TMI Blog2017 (12) TMI 1655X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient of loan / advance, is now stands settled, in case of CIT, Delhi-II vs. Madhur Housing and Development Company [2017 (10) TMI 1279 - SUPREME COURT OF INDIA]. - Decided in favour of assessee. Disallowance on account of keyman issuance policy - assessee failed to produce any admissible evidence during the course of assessment proceedings - Held that:- The policy document was fully explanatory as “key man policy (APB -26). The policy holder was the assessee company while the life assured is that of Shri Hari Kant Samodhiya, its MD. The premium is allowed as business expenditure as per CBDT Circular No. 38/2016 dated 22nd November 2016. In view of the above, we observe that the findings of the ld. CIT(A) are in conformity with the facts of the case which are not controverted by ld. DR. The order of the CIT(A) is confirmed on this issue accordingly. - Decided against revenue - ITA Nos. 121 & 122/Agra/2017 - - - Dated:- 7-12-2017 - Shri A.D. Jain, Judicial Member And Shri Dr. Mitha Lal Meena, Accountant Member Appellant : Shri Waseem Arshad, Sr. DR Respondent : Shri Mahesh Agarwal, CA ORDER PER BENCH: These appeals by the Revenue are directed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The assessee explained before the AO that it was neither a registered nor a beneficial shareholder in its group concerns. Therefore, the provisions of section 2(22)(e) are not applicable. The AO was not satisfied with the reply of the assessee and the cases of CIT vs. Ankitech Pvt. Ltd and others , reported in 340 ITR 14; CIT vs.Hotel Hilltop , reported in 313 ITR 116 (Raj) and CIT vs. Universal Medicare Pvt. Ltd. reported in 324 ITR 263 (Mum). Since the Assessing Officer was being not satisfied with the contention of the assessee and relied on the judgment of ITAT, Delhi Bench in the case of NCK Sons Exports (P.) Ltd. vs. ITO , Delhi in 102 ITD 311 and held that it is the case of common shareholding between lending and receiving company, the provisions of deemed dividend u/s 2(22)(e) are attracted and accordingly made the additions in both the assessment years under appeal. 2.2 Aggrieved assessee filed appeal before ld. CIT(A) wherein the CIT(A) has deleted the whole addition in both the assessment year under appeal holding as under: - ITA No. 121/Agra/2017 (A.Y. 2011-12) 5.1.2. I have gone through, the averments of the appellant and perused the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors (Gwl.) Pvt. Ltd., M/s Royal Motors (Bhopal) Pvt. Ltd. and M/s Samadhiya Financial (P) Ltd. is hereby deleted and thus, these grounds of appeal are allowed. ITA No. 121/Agra/2017 (A.Y. 2012-13) 5.1.2. I have gone through, the averments of the appellant and perused the facts of the case and the observation of the AO in the impugned assessment order. The major argument on the issue of deemed dividend made by the AR of the appellant is that M/S Royal Motors (Gwl.) Pvt Ltd., M/S Royal Motors (Bhopal) Pvt Ltd. and M/s Samadhiya Financial Services (P) Ltd. are neither a beneficial nor a registered shareholder of the appellant company and thus as it is not a shareholder the question of deemed dividend does not arise. On this issue, J am in agreement with the appellant that M/S Royal Motors (Gwl.) Pvt Ltd., M/S Royal Motors (Bhopaf) Pvt Ltd. and M/s Samadhiya Financial Services (P) Ltd, are neither a beneficial nor registered shareholder of the appellant. As is apparent from the above arguments placed by the appellant and various case laws cited thereon, it seems to be a unanimity in decisions on the issue of contention and argument raised by the appellant. Various High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns (HUF) Vs. CIT, (Civil Appeal No. 12274 of 2016). On the basis of these cases, he vehemently argued that the loan/advance received by the assesses company from TAPL and VFARPL is fully covered by the provisions of section 2(22)(e) and the assessing officer was correct in treating the same as deemed dividend and assessing the same in the hands of the assessee company. 2.4 Per contra, the respondent Counsel for the assessee Shri Mahesh Agarwal supported the order of the CIT (Appeals). He contended that intention behind section 2(22)(e) was to curb the malpractices of closely held companies who do not distribute dividend but give loans / advances to their inter share hlolders and thereby avoid paying tax on dividend distribution. Since dividend could be given only to a registered shareholder, provisions of section 2(22)(e) could be attracted only in the hands of a registered shareholder. A non-shareholder cannot be deemed as shareholder for the purpose of section 2(22)(e). His main contention was that addition u/s 2(22)(e) can be made only in the hands of the registered and beneficial shareholder and since the assessee company does not hold any shares in the lender companies, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned judgment and order dated 11.05.2011 has relied upon a judgment of the same date by a Division Bench of the High Court of Delhi in ITA No. 462 of 2009. Having perused the judgment and having heard arguments, we are of the view that the judgment is a detailed judgment going into Section 2(22)(e) of the Income Tax Act which arises at the correct construction of the said Section. We do not wish to add anything to the judgment except to say that we agree therewith. These appeals are disposed of accordingly. 2.6.4 Following the decision of Hon ble Apex Court in Madhur Housing and Development Company (supra),we hold that the CIT(A) has passed well-reasoned orders in respect of both the assessment years under appeal which do not suffer any infirmities. Therefore, the orders of ld. CIT(A) on this issue are confirmed. Thus, the 1st ground of appeal is rejected. 3. The next issue is related to disallowance of ₹ 9,50,150/- by AO made on account of keyman issuance policy stating that assessee failed to produce any admissible evidence during the course of assessment proceedings. 3.1 The ld. CIT(A) deleted the addition considering the contention of the assessee that the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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