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TMI Blog2015 (10) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... . Pugazh Chemical Plant and Equipment Pvt. Ltd. According to the Assessing Officer, the shareholding of the assessee company is a concern in which the shareholders of M/s. Pugazh Chemical Plant and Equipment Pvt. Ltd. have substantial interest, being so, the provisions of sec.2(22)(e) of the Act is applicable. However, the Commissioner of Income-tax(Appeals) observed that the assessee received loan from M/s. Pugazh Chemical Plant and Equipment Pvt. Ltd. could not be considered as deemed dividend in the hands of the assessee, as the assessee itself is not a shareholder of M/s. Pugazh Chemical Plant and Equipment Pvt. Ltd. and following the order of the Tribunal in assessee's own case in ITA No.818/Mds/2013 dated 6.9.2013, allowed the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not have been any repayment. But, at the same time, it is an admitted position that assessee-company as such was not a shareholder of the lender company. May be there were individual shareholders, who had shares of both the companies, holding in excess of 10% in such companies. However, to rope in a loan/advance as deemed dividend under Section 2(22)(e) of the Act, it is necessary that the benefit should have been 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 sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the law laid down in the case of Nikko Technologies (I) (P) Ltd. (supra) is not correct. We therefore hold that deemed dividend under s. 2(22)(e) of the I.T. Act, 1961 can be assessed only in the hands of a shareholder of the lender company and not in the hands of any other person." The view taken by the Special Bench has been confirmed by Hon'ble Delhi High Court in the case of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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