TMI Blog2011 (11) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of manufacturing of modified sugar boiled candy and modified toffee. In its return the assessee showed loss of ₹ 1,92,07,679/-. The case was selected for scrutiny by issuing notice u/s 143(2) of the Act and assessment u/s 143(3) of the Act was completed on 31.12.2008 determining total income at nil after allowing set off of brought forward unabsorbed depreciation of earlier years. The Assessing Officer noted that the assessee company had taken unsecured loans from the following sister concerns :- i. Makson Health care P. Ltd. ₹ 66,87,858/- ii. Makson Ind.P. Ltd. ₹ 41.09,329 iii. Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the order of the Assessing Officer whereas the learned counsel for the assessee relied upon the order of the learned Commissioner of Income tax (Appeals). 2. We have considered the rival contentions, carefully gone through the orders of the authorities below. Special Bench of the tri in the case of Bhaumik Colour Lab (supra) after considering the issue at length held that the provisions of Section 2(22)(e) of the Act can be attracted only when the assessee company is registered and beneficial owner of shares in the lender company. Furthermore, in the case of CIT Vs. Indian Technocraft Ltd., ITA NO. 352 of 2011 order dated 11th May, 2011 the Hon ble Delhi High Court by considering the decisions of C.P.Sarathy Mudaliar 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on who is the beneficial owner of shares . This expression used in Section 2 (22)(e) , both in the 1961 Act and in the amended provisions w.e.f. 1st April ,1968 only qualifies the word shareholder and does not in any way alter the position that the shareholder has to be a registered shareholder. These provisions also do not substitute the aforesaid requirement to a requirement of merely holding a beneficial interest in the shares without being a registered holder of shares. The expression being is a present participle. A participle is a word which is partly a verb and partly an adjective. In Section 2(22) (e), the present participle being is used to described the noun shareholder like an adjective. The expression being a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rganics (P) Ltd. 164 Taxman 169 (Ahd.) Thus even with the change in the definition under the current provisions of the Income-tax Act, 1961, wherein the definition of deemed dividend is applicable to loan or advance given to a registered and a beneficial shareholder, the aforementioned decision of the Supreme Court in the case of Rameshwarlal Sanwarmal (Supra) is not applicable to the facts of assessee s case. 7. In view of the above judicial pronouncements, we hold that for bringing an assessee within the purview of Section 2(22)(e), both the conditions regarding assessee being registered as well as beneficial shareholder of the lender company are required to be established. In case any of the conditions is not satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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