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TMI Blog2019 (2) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entities which have advanced loans and advance, then the addition is required to be deleted . As assessee was neither the beneficial nor the registered shareholder of the company, the amount so received is not liable to be taxed as deemed dividend. No error in the reasons recorded by the Ld. CIT(A), while deleting the addition towards the deemed dividend u/s 2(22)(e) of the Act. Hence, we are inclined to uphold the order of the Ld. CIT(A) and dismissed the appeal filed by the Revenue. - Decided in favour of assessee. - ITA NO.5019/Mum/2017 - - - Dated:- 13-2-2019 - Shri G. Manjunatha, Accountant Member And Shri Ravish Sood, Judicial Member For the Assessee : Shri Hari S. Raheja For the Revenue : Shri R. Sindhu ORDER PER G. MANJUNATHA (ACCOUNTANT MEMBER) This appeal filed by the Revenue is directed against the order of the Ld. CIT(Appeal)-5, Mumbai, dated 10/04/2017 and it pertains to AY 2014-15. The Revenue has raised the following grounds of appeal:- Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is right in deleting the addition made holding that since the assessee company is not the share holder in other comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be active at the moment the loan is given to any concern in which shareholders are members or partners and in which there has been substantial interest. Accordingly, the loan taken by the assessee company, from M/s Shivsmruti Investment Services Pvt. Ltd. has been considered as deemed dividend under the provisions of section 2(22)(e) of the Act. 3. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), it was argued that provisions of section 2(22)(e) of the Act, cannot be invoked as the assessee is neither the shareholder nor does it have any beneficial interest in the shares of M/s Shivsmruti Investment Services Pvt. Ltd. The assessee has relied upon the decision of the Hon ble Bombay High Court in the case of CIT vs Impact Containers Pvt. Ltd. (Bom.). The Ld. CIT(A), after considering the submissions of the assessee and also following the decision of the Hon ble Bombay High Court in the case of Universal Medicare 324 ITR 263 (Bom.) and Bhaumik Colours 313 ITR 146(Bom.) held that the assessee company is not a shareholder in another company and hence provisions of section 2(22)(e) of the Act, cannot be invoked. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as deemed dividend to the extent of reserves and surplus of the lending company. In this case, there is no dispute with regard to the fact that as on date of loan, the company i.e. M/s Shivsmruti Investment Services Pvt. Ltd. is having reserves and surplus in excess of loans and advances given to the assessee company. The only dispute is whether the said loans and advances shall be treated as deemed dividend within the meaning of section 2(22)(e) of the Act, when recipient company was neither beneficial nor registered owner of shares in other company. Admittedly, the assessee is not the beneficial ownership in the lending company, but two common shareholders are owned more than 40% equity shares in the above company. When the assessee is neither beneficial nor registered in lending company, then loans and advances received from the said company cannot be brought to tax within the ambit of provisions of section 2(22)(e) of the Act. This legal proposition has been laid down by the Hon ble Bombay Court in the case of CIT vs Impact Containers Pvt. Ltd. (Bom.), where the Hon ble High Court by following its earlier decision in the case of Universal Medicare 324 ITR 263 (Bom.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though, the share certificates were issued in the name of the Karta, Shri Gopal Kumar Sanei, but in the annual returns, it is the HUF which was shown as registered and beneficial shareholder. In any case, it cannot be doubted that it is the beneficial shareholder. Even if we presume that it is not a registered shareholder, as per the provisions of Section 2(22)(e) of the Act, once the payment is received by the HUF and shareholder (Mr. Sanei, karta, in this case) is a member of the said HUF and he has substantial interest in the HUF, the payment made to the HUF shall constitute deemed dividend within the meaning of clause (e) of Section 2(22) of the Act. 21. It is clear from the above order that all the parties have clearly held that HUF was real beneficial owner of the company, accordingly amount so received was correctly held to be deemed dividend. However, in the present case assessee neither a registered nor beneficial share holder of EIPL which is not disputed by the revenue authority. Hence, decision of Gopal and Sons HUF will not apply in present case. But it supports the contention of assessee that .addition cannot be made in assessee s hand because NHBPL is not a benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the issue raised is a debatable issue. But, I feel that when there is a decision of the Apex Court, no Inferior Court or Tribunal can say that the issue is a debatable issue for the reason that a Bench of two Judges of the Apex Court has doubted the correctness of the decision of the Constitution Bench. Even assuming there is a final judgment of a two Judges Bench of the Apex Court, the same has to be ignored and Inferior Courts and Tribunals are bound to follow the decision of the Constitution Bench in view of the law relating to precedents and also article 741 of the Constitution of India. So, the rejection of Ext. P2 application is unjustified. 26. In view of the above, the decision of the Hon ble Supreme Court as on today established binding. Under Article 141 of the Constitution, ratio of decision of the Hon ble Supreme Court and principle underlying decision is binding. It is most crucial to note that in that case matter was referred to reconsider the earlier decision with their observation that for applying deemed dividend provision it is sufficient if the shareholder is beneficial shareholder. It need not be necessary that shareholder must be registered shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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