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TMI Blog2015 (4) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... at such deemed dividend is to be assessed only in the hands of shareholder and not the borrowing concern in which such shareholder is a member or partner having substantial interest. In view of above addition u/s. 2(22)(e) was directed to be deleted in the hands of assessee. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. - Decided in favour of assessee Addition u/s 41(1) on account of cessation of liabilities - CIT(A) deltd the addition - Held that:- CIT(A) held that merely because of lapse of period of three years, it cannot be said that liabilities had ceased or were remitted. Assessee is liable to pay certain amounts and liability. Once assessee recognize this as its liability, it does not ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chhaganbhai Haribhai Patel and Shri Jaydevbhai C.Patel holds substantial shares in both the companies and that the company advancing the loan posses accumulated profits to the tune of ₹ 1,71,60,878/-. 2. On the facts and in the circumstances of the case and in law, the ld.CIT(Appeals) erred in deleting the addition of ₹ 7,59,469/- made u/s.41(l) of the Act the amount in respect of creditors remained unpaid for more than 3 years as the assessee had failed to establish the genuineness of the creditors by furnishing evidence like address and proof of payment. 2.1 In ITA No. 2110/Ahd/2011 for A.Y. 2007-08, assessee has filed the appeal on the following grounds: 1. Ld. CIT (A) grossly erred in law and on facts in ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumulated profits of ₹ 1,71,60,878/-. Payment of loan of ₹ 26,54,225/- was therefore taxed in the hands of assessee by Assessing Officer by invoking provisions of Section 2(22)(e). Assessing Officer did not accept assessee's submission that since assessee company was not a shareholder of M/s Giriraj Developers Pvt. Ltd, provisions of Section 2(22)(e) could not be invoked. 3.1 Matter was carried before the First Appellate Authority wherein assessee referred to the balance sheet of M/s Giriraj Developers Pvt. Ltd. and shareholder list of company to establish that assessee was not a shareholder of the said company. Contention of assessee has been that deemed dividend can be assessed only in the hands of a person who is share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt. Ltd. as on 31.3.2007 i.e. 1.16:1 and it was further held that reasonable opportunity of hearing would be given by Assessing Officer to Shri Chhaganbhai H. Patel and Shri Jaydevbhai C Patel before taxing the aforesaid deemed dividend in their hands. In this regard, stand of assessee has been that CIT(A) is not supposed to decide something with regard to third person as Shri Chhaganbhai H. Patel and Shri Jaydevbhai C Patel in this case. According to the contention of assessee and without any prejudice to merit of claim, we impugn the remark of CIT(A) i.e. deemed dividend of ₹ 26,54,225/- was therefore to be taxed in the hands of share holders i.e. Shri Chhaganbhai H. Patel and Shri Jaydevbhai C Patel in the ratio of their share h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result, Revenue s appeal is dismissed and that of assessee is partly allowed for A.Y. 2007-08. 7. In ITA No. 2750/Ahd/2011 for A.Y. 2008-09, assessee has filed the appeal on the following grounds: 1. Ld. CIT (A) grossly erred in law and on facts in holding the common shareholders of the appellant company as well lender company exigible to the provisions of section 2(22)(e) of the Act without appreciating the fact that the sum of ₹ 4,50,000/- received by the appellant company was in the ordinary course of business. 2. Ld. CIT (A) further erred in simply following appellate order of earlier year without application of mind and issuing direction to tax the amount in the hands of shareholders in ration of 1.16:1. The order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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