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TMI Blog2019 (2) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... loan to a concern in which the assessee company is a member or partner and in which it has a substantial interest. In other words, what the second limb of section 2(22)(e) contemplates is that, the creditor companies give a loan not directly to its shareholder but to any concern in which such shareholder has a substantial interest. It is then that the same would attract the second limb of Section 2(22)(e) of the I.T. Act, 1961. That is certainly not the factual situation before us. Decided against the revenue. - INCOME TAX APPEAL (IT) NO. 576 OF 2016 - - - Dated:- 8-2-2019 - S.C. DHARMADHIKARI B.P. COLABAWALLA, JJ. Mr. Arvind Pinto for the Appellant. Mrs. Sanjukta Chowdhury a/w Mr. Pramod Kumar Parida for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(22)(e) i.e. payments made to any concern in which the shareholder is a member . 4. The brief facts of the case are that the respondent assessee is a company engaged in the manufacturing and export of studded jewelry. The assessee claims an exemption of its profits earned in the new units established in the Special Economic Zone under Section 10AA of the I.T. Act, 1961. During the course of audit of the income declared by the assessee company for the A.Y. 200910, the Assessing Officer (for short A.O. ) inter alia noted that the assessee had obtained unsecured loans from two related companies, namely, NSN Jewelers Pvt. Ltd. and KSN Trading Pvt. Ltd. On calling for the details of shareholding pattern of the creditor companies (i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of deemed dividend and dismissed the appeal of the revenue. This is how the appeal has now came up before us. 7. Mr. Pinto, learned advocate appearing on behalf of the revenue, submitted that during the A.Y. in question, the assessee company had taken unsecured loans of ₹ 1.51 Crores from M/s NSN Jewelers Pvt. Ltd. and ₹ 86.51 Lacs from M/s KSN Trading Pvt. Ltd. He brought to our attention the shareholding of the assessee company as well as the shareholding pattern of M/s KSN Jewelers Pvt. Ltd. and M/s KSN Trading Pvt. Ltd. This shareholding pattern has been set out by the A.O. in his assessment order dated 6th December, 2011. Mr Pinto then submitted that Section 2(22)(e) of the I.T. Act, 1961 inter alia stipulates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. He therefore submitted that the questions of law reproduced earlier be answered in favour of the revenue and against the assessee company. 8. To understand this argument, it would be necessary to reproduce the provisions of Section 2(22)(e) of the I.T. Act, 1961 insofar as it relates to the controversy raised in the present appeal. It reads thus:- 2. In this Act, unless the context otherwise requires --- (22) dividend includes --- (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving a substantial interest in the assessee company as well as in the creditor companies is one Sunjewels India Pvt. Ltd. As mentioned earlier Sunjewels India Pvt. Ltd. holds 86 per cent of the shareholding in the assessee company and 99 per cent shareholding in the creditor companies. It is also an admitted fact that the loans given by the creditor companies was not to Sunjewels India Pvt. Ltd. but was to the assessee company. This being the factual position, we find that the CIT(A) as well as ITAT were fully justified in holding that this case did not fall within the provisions of Section 2(22)(e) of the I.T. Act, 1961. 11. For the second limb of Section 2(22)(e) of the I.T. Act, 1961 to come into play, the condition that has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Jetair Private Limited, New Delhi. In this company (M/s Jetair Private Limited), the assessee firm subscribed to its equity capital in the name of two of its partners, namely, Mr Naresh Goyal and Mr Surinder Goyal totaling to 48.19 % of the total shareholding. It was this shareholding of the assessee firm that was held by the aforesaid two partners for and on behalf of the firm and who happened to be the beneficial shareholder. Relying upon the decision in the case of Ankitech Pvt. Ltd. it was sought to be argued before the Supreme Court that since the assessee firm was not a registered holder of the shares in Jetair Private Limited, New Delhi, any loan taken by the assessee firm from the said company could not be taxed as deemed divi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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