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2011 (1) TMI 1328

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..... ot forming part of current repairs and therefore, capital in nature. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 45,09,935/- u/s. 2(22)(e) of the Act ignoring the decision of Mumbai ITAT in the case of M/s. Unisol Infra Services Pvt Ltd. in ITA No. 2187/Mum/2008 dated 11.08.2009 wherein it is held that the provisions of Section 2(22)(e) are applicable in the hands of recipient if all the conditions are satisfied." 3. Ground No. 1 pertains to the disallowance of `2,85,846/-/- out of repairs expenses. The assessee incurred the said sum on purchase of aluminium doors, mirror, fibre lights, etc. as described in the assessment order. The A.O. observed that these item .....

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..... received from the related concern, having common shareholders, as loan or advance, so that it will attract provisions of section 2(22)(e) of the Act. The credit balance represents the cost of goods or services received by the assessee. Cost of goods or services cannot be treated as advance or loan. Hence closing balance in the hands of the assessee cannot be treated as deemed dividend. Even if it is assumed that the transactions are such that provisions of section 2(22)(e) are attracted, deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder. As the assessee is not a shareholder in these companies no deemed dividend is assessable in i .....

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..... the provisions of s. 2(22)9e) will not apply, similarly, if a person is a beneficial shareholder but not a registered shareholder then also the provisions of s. 2(22)(e) will not apply. In the circumstance the provisions of section 2(22)(e) do not apply to the appellant. I, therefore, delete the addition made of ₹ 45,09,935. The ground is allowed." 7. The learned D.R. tried to distinguish the judgement of the Special Bench by relying on the decision in the case of M/s. Unisol Infra Services Pvt Ltd. in ITA No. 2187/Mum/2008, which is mentioned in the grounds of appeal. The order relied upon by the Revenue was recalled subsequently as that order did not consider the Special Bench decision in its correct perspective and accordingly rel .....

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