TMI Blog2013 (5) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... aka Industries Pvt. Ltd. was acceptable to them earlier and further more the interest paid has been allowed by the AO in the impugned assessment year as expenditure. It is not the case of the Revenue to give a name as deemed dividend to the interest income which has been earned by M/s.Pataka Industries Pv.t Ltd. on which tax has already paid for the impugned assessment year for the assessee. We have no hesitation in upholding the order of the ld. CIT(A) and dismiss the appeal filed by the Revenue. - ITA No.1803/Kol/2012 - - - Dated:- 16-5-2013 - Sri K.K. Gupta, AM Sri Mahavir Singh, JM For the Appellant Shri L.K.S.Dehiya, CIT For the Respondent Shri S.L.Kochar ORDER Per Shri K.K.Gupta, AM This appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the relevant period M/s. Pataka Industries (P)Ltd. was not a company in which public were substantially interested and has more accumulated profit in reserve and surplus than the amount given to the assessee i.e. M/s. East End Silk (P) Ltd. At the same time one of the shareholders of M/s.Pataka Industries (P)Ltd. Namely Mr.Abul Kalam was holding 24% shares in that company (more than 10%) and he also was holding 23.8% (i.e. more than 20%) in the loan recipient company i.e.M/s. East End Silk (P)Ltd. In the light of above fact, during assessment proceeding the A/R of the assessee was asked why this sum of ₹ 3,76,21,851/- should not be treated as deemed dividend as per the provisions of the section 2(22)(e) of the Income tax act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct are attracted and it is not the case of the assessee after having accepted that the facts are leading to the finding that it has to be taxed under the deeming provisions of section 2(22)(e) cannot be distinguished, in so far as, the appeal of the assessee for the earlier year was in its favour on the assumption of jurisdiction of CIT u/s 263. He quoted the observations of the AO which may kindly be considered in rendering support to the issue raised by the Revenue. The A/R s argument that the closing balance of loan is less than the opening balance is true but it is also true that the assessee has received fresh loan of ₹ 3,76,21,851/- during the relevant F.Y. The A/R s arguments is also not acceptable as because money lending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable under the provision of section 2(22)(e) of the act on identical facts, in so far as, the AO has categorically given a finding that the assessee had paid a sum of ₹ 1,73,53,519/- as interest and deducted tax at source amounting to ₹ 39,32,262/- on such payment to M/s.Pataka Industries Pvt. Ltd. The ld. CIT(A) rightly held that the facts cannot be misinterpreted in trying to consider the definition of deemed dividend as per the provision of section 2(22)(e) of the Act . When a common share holder was to be considered for holding the income based on a loan but not dividend. He pointed out that the ld. AO himself has given his finding and tried to relate to the same by holding that the loan amount should not have been paid fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of loan is being brought forward when it was to be considered the actual payment received in the impugned assessment year whether could be subject to taxation as deemed dividend u/s 2(22)(e) of the Act was for revisiting the definition of deemed dividend u/s 2(22)(e) of the Act is of no avail. The AO has not been able to establish the facts otherwise, in so far as, it was not the assessee who suddenly took action for receiving the amount as deemed dividend when the department has been accepted the loan amount much more payable by it to M/s.Pataka Industries Pvt. Ltd. was acceptable to them earlier and further more the interest paid has been allowed by the AO in the impugned assessment year as expenditure. The income on account of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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