TMI Blog2008 (3) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee-firm whose partners hold 100% share in M/s. Hilltop Palace Hotels (P.) Ltd., had received the payment of ₹ 10 lakhs by way of security - the fact that substantial portion of this ₹ 10 lakhs of amount, say more than ₹ 9 lakhs, have been advanced only during January 7, 1991, to March 22, 1991, it is difficult to accept it as a security - IT Appeal No. 25 of 2005 - - - Dated:- 17-3-2008 - N. P. GUPTA and DEO NARAYAN THANVI JJ. K. K. Bissa for the appellant. Anjay Kothari for the respondent. JUDGMENT This appeal by the Revenue against the judgment of the Tribunal dated September 16, 2004, was admitted, vide order dated March 29, 2005, by framing the following substantial questions of law: "1. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company to the firm. It is also not in dispute that the shareholding pattern of the company is as under: "Shareholding pattern of M/s. Hilltop Palace Hotels (P.) Ltd. (1) Shri Roop Kumar Khurana 23.33% (2) Smt. Saroj Khurana 4.67% (3) Vikas Khurana 22% (4) Deshbandhu Khurana 25% (5) Shri Rajiv Khurana 25%" 3. Likewise, it is also not in dispute that at the relevant time constitution of the firm was as under: "Constitution of M/s Hotel Hilltop: 1. Shri Roop Kumar Khurana 45% 2. Shri Deshbandhu Khurana 55%" 4. The Assessing Officer, in these circumstances, found th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stions framed. 7. Long drawn arguments were made on either side. However, before proceeding further, we may gainfully quote the provisions of section 2(22)(e), which read as under: "2.(22)(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent. of the voting power, or to any concern in which such shareholder is a member or a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t should be made on behalf of or for the individual benefit of any such shareholder, obviously, the provision is intended to attract the liability of tax on the person, on whose behalf or for whose individual benefit the amount is paid by the company whether to the shareholder or to the concerned firm. In which event, it would fall within the expression "deemed dividend". Obviously, income from dividend is taxable as income from other source under section 56 of the Act and in the very nature of things the income has to be of the person earning the income. The assessee in the present case is not shown to be one of the persons being shareholder. Of course, the two individuals being Roop Kumar and Devendra Kumar are the common persons holding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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