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TMI Blog2013 (10) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of Delhi High Court in CIT Vs. Ankitech (P.) Limited, (2012) 340 ITR 14 (Delhi). 2. The accepted position is that the respondent assessee Bikaner Cuisine Pvt. Ltd. was not a shareholder of BIPS Systems Ltd. The latter company i.e. BIPS Systems Ltd. had granted unsecured loan of Rs.49,25,000/- to the respondent assessee. The Assessing Officer invoked provisions of Section 2(22)(e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted profits would not distribute such profit as dividend because if so distributed the dividend income would become taxable in the hands of the shareholders. Instead of distributing accumulated profits as dividend, companies distribute them as loan or advances to shareholders or to concern in which such shareholders have substantial interest or make any payment on behalf of or for the individual b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. We have to keep in mind that this legal provision relates to ''dividend''. Thus, by a deeming provision, it is the definition of dividend which is enlarged. Legal fiction does not extend to ''shareholder''. When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specified under section 2(22)(e) of the Act would also be treated as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in respect of shareholder as well, that has not happened. Most of the arguments of the learned counsel for the Revenue would stand answered, once we look into the matter from this perspective. 26. In a case like this, the recipient would be a shareholder by way of deeming provision. It is not correct on the part of the Revenue to argue that if this position is taken, then the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out above, it is not in dispute that the conditions stipulated in section 2(22)(e) of the Act treating the loan and advance as deemed dividend are established in these cases. Therefore, it would always be open to the Revenue to take corrective measure by treating this dividend income at the hands of the shareholders and tax them accordingly. As otherwise, it would amount to escapement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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