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TMI Blog2013 (1) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... f convenience, all the cases have been heard through E-Court, Mumbai and disposed of by this consolidated order together. 2. We will take up first ITA No.65 66/Nag/2011 in case M/s Bharat Hardware Iron Stores filed by the department for both of the years i.e. AY 2006-07 2007-08. 3. The department has raised the grounds in regard to deletion of addition of ₹ 39,22,792/- made by the AO as deemed dividend in view of Section 2(22)(e) of the Act and deletion the addition of ₹ 19,22,957/- made by the AO as deemed dividend income under Section2(22)(e) and deletion of consequential addition of ₹ 24742/- made by the AO on the ground of disallowance of interest on deemed dividend income. 4. The brief facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable in the facts and circumstances of the case. Reliance was placed in various case laws reported in 122 ITR 1 (SC); 217 CTR 527 (Raj); 199 ITR 88 (All.) and in the case of ACIT Vs. Bhaumik Colour (P) Ltd. 118 ITD 1. After considering the submission and perusing the material on record and also taking into consideration the provision of Section 2(22)(e) of the Act, learned CIT(A) found that the deemed dividend income can be made in the hands of beneficiary shareholders. In case of Bhaumik Colour (P) Ltd. (supra), it has been held that deemed dividend income can be assessed in the hands of share holder only. Accordingly, learned CIT(A) noted that neither the assessee s firm is a registered shareholder nor beneficiary shareholder in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequential to the addition made as deemed dividend. Accordingly, we confirm the order of the learned CIT(A) for both of the years. Hence, appeals of the department i.e. ITA No.65 66/Nag/2011 fail and the same are dismissed. 8. Now, we will take up the appeals of the assessee i.e. ITA No.68 69/Nag/2011 for AY 2006-07 2007-08.. 9. The only issue in appeals of the assessee is against confirming the disallowance of ₹ 8,48,034/- ₹ 10,57,490/- out of interest paid as non-business purpose expenditure respectively for both of the years. 10. The brief facts in this regard are that the partner of the assessee firm withdrew some capital out of credit balance in their credit on account of capital in the firm and advanced to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss account, on the other hand, the lenders have shown the interest income in their hands and paying due tax on that income. The rate of tax is same, therefore, in our considered view, disallowance of interest paid was not justified under Section37(1). This is the business man who knows how to run his business activity. The assessee has run his business activities in a way which they like and was beneficial for them. If by any reason they have made some tax planning, that tax planning is also in the four corner of law, which is permissible. Therefore, for this reason also, disallowance of interest was not justified. In view of the above facts and circumstances of the case, we delete the addition made on account of disallowance of interest fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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