TMI Blog2021 (2) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... The appeal filed by revenue and cross objection filed by assessee for A.Y. 2008-09, arise from order of the CIT(A)-1, Ahmedabad-1 dated 29-06- 2016, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short the Act . 2. The solitary issue in the appeal of the revenue is directed against the decision of ld. CIT(A) in deleting the addition of ₹ 3,30,50,859/- made on account of deemed dividend u/s. 2(22)(e) of the Act. 3. The fact in brief is that return of income declaring total income of ₹ 1,53,410/- was filed on 29th Sep, 2008. The return of income was processed u/s. 143(1) of the Act and subsequently the case was reopened by issuing of notice u/s. 148 of the Act on 27th March, 2015. During the course of reopening of assessment, the Assessing Officer noticed that JP Escon Ltd. Company had provided loan of ₹ 6,83,52,624/- to the assessee company. There were common shareholders in both the companies namely Shri Pravin Kotak and Shri Amit Gupta with following share holding ratio in both the companies:- Sr. No. Name of the Share holder Dhawani Infrastructure Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the company makes payment, or on its behalf payment is made for individual benefit of any such shareholder to the extent to which the company in either case possesses accumulated profits. 2.7. In the captioned case, the payment has been made by J P Escon Limited, to the appellant company but the appellant company is not a registered share holder of J P Escon Limited. From the facts, it is seen that appellant is not a shareholder in the lender company however, the assessing officer treated the same as deemed dividend in hands of appellant company. It is also submitted that the transaction was not in the nature of advance or loan and it was simply inter corporate deposits (ICD). The appellant had provided for the interest expenses on the said ICD borrowed and have deducted the necessary TDS and have also paid back the said ICD along with interest. Appellant's main objection was that in view of the various decisions including special bench of ITAT Mumbai in the case of Asstt. CIT v/s. Bhaumik Colour (P.) Ltd.[2009] 118 ITD 1 (Mum.) (SB) and jurisdictional High Court decision in the case of CIT v/s Daisy Packers (P.) Ltd [2013] 40 taxmdnn.com 480 (Gujarat), 3. Bombay High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities. The ld. counsel has contended that for the applicability of section 2(22)(2) of the Act, it is required that the assessee must be a shareholder in the company from whom the loan or advance has been taken. The ld. counsel has supported the order of ld. CIT(A). On the other hand, the ld. Departmental Representative has supported the order of Assessing Officer. 6. Heard both the sides and perused the material on the record. During the year under consideration, the J. P. Escon Ltd. has given inter corporate deposit to the assesse company. The case of the assessee was reopened for the reasons that J.P. Escon Ltd. had provided loan of ₹ 68,35,2624/- to the assessee company which attracts the provision of section 2(22)(e) of the Act. At the assessment stage, the assessee has categorically explained after referring various judicial pronouncements that the amount received from J.P. Escon Ltd. cannot be taxed as deemed dividend in its hand as it was not the registered share holder of J.P. Escon Ltd. The Assessing Officer after considering the substantial common share holding of Shri Pravin Kotak and Shri Amit Gupta, treated the amount of ₹ 3,30,50,859/- upt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT vs. Leela Ship Recycling Pvt. Ltd. supra the Co-ordinate Bench of the ITAT has adjudicated the identical issue on same facts as under:- 4. We have heard the rival contentions, perused the material on record and duly considered facts of the case and the applicable legal position. 5. Learned representatives fairly agree that the issue in appeal is now covered by Hon'ble jurisdictional High Court's judgment in the case of CIT Vs Mahavir Inductomelt Pvt Ltd (TA No. 890 of 2011; judgment dated 13th January 2017) wherein Their Lordships have extensively reproduced from Hon'ble Delhi High Court's judgment in the case of Anitech Pvt Ltd (supra), and concurred with the same. Thus, in a case in which an amount is received from a person other than the shareholder, as is the admitted position in this case, the provisions of Section 2(22)(e) cannot indeed be invoked. The CIT(A) was thus justified in granting the impugned relief in respect of the addition under section 2(22)(e). We, therefore, approve the conclusion arrived at by the learned CIT(A) in this regard, and decline to interfere in the matter on that count. We have also through the decision of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan was given, it cannot be said that the learned Tribunal has c ommitted any error in deleting the addition made by the Assessing Officer on deemed dividend. In view of the findings as supra Hon ble Jurisdictional High Court wherein it is held that for the applicability of section 2(22)(e), it is required that the assessee company must be a shareholder in the company from whom the loan or advance has been taken and it does not provide that any shareholder in the assessee company who had taken any loan or advance from another company in which such shareholder is also a shareholder having substantial interest. Since the facts of the case of the assessee are squarely covered by the aforesaid decisions of Hon ble High Court and Co-ordinate Bench of the ITAT, the impugned addition is deleted. Accordingly, this ground of the assesse is allowed. After taking into consideration, the aforesaid facts and judicial findings as referred above, it is undisputed fact that assessee company was not a registered share holder in J.P. Escon Ltd. from whom it has obtained loan during the year under consideration. Therefore, the addition made by the Assessing Officer as deemed dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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