TMI Blog2017 (10) TMI 1623X X X X Extracts X X X X X X X X Extracts X X X X ..... lt on the disputed issue and also the provisions of law applicable and directed the AO to treat the dividend in the hands of partner Shri Mahimananda Mishra. On the query from the bench whether this deemed dividend was taxed in the hands of Shri Mahimananda Mishra, the ld. AR and DR could not substantiate with any convincing answer, which is proved that the transaction comes within the purview of deemed dividend and the question now before us to be taxable in the hands of firm or in the hands of partner. Also it is not clear as to whether it is taxed in the hands of assessee s partner and the ld. AR could not substantiate the fact that the shares invested by the director are not out of funds of partnership firm and CIT(A) mistook the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of hearing. 2. Brief facts of the case are that the assessee is a partnership firm engaged in the business of labour contract in the brand name of M/s Mahimananda Mishra and filed the return of income for the assessment year 2011-2012 on 10.08.2012 with total income of Rs.4,92,142/- and the return of income was processed u/s.143(1) of the Act and subsequently the case was selected for scrutiny and notice u/s.143(2) 142(1) along with questionnaire was issued. In compliance to the same, ld. AR of the assessee appeared from time to time and produced the relevant documents as required by the AO. 3. The AO on perusal of the financial statements found that the assessee firm has availed loan from M/s Orissa Stevedores Ltd. Rs.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a share holder in M/s Orissa Stevedores Limited, the amount disbursed to the assessee firm by the said company should not be treated as deemed dividend in the hands of the assessee firm, but the same should be treated as deemed dividend u/s.2(22)(e) of the Act in the hands of Shri Mahimananda Mishra who is a director in the company M/s Orissa Stevedores Limited having substantial interest and also holds major share as partner with substantial interest in the assessee firm and partly allowed the appeal of the assessee. 5. Aggrieved by the order of CIT(A), the revenue has filed an appeal before the Tribunal. 6. Before us, ld. DR argued that the CIT(A) erred in deleting the addition from the hands of assessee firm and directed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of such HUF. 16. In the instant case, the payment in question is made to the assessee which is a HUF. Shares are held by Shri. Gopal Kumar Sanei, who is Karta of this HUF. The said Karta is, undoubtedly, the member of HUF. He also has substantial interest in the assessee/HUF, being its Karta. It was not disputed that he was entitled to not less than 20% of the income of HUF. In view of the aforesaid position, provisions of Section 2(22)(e) of the Act get attracted and it is not even necessary to determine as to whether HUF can, in law, be beneficial shareholder or registered shareholder in a Company. Similarly, the ld. AR submitted that provisions of deemed dividend u/s.2(22)(e) of the Act shall apply to the registered shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up for consideration in the instant matter. 6.Accordingly, in so far as Questions Nos.3 and 4 are concerned, we find that no interference is called for with the view taken by the Tribunal via the impugned order. In these circumstances, the Revenue's appeal, i.e. T.C. (A) No.105 of 2017, pertaining to AY 2007-08, with regard to the said questions, is dismissed. We considering the apparent facts, material on record and judicial decisions, are of the substantive view that the provisions of Section 2(22)(e) of the Act are applicable in respect of transaction of unsecured loans and further ld. AR could not substantiate the reasons of obtaining unsecured loan by the assessee firm from the M/s Orissa Stevedores Limited. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend u/s.2(22)(e) of the Act in the hands of the individual director, Shri Mahimananda Mishra who is a director in the paying company M/s Orissa Stevedores Limited with substantial interest and is a holder of major share as a partner with substantial interest in the assessee firm. Further, it is not clear as to whether it is taxed in the hands of assessee s partner and the ld. AR could not substantiate the fact that the shares invested by the director are not out of funds of partnership firm and CIT(A) mistook the fact of taxing in the hands of director, therefore, in the interest of substantial justice, we remit the disputed issue to the file of CIT(A) to verify the fact and decide the issue after providing opportunity of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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