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TMI Blog2014 (2) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... clared a loss of Rs. 1,60,28,165 and a return was filed in this regard on November 27, 2003, accompanied with copies of balance-sheet, trading account, profit and loss account and other statements including the report of the auditors in Form No. 3CD. The return was processed under section 143(1) of the Income-tax Act. During the assessment proceedings under section 143(3) in the case of M/s. G. I. Power Corporation Ltd., 77 Kali Jani, Jammu, for the assessment year 2007-08 (a sister concern of the assessee-company), it revealed that unsecured loan received as intercorporate deposits from M/s. Joint Investment Ltd. (another sister concern of the assessee-company) is covered under section 2(22)(e) of the Income-tax Act, as such, assessed as deemed dividend. It also gathered during the assessment proceedings that the assessee also belongs to the same group of companies and fulfils the conditions of section 2(22)(e) of the Income-tax Act for the intercorporate deposit received by it. The assessee-company has taken loan of Rs. 9,66,39,961 from the aforesaid M/s. G. I. Power Corporation Ltd., during the year under consideration. Since there is common shareholder, i.e., Sh. Anil Nanda hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceeding. However, the Department did not accept the plea(s) of the assessee and treated an amount of Rs. 8,61,75,000 as deemed dividend under section 2(22)(e) of the Income-tax Act in the hands of the assessee and after computing the income of the assessee, made a gross tax demand of Rs. 5,91,63,858. Penalty proceedings under section 271(1)(c) of the Income-tax Act were also initiated. Aggrieved of the said order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), Jammu, which was allowed on May 7, 2012, which constrained the Revenue to file an appeal before the learned Income-tax Appellate Tribunal, which now stands dismissed, vide order dated October 17, 2012, solely on the ground that the issue in dispute has already been decided by the Income-tax Appellate Tribunal in favour of the assessee in the assessee's own case for the assessment year 2003-04 following the order of the High Court of Punjab and Haryana in Sharman's case (supra). Hence, I. T. A. No. 16 of 2013. While assailing the impugned orders of the Income-tax Appellate Tribunal in both the appeals, the Revenue has sought the following substantial questions of law : In I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Thakur contends that the ratio of Sharman's case (supra) is not applicable to the facts of the present case, as such, the Income-tax Appellate Tribunal was not right in dismissing the appeal of the Revenue for both the assessment years. Per contra, Mr. Kaushik, appearing for the assessee, submits that any loan or advance received by an assessee from an entity in a situation of having common shareholder between the assessee and the entity giving loan or advance is to be taxable as a "deemed dividend" under section 2(22)(e) only in the hands of a registered shareholder of the lending entity and not in the hands of an assessee, who is not a registered shareholder of the lending entity. Learned counsel submitted that on the facts of the present case, it is an undisputed position that the assessee is not a shareholder in the lending entity, viz., G. I. Power Corporation Ltd. Mr. Kaushik submits that this legal position has been authoritatively confirmed by the apex court in CIT v. C. P. Sarathy Mudaliar [1972] 83 ITR 170 (SC) and while following the ratio of this judgment, the Delhi High Court in a batch of various appeals in the case of CIT v. Ankitech (P.) Ltd. reported in [2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory specified under section 2(22)(e) of the Act, viz., a concern (like the assessee herein), which is given the loan or advance is admittedly not a shareholder/member of the payer company. Therefore, under no circumstance, it could be treated as shareholder/member receiving dividend. If the intention of the Legislature was to tax such loan or advance as deemed dividend at the hands of 'deeming shareholder', then the Legislature would have inserted a deeming provision 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." Mr. Kaushik further submits that as per another decision of the hon'ble the Supreme Court in the case of Rameshwarlal Sanwarmal v. CIT [1980] 122 ITR 1 (SC), it is only where a loan is advanced by the company to a registered shareholder that the amount of loan would be liable to be regarded as "deemed dividend" and the loan granted to a beneficial owner of the shares, who is not a registered shareholder cannot be subject to tax as "deemed dividend". Mr. Kaushik, in support of his submissions, has relied upon the following jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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