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TMI Blog2013 (11) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... referred by the Appellants came to be dismissed. 3. Briefly, the facts of the case are that the assessee, the Respondent herein, filed the return of income declaring a total income of Rs.9,88,598/-, which was made under Section 143(1) of the Income Tax Act, 1961. During the course of the search at the office of M/s. Goa Golf Club Pvt. Ltd., from the ledger extract, it was found that M/s. Goa Golf Club Pvt. Ltd., advanced loan to M/s. Brito Amusement Pvt.Ltd., It was further noted that Dr. William Britto and Mrs. Muriel Britto, are the share holders of M/s. Goa Golf Club Pvt. Ltd.,, holding 75% and 25% shareholding therein. It was further found that the said Dr. William Britto and Mrs. Muriel Britto and M/s. Goa Golf Club Pvt. Ltd., were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Appellate Tribunal, Panaji, which was disposed of by Order dated 01.10.2012. The Income Tax Appellate Tribunal allowed the Appeal of the Respondents by coming to the conclusion that in the Order passed under Section 253 for the assessment year 2003-2004 in the case of M/s. Goa Golf Club Pvt. Ltd., the amount paid to the assessee company of Rs.2,23,94,763/-, is treated as revenue expenditure. However, the ledger account in respect of payment received from M/s. Goa Golf Club Pvt. Ltd., it is clear that the payments made to the assessee company includes the payment against expenditure and also the loan and advances which have been admitted in the audited balance sheet. It is further the contention of the Appellant that the Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that as the material on record establishes that Dr. Britto has a substantial interest in the said Company the advance is to be continued to be deemed divident. Learned Counsel has taken us throuogh the Judgment of the Income Tax Appellate Tribunal and pointed out that the Tribunal has erroneously come to the conclusion that advances cannot be considered as deemed dividends in terms of Section 2(22)(e) of the Income Tax Act of 1961. 5. On the other hand, Shri Rivonkar, learned Counsel appearing for the Respondents, has supported the Order of the Appellate Tribunal. The learned Counsel has pointed out that the assessee does not hold any shares in M/s. Goa Golf Club Pvt. Ltd., and that Mr. William Britto and his wife Mrs. Muriel Britto, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder of M/s. Goa Golf Club Pvt. Ltd. In order to consider whether such amount can be held to be deemed dividend in the hands of a person other than a shareholder, it would be appropriate to examine the provisions of Section 2(22)(e) of the Income Tax Act, of 1961, as amended with effect from 01.04.1988 which reads as under : "(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 particip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also considered the Judgment of the Special Bench and found that it had taken the same view that deemed dividend cannot be assessed in the hands of a person who is not a shareholder of the Company. The learned Tribunal, as such, set aside the Order of the Commissioner of Income Tax and deleted the additions made by the Assessing Officer as deemed dividend in the hands of the assessee who is not the shareholder of M/s. Goa Golf Club Pvt. Ltd. 8. The findings arrived at by the Income Tax Appellate Tribunal that the Respondent is not assessee of M/s. Goa Golf Club Pvt. Ltd., has not been disputed by the Appeelants. In this context, it would be appropriate to note the observations of the Division Bench of this Court in the case of Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be taxed in the hands of the recipient of the dividend namely the shareholder. The effect of Section 2(22) is to provide an inclusive definition of the expression dividend. Clause (e) expands the nature of payments which can be classified as a dividend. Clause (e) of Section 2(22) includes a payment made by the company in which the public is not substantially interested by way of an advance or loan to a shareholder or to any concern to which such shareholder is a member or partner, subject to the fulfillment of the requirements which are spelt out in the provision. Similarly, a payment made by a company on behalf, of for the individual benefit, of any such shareholder is treated by Clause (e) to be included in the expression 'divid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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