2013 (11) TMI 1771 - AT - Income Tax

Summary

Issues Involved: Appeal against the order of CIT (A) regarding addition of deemed dividend u/s 2(22)(e) for assessment year 2009-2010.

Summary:
1. Background: The Revenue filed an appeal against the CIT (A)'s decision to delete the addition of deemed dividend of Rs. 76,00,000 u/s 2(22)(e) for the assessment year 2009-2010.

2. Assessment and Addition: The assessee, engaged in import and export of Bio-Products, declared total income of Rs. 26,05,248. The AO assessed income at Rs. 102,05,248 and added Rs. 76,00,000 as deemed dividend u/s 2(22)(e).

3. First Appellate Authority: CIT (A) allowed the appeal and deleted the addition, citing precedents like ACIT vs. Bhaumik Colour (P) Ltd. and CIT vs. Universal Medicare P. Ltd. Revenue appealed to the Tribunal.

4. Tribunal Proceedings: The Revenue heavily relied on the AO's order, while the assessee's counsel referred to the CIT (A)'s decision and a previous Tribunal order in favor of the assessee.

5. Tribunal Decision: The Tribunal noted that the assessee was a shareholder of the lender companies, and as per legal interpretation, provisions of section 2(22)(e) apply to shareholders, not beneficial shareholders like the assessee. The Tribunal found no distinction from the Special Bench decision and upheld the CIT (A)'s order, dismissing the Revenue's appeal.

6. Conclusion: The Tribunal confirmed the CIT (A)'s decision to delete the addition of deemed dividend, as the legal position supported the assessee's case. The appeal of the Revenue was dismissed on 4th November 2013.