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TMI Blog2014 (4) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... the observations of the CIT (A) – Decided against Revenue. - ITA Nos. 2119 & 1359/Del/2013 - - - Dated:- 4-4-2014 - Shri G. D. Agrawal And Shri A. D. Jain,JJ. For the Petitioner : Shri Hardipender Singh, Advocate For the Respondent : Smt. Nidhi Srivastava, Sr. DR ORDER Per A. D. Jain, Judicial Member: These are Department s appeals for Assessment Years 2008-09 and 2009-10, respectively, against the action of the ld. CIT (A) in deleting the addition of Rs. 32 lac (for Assessment Year 2008-09) and Rs. 20 lac (for Assessment Year 2009-10), made on account of deemed dividend income u/s 2 (22) (e) of the IT Act. The facts in both these cases being, mutatis mutandis exactly similar, both these appeals are being disposed of by this composite order. The facts, for facility, are being taken from ITA No.2119/Del/2013. 2. The Assessing Officer found the assessee company to have received loans of Rs. 32 lacs and Rs. 20 lacs from M/s Shivalik Dairies Pvt. Ltd. in both these years. The Assessing Officer observed that since the major shareholders of the assessee company, i.e., S/Shri Devendra Dhawan, Neeraj Dhawan and Suraj Dhawan, etc., are interested in M/s Shiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e speaking orders, requiring no interference at our hands; that the loans were advanced by M/s Shivalik Dairies Pvt. Ltd. in the ordinary course of its business; that the lending of money was a substantial part of the business of the said lending company; that to attract Section 2 (22) (e) of the Act, the payment must be made to the person who is a registered holder of shares and the shareholder alone, as held in CIT vs. Bhopal Clothing Company Pvt. Ltd. , 350 ITR 67 (Del); that all these aspects have duly been taken into consideration by the Ld. CIT (A) while rightly deleting the additions wrongly made by the Assessing Officer for both the years under consideration; and that therefore, there being no merit therein both the appeals of the department be dismissed. 5. We have heard the parties and have perused the material on record. It remains undisputed that the loans were advanced to the assessee by M/s Shivalik Dairies Pvt. Ltd. in the ordinary course of its business and that lending of money was a substantial part of the business of Shivalik Dairies Pvt. Ltd. The Profit Loss Account of the lending company, a copy whereof has been placed on record, shows that there is 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another , 332 ITR 63 (Bom), it has been held that as per Section 2 (22) (e) of the Act, any advance or loan made by a company to a shareholder or a concern in which the shareholder has a substantial interest would not be regarded as a dividend, if the advance or loan was made by the lending company in the ordinary course of its business and that the lending of the money was a substantial part of the business of the lending company. Both these conditions are satisfied in the present case. 8. Further, in CIT vs. Gopal Clothing Company Pvt. Ltd. (supra), it was held that in order to attract the provisions of Section 2 (22) (e) of the Act, payment must be made to the person who is a registered holder of shares and the shareholder along and that the facts that the shareholders of the assessee company were also shareholders of the lending company, was not sufficient and did not meet the requirement of Section 2 (22) (e) of the Act. 9. In CIT vs. MCC Marketing (P) Ltd., 343 ITR 350 (Del), it was held that the assessee company, who was not a shareholder of the company from which it had received a loan or an advance, could not be treated as covered by the definition of the word d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d advance money or give credit to persons, firms or companies. The appellant has filed copy of memorandum of association in the submission as Annexure-(i) to the submission. The purpose of advancing money has been listed at S. No. 17 of the MOD. The appellant has also filed copy of accounts of M/s Shivalik Dairies Pvt. Ltd. wherein the receipt of the interest has been disclosed by M/s Shivalik Dairies Pvt. Ltd. in its profit and loss account. During the F.Y. 2007-08, the appellant company has paid interest of Rs.7,38,082/-to M/s Shivalik Dairies Pvt. Ltd. as interest on the money taken as loan. It is also seen from the details filed by the appellant that M/s Shivalik Dairies Pvt. Ltd. has earned income by way of interest from lending of money of Rs.l9,95,167/-during the year. M/s Shivalik Dairies Pvt. Ltd has income from interest and there is no other income in its profit and loss account. All these facts established that loan or advance was made by Mis Shivalik Dairies Pvt. Ltd. to the appellant company in the ordinary course of its business. It is also seen that lending of money was substantial part of the business of M/s Shivalik Dairies Pvt. Ltd. The provisions of section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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