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TMI Blog2013 (9) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Sridhar For the Respondent : Guru Bashyam ORDER Abraham P. George (Accountant Member) In this appeal filed by the assessee, it assails an addition of ₹ 25,51,652/- made under Section 2(22)(e) of Income-tax Act, 1961 (in short 'the Act'). 2. Facts apropos are that assessee, engaged in manufacturing of cement concrete tiles, had filed its return for impugned assessment year declaring an income of ₹ 22,90,000/-. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had taken a loan of ₹ 1,44,38,000/- from one M/s Pugazh Chemical Plant Equipments (P) Ltd., of which, ₹ 76,68,000/- was repaid. Assessing Officer verified the share ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this purpose, dealership was given to M/s Pugazh Chemical Plant Equipments (P) Ltd. and the advance received was nothing but a dealership deposit. Reliance was placed on the decision of Special Bench of this Tribunal in the case of ACIT Vs. Bhaumik Colour Pvt. Ltd. (2009 118 ITD 1) and that of Hon'ble Delhi High Court in the case of CIT v. Ankitech Pvt. Ltd. Others (340 ITR 14). 4. However, the CIT(Appeals) was not impressed. According to him, assessee could not show that the amount received from lender company was only a trade advance. There was no evidence to show that nature of transactions between assessee and lender company were in the normal course of business. In this view of the matter, he confirmed the addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below, submitted that Hon'ble Bombay High Court in the case of Sadana Textiles Mills (P.) Ltd. v. CIT (188 ITR 318) had clearly held that Section 2(22)(e) could be applied even on a corporate entity for advance of loan received by such corporate entity, if the creditor was having accumulated profits, as required under Section 2(22)(e) of the Act. Further, according to him, Mumbai Bench of this Tribunal in the case of Nikko Technologies (I) (P) Ltd. (I.T.A. No. 4077/Mum/2002) dated 30th December, 2005 had held that where common shareholders were there, a loan taken by a concern could be brought within the ambit of Section 2(22)(e) of the Act. 7. We have perused the orders and heard the rival submissions. No doubt, ld. CIT(Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n received by the shareholders. The Special Bench of this Tribunal in the case of Bhaumik Colour Pvt. Ltd. (supra) has clearly held at paras 39 and 40 of its order that deemed dividend could be assessed only in the hands of a person who was a shareholder of the lender company and not in the hands of a person other than a shareholder. It was held by the Tribunal at paras 39 and 40 of its order as under:- 39. In the decision of the Tribunal in the case of Nikko Technologies (I) (P) Ltd. (supra), reliance has been placed on Circular No.495 dated 22nd September, 1987 which states as follows:- Further deemed dividend would be taxable in the hands of the concern, where all the following conditions are satisfied .. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ankitech Private Limited Others (supra) as well as in the case of Gopal Clothing Co. (P) Ltd. (supra). No doubt, in the case of Sadhana Textiles Mills (P.) Ltd. (supra), relied on by the learned D.R., Hon'ble Bombay High Court had held that Section 2(22)(e) could be applied even on an advance or loan paid to a corporate entity. However, in the said case, the assesse company itself was holding equity shares in the lender company, exceeding 10%. Here, on the other hand, admittedly the assesse company was not holding any shares in the lender company at all. Therefore, in our opinion, the said decision will not help the case of the Revenue. 8. Coming to the decision of Nikko Technologies (I) (P) Ltd. (supra) of the Tribunal, again re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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