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TMI Blog2018 (1) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... een given by M/s Beehive Systems Private Limited in which the assessee is a shareholder. See CIT Versus ANKITECH PVT LTD. & OTHERS [2011 (5) TMI 325 - DELHI HIGH COURT] - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case and in law, the Ld. AO has grossly erred in making addition by ₹ 1,000,000/- as deemed dividend in the hands of appellant. 4) The Ld. AO has grossly erred in considering the payment received from Beehive Technologies Private Limited as deemed dividend in the hands of appellant wherein the appellant is not a shareholder of the company. 5) THAT in the facts and circumstances of the case, the Learned CIT(A) erred in not considering that provisions of Section 2(22)(e) are not attracted in the present matter; and the addition of ₹ 10,00,000/- as deemed dividend made by the A.O being bad in law needs to be deleted. 6) THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine (P) Ltd. reported in 223 Taxman 106(Delhi)(MAG) and also on another judgment of the Hon'ble Delhi High Court in the case of CIT vs. Ankitech (P) Ltd. reported in 340 ITR 14 (Del) for the proposition that the provisions of section 2(22)(e) could not be attracted in cases where the assessee was not a shareholder in the payer company. 4. In response, the Ld. Sr. DR placed reliance on the orders of the authorities below and submitted that the transaction was routed through M/s Beehive Technologies Private Limited only to circumvent the provisions of section 2(22)(e) and, therefore, the Assessing Officer had rightly made the addition. 5. We have heard the rival submissions and perused the material available on record. The fact that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention behind the provisions of Section 2(22)(e) of the Act is to tax dividend in the hands of shareholders. The deeming provisions as i t applies to the case of loans or advances by a company to a concern in which its shareholder has substantial interest, is based on the presumption that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. 25. Further, it is an admitted case that under normal circumstances, such a loan or advance given to the shareholders or to a concern, would not qual ify as dividend. It has been made so by legal f iction created under Section 2(22)(e) of the Act. We have to keep in mind that this legal provision relates to "dividend". Thus, by a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me "is not taxed at the hands of the recipient". Such an argument based on the scheme of the Act as projected by the learned counsels for the Revenue on the basis of Sections 4, 5, 8, 14and 56 of the Act would be of no avail. Simple answer to this argument is that such loan or advance, in the f irst place, is not an income. Such a loan or advance has to be returned by the recipient to the company, which has given the loan or advance. 27. Precisely, for this very reason, the Courts have held that if the amounts advanced are for business transactions between the parties, such payment would not fall within the deeming dividend under Section 2(22)(e) of the Act. xxxxxxx 30. Before we part with, some comments are to be necessarily made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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