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TMI Blog2019 (12) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... passing that order in contravention of the provisions of S.250(6) of the Income Tax Act, 1961. 2. That on law, facts and circumstances of the case, Worthy CIT(A) has erred in confirming the action of Ld. AO of making addition of Rs. 26,926/- u / s 36(1)(iii) by disallowing proportionate interest in respect of interest free advance given for business purpose to M/ s Temptation Foods even when the owned interest free funds far exceeded the advance in question. 3. That on law, facts and circumstances of the case, Worthy CIT(A) has erred in confirming the action of Ld. AO of making an addition of Rs. 11,00,000/- u / s 2(22)(e) even when the appellant company is not a shareholder of Punjab Metallics Ltd. from the relevant amount was receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny is holding 72.26% of shares in the assessee company and also holding 45.39% of shares in M/s Punjab Metallic Pvt. Ltd. Also as per the Balance sheet of the company, M/S Punjab Metallic Pvt. Ltd has not declared any dividend during the year. Therefore, it can be concluded that the case of the assessee company falls within the objectives behind the section 2(22)(e) and therefore, the amount of loan Rs. 11,00,000/- received by the assessee company from M/S Punjab Metallic Pvt. Ltd is liable to be added to the income of the assessee as deemed dividend u/s 2(22)(e). 4.13 It is pertinent to mention here that this dividend income in the hands of the assessee company is not exempt u/s 10(34) of the I.T. Act, 1961, simply because only those di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as under: "Facts & Submissions on this Ground: 1. As regards the applicability of provisions of deemed dividend u/s 2(22)(e) of the Act in respect of amount received in assessee company from Punjab Metalics, It is submitted that the assessee company is not a shareholder of Punjab Metallics.Therefore, the advance in question cannot be held as taxable deemed dividend u/s 2(22)(e) of the Act in the hands of recipient company, who is not a shareholder of the payer company. For this proposition, we rely upon the following ratio of judgment in the following cases: 1. CIT vs. Sharman Woolen Mills Ltd.(2012) 204 Taxman 82 (P&H HC)... 2. CIT vs. Ankitech Pvt. Ltd.(2012) 340ITR 14 (Del. HC)... 3. CIT vs. G.T.Z. Securities Ltd. (2012) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and sustained the addition by observing in para 7.2.3 of the impugned order as under: 7.2.3 The facts of the present case are that the assessee company has received loan of Rs. 11,00,000/- during the year from a company i.e M/s Punjab Metallic Pvt. Ltd. in which public is not substantially interested. Sh. Sukhinder Singh Managing Director of the assessee company is holding 72.26% of shares in the assessee company and also holding 45.39% of shares in M/s Punjab Metallic Pvt. Ltd. Thus the clause of substantial interest is satisfied. Lending of money is not a substantial part of the business of the Company M/S Punjab Metallic Pvt. Ltd. The company M/S Punjab Metallic Pvt. Ltd is holding enough accumulated profits to cover the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012) 340 ITR 14 (Del.) 3. CIT vs. G.T.Z. Securities Ltd. (2012) 359 ITR 345 (J & K)... 4. CIT vs. Sarva Equity Pvt. Ltd. (2012) 225 Taxman 172 (Kar)... 5. CIT vs. Impact Containers Pvt. Ltd. (2014) 367 ITR 346 (Bom) 11. In his rival submissions the Ld. DR strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the observations made in para 7.2.3 of the said order. 12. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that M/s Punjab Metallic Pvt. Ltd. is not a share holder of the assessee company from whom the loan was received by the assessee. Therefore the amount of loan cannot be treated as a deem dividend u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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