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TMI Blog2018 (1) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... Act') 2. Brief facts of the case are that the return of income was filed declaring income of Rs. 1,41,66,720/- on 30.07.2010. Subsequently, information was received by the Assessing Officer wherein it was informed that during the course of assessment proceedings in the case of M/s Beehive Systems Private Limited for assessment year 2010-11, it was noticed that this company had advanced Rs. 10 lakh to its Director Shri Tushar Kothari (assessee) who was holding 46% of the shares in the said company. Based on this information, notice u/s 148 of the Act was issued after duly recording the reasons. During the course of re-assessment proceedings, the assessee submitted that he was not covered by the provisions of section 2(22)(e) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. erred in treating the amount of Rs. 10,00,000/- given to assessee by M/s. Beehieve Technologies (P) Ltd. as deemed dividend in the hand of assessee ignoring the fact that assessee was not the shareholder of M/s. Beehieve Technologies (P) Ltd. 7) THAT in the facts and circumstances of the case, the Learned CIT(A) had erred in ignoring the fact that no payment was made by M/s. Beehive Systems (P) Ltd. Company in which assessee is a Shareholder, to assessee; the payment was made only by M/s. Beehieve Technologies (P) Ltd. to assessee. 8) THAT the appellant craves leave to add, alter, amend or drop any of the above grounds at the time of hearing." 3. The Ld. AR submitted that the impugned amount has been treated as income u/s 2(22)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Technologies Private Limited is undisputed. It is also undisputed that the assessee is not a shareholder in M/s Beehive Technologies Private Limited. The Assessing Officer has also noted that on perusal of bank statement, it was found that Shri Tushar Kothari i.e. the assessee had received payment of Rs. 10 lakh in his HDFC account from M/s Beehive Technologies Private Limited. Thus, it is very much evident that the impugned amount has not been given by M/s Beehive Systems Private Limited in which the assessee is a shareholder. Hon'ble Delhi High Court in the case of Commissioner of Income Tax(A) vs Ankitech (P) Ltd. (supra) has held in Para 24 to 30 as under:- "24. The intention behind enacting provisions of Section 2(22)(e) is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend which is enlarged. Legal f iction does not extend to "shareholder". When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specif ied under Section 2(22)(e) of the Act would also be treated as dividend. The f iction has to stop here and is not to be extended further for broadening the concept of shareholders by way of legal f iction. It is a common case that any company is supposed to distribute the prof its in the form of dividend to its shareholders/members and such dividend cannot be given to nonmembers. The second category specif ied under Section 2(22)(e) of the Act, viz., a concern (like the assessee herein), which is given the loan or advance is admittedly not a shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that the conditions stipulated in Section 2(22)(e) of the Act treating the loan and advance as deemed dividend are establ ished in these cases. Therefore, it would always be open to the Revenue to take corrective measure by treating this dividend income at the hands of the shareholders and tax them accordingly. As otherwise, it would amount to escapement of income at the hands of those shareholders. 4. The appeal has no merit and is accordingly dismissed." 6. Thus, guided by the ratio of decision of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs Ankitech (P) Ltd (supra)., we find that the addition has no feet to stand and we set aside the order of the Ld. Commissioner of Income Tax(A) and direct the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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