd., (Holding Company) and Suresh Enterprises Pvt. Limited (Subsidiary Company), the nature of the accounts and the Carry Forward Loss position of SHEJAWADKAR BUILDERS PVT. LTD. 3. The order passed by the learned C I T (A) is erroneous and prejudiced since the submissions made regarding the carry forward loss and re-casted Balance Sheets are not taken into consideration to ascertain the fact that, the SBPL is having the accumulated loss position. 4. As mentioned in page 2, of the Assessment Order; Bare reading of the sections 2(22)(e) implies the following Any payment made by a private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) Difference between depreciation calculated at the rate given under the IT. Act and rate adopted in books. d) Balance in charge e) Capital gains not chargeable to tax The Honourable C I T (A) has not taken into consideration the meaning of Dividend as explained above and hence the order passed by C I T (A) is against the provisions of Section 2(22)(e) We pray Your Honour to delete the additions made on account of Deemed Dividend u/s 2(22)(e) in the interest of the natural justice. PRAYER FOR STAY The appellant prays the Honourable Appellate Tribunal to stay the proceedings of collection of taxes till our case is heard and disposed off by the Honourable Appellate Tribunal in view of the financial hardship faced by the Company. PRAYER The Appellant prays the Honourable Appellate Tribunal to permit the submission of additional Grounds of Appeal and facts at the time of hearing. Your Honour is earnestly requested to delete the additions made by the Learned C I T (A) in the interest of the provisions of the Income Tax Act, 1961 and natural justice. 3. Briefly facts of the case are the assessee is a company duly incorporated unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts and circumstances, amount received by the assesseecompany from Shejwadkar Builders Pvt. Ltd. and Shejwadkar Construction Co. Ltd. constitutes deemed dividend in the hands of the assessee-company. There is no dispute about receipt of money from Shejwadkar Builders Pvt.Ltd. and Shejwadkar Construction Co. Ltd. The provisions of sec.2(22)(e) are reproduced below: 2(22) dividend includes- (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) 5 made after the 31st day of May, 1987 , by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition took place]. Explanation 3.- For the purposes of this clause,- (a) concern means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company; (b) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern; From the above provisions, it is clear that for invoking the provisions of section 2(22)(e), sine qua non condition is recipient of loan should be a shareholder in the companies from which loans/advances are received. From the assessment order, the share holding of the three companies was mentioned which is extracted below: From the above details, it is clear that the assesseecompany i.e. Suresh Enterprises, Pvt. Ltd., is not a shareholder in Shejawadkar Builders Pvt. Ltd. Therefore, the essential condition for invoking provisions of sec.2(22)(e) is not fulfilled in this case. 7. The co-ordinate bench Delhi in ITA No.6302/Del/2013 dated 10/06/2015 in the case of IAG Promoters and Developers Pvt. Ltd., Vs. ACIT , to which one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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