TMI Blog2023 (1) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... clear whether deemed dividend should be taxed in the hands of Assessee s partner or in the hands of the Assessee. Since the plain reading of Section 2(22)(e) of the Act makes it clear that the deemed dividend is to be taxed in the hands of individual shareholder and not an entity which does not hold shares in OSL, the question of remanding the matter to the CIT(A) did not arise. The question framed by this Court is answered in favour of the Assessee and against the Department by holding that the deemed dividend should be taxed in the hands of Mr. Mahimananda Mishra, the individual Director of OSL and not in the hands of the Appellant-Assessee, the Firm. - DR. S. MURALIDHAR CHIEF JUSTICE AND M.S. RAMAN, JUDGE For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Firm i.e. M/s. Mahimananda Mishra. Of this, Rs.1,74,04,185/- was received as cash. The Assessing Officer (AO) proceeded to treat the above unsecured loan as a deemed dividend in the hands of the Firm and added it to the income of the Firm invoking Section 2(22)(e) of the Income Tax Act, 1961 (Act). 7. When the Assessee took the matter in appeal to the Commissioner of Income Tax (Appeals), Cuttack [CIT(A)], it was noted by the CIT(A) in the order dated 16th November, 2015 allowing the appeal that in terms of Section 2(22)(e) of the Act, the amount could be treated as deemed dividend only in the hands of shareholder since he is the beneficial owner of the shares in OSL. 8. Section 2(22)(e) of the Act reads as under: 2. (22). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake remedial measures accordingly. 10. The ITAT in the impugned order has, in the considered view of this Court, needlessly remanded the matter to the CIT (A) on the ground that it was not clear whether deemed dividend should be taxed in the hands of Assessee s partner or in the hands of the Assessee. Since the plain reading of Section 2(22)(e) of the Act makes it clear that the deemed dividend is to be taxed in the hands of individual shareholder and not an entity which does not hold shares in OSL, the question of remanding the matter to the CIT(A) did not arise. 11. For the aforementioned reasons, the question framed by this Court is answered in favour of the Assessee and against the Department by holding that the deemed dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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