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TMI Blog2015 (6) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... to or with any company, body corporate firm, person or association. Therefore, the amount so received in the course of the business of that company. The ld.counsel for the assessee admitted the fact that the said company is not a non-banking finance company and it was also not demonstrated as to how the loan transaction as effected by the said company are permissible under the Banking Regulation Act, the regulations framed by the Reserve Bank of India and also the Companies Act, 1956. The business of banking and finance is regulated by the Reserve Bank of India and in case a corporate entity, permission from RBI and other Regulatory Authorities is required for carrying out such business. In the absence of such permission, we are of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above, since the assessee has failed to disclose his true income. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO be restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 18/09/2008, thereby the Assessing Officer (AO in short) made addition of ₹ 19,83,425/- treating the loan amount received fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness and no commercial expediency is demonstrated for giving such loan to the assessee-company. He submitted that under these facts, the AO was justified in treating the loan amount as deemed dividend in the hands of the assessee. 3.1. On the contrary, the ld.counsel for the assessee submitted that the AO was not justified in invoking the provisions of section 2 (22)(e) of the Act as these provisions of section are not applicable on the facts of the present case. He submitted that it was demonstrated before the AO that one of the Objects of the company is also giving loans and advances. He submitted that the ld.CIT(A) was not justified in confirming the action of the AO for treating the loan amount as deemed dividend. 3.2. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 2 (22)(e) is clearly applicable and loan amount has to be treated as deemed dividend. Considering the fact of the case, the transaction of loan is treated as deemed dividend. Appellant is not a shareholder in the lender company however assessing officer treated the same as deemed dividend in hands of appellant company. Appellant s main objection was that in view of the various decisions including special bench of ITAT Mumbai and Rajasthan High Court referred in appellant s submission, the addition of deemed dividend can be made only in the hands of shareholder. If the recipient of the loan is not a shareholder and transaction is covered by this provision, the addition is to be made in hands of shareholder. Consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able as Deemed Dividend u/s.2(22)(e) of the I.T.Act on the ground that the Lender Company is not in the Money lending business which is absolutely incorrect. 2. That the CIT(A) erred in not dealing with the decision of the Honourable Tribunal Ahmedabad in the case of ITO vs. Krishnonics Ltd. reported in 119 ITD 49 (Ahd) which was cited and which is directly applicable to the facts of the case and thereby erred in not excluding the said loan from the purview of the Deemed Dividend . It is submitted that in view of the facts mentioned in the Statement of Facts filed before the CIT(A), the provisions of sec.2(22)(e) are not applicable and, hence, the loan of ₹ 1983425 received cannot be taxed as Deemed Dividend . 5.1. The griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s.Abhishek Engineers Pvt.Ltd., therefore the addition cannot be made in the hands of the assessee-company. The ld.counsel for the assessee could not demonstrate as to how the assessee-company is aggrieved by the direction of the ld.CIT(A). The only contention of the ld.counsel for the assessee was that in the Memorandum of Association of the M/s.Abhishek Engineers Pvt.Ltd. that company had Object to advance, deposit or lend money, securities and properties to or with any company, body corporate firm, person or association. Therefore, the amount so received in the course of the business of that company. The ld.counsel for the assessee admitted the fact that the said company is not a non-banking finance company and it was also not demons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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