TMI Blog2023 (11) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords too is that it was clearly pointed out that the assessee company is not a shareholder of GSEC Aviation Limited from whom the loan has been received.. From the annual accounts annexed to the petition, it is evident that a notice was given under Sec. 142 of the Act, to which the petitioner had responded showing that the shareholder of the companies were original owners and the shares holding not less than 10% of the voting power. Delhi High Court in the case of Ankitech [ 2011 (5) TMI 325 - DELHI HIGH COURT] had held that where loans and advances are given in the normal course of business and transaction in question benefits both, i.e. the payer and the payee companies, the provisions of Sec. 2(22)(e) cannot be invoked. It is well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 27.03.2021, the petitioner filed return and sought for reasons recorded for reopening by a letter dated 20.04.2021. Instead of providing reasons for reopening, a notice under Sec. 143(2) dated 06.05.2021 was issued. The petitioner replied vide letter dated 21.05.2021, filed objections on 25.08.2021, which were disposed of on 21.12.2021. 4. Mr. B.S. Soparkar, learned counsel appearing for the petitioner, would take us through the reasons recorded and submit as under:- 4.1 The reasons itself would indicate that the reopening of the assessment is based on scrutiny of the case records, balance-sheet, profit loss account and computation of income. 4.2 Mr. Soparkar, learned counsel, from the reasons recorded, would submit that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also raised at the time of original assessment. He therefore submitted that once the issue of loan was thoroughly examined in detail, and having formed the opinion, it was a clear case of change of opinion . Mr. Soparkar, learned counsel, would therefore submit that the notice under section 148 and the order rejecting the objections is bad in light of the decision in the case of CIT vs. Kelvinator of India Ltd reported in (2010) (320 ITR 561) as it was a case of change of opinion . 5. Mr. Varun Patel, learned Senior Standing Counsel appearing with Mr. Dev D. Patel, learned advocate for the revenue, would support the notice and the order disposing of the objections. Mr. Patel, would submit that there was basis of forming reason to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out by the learned counsel for the petitioner, it is a settled position of law that where loan has been given by the Company to concern, wherein, the shareholder of the payer Company holds at least 20% of share carrying voting power, the said loan can be considered as dividend under section 2(22)(e) of the Act and not the concern to whom the loan has been given. From the annual accounts annexed to the petition, it is evident that a notice was given under Sec. 142 of the Act, to which the petitioner had responded showing that the shareholder of the companies were original owners and the shares holding not less than 10% of the voting power. 6.2 Even in the case of Daisy Packers (supra), the Court had considered the question of deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther recorded finding that it was not a loan given by Amigo Brushes Pvt Ltd. to the assessee company and it was intercorporate deposits. However, we need not go into various questions raised by learned counsel for the parties as admittedly the assessee was not shareholder in the Amigo Brushes Pvt. Ltd. The Division Bench of this Court in Commissioner of Income Tax vs. Ankitach(P) Ltd. [(2012) 340 ITR 14]. The Delhi High Court has held that if the assessee company does not hold a share in other company from which it had received deposit then it cannot be treated to be a deemed dividend under Section 2(22)(e)of the Act. In view of this admitted position that assessee is not a shareholder in Amigo Brushes Pvt. Ltd. and therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng dividend, (iii) in a case where conditions stipulated in section 2(22)(e) treating loan and advance as deemed dividend are established, revenue can treat dividend income at hands of shareholders and tax them accordingly, and (iv) where loans and advances are given in normal course of business and transaction in question benefits both payer and payee companies, provisions of section 2(22)(e) cannot be invoked. 6.4 It is well settled in the case of Kelvinator of India (supra), that reason must have a link with the formation of the belief. 7. In view of the aforesaid, the notice dated 27.03.2021 issued under section 148 of the Income Tax Act, 1961, and the order disposing of the objections are hereby quashed and set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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