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TMI Blog2018 (5) TMI 1908X X X X Extracts X X X X X X X X Extracts X X X X ..... uphold the order of the CIT(A) deleting the addition on the ground that the money received being in normal course of business is beyond the purview of section 2 (22) (e) of the IT Act. Even otherwise also an it is an admitted fact that the assessee company is not a shareholder in M/s. IRIS Associates Pvt. Ltd. the Hon ble Supreme Court in the case of CIT Vs. Madhur Housing Development Company [ 2017 (10) TMI 1279 - SUPREME COURT] where it has been held that although there were persons having substantial interest in the assessee company and company which gave the loan, the assessee company not being shareholder of the company which gave the loan, the loan was not assessable as deemed dividend in assessee s hands. Although this decision has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates Pvt. Ltd are as under :- S. NO. NAME OF SHARE HOLDER AAKAR DESIGN CONSULTANTS PVT LTD IRIS ASSOCIATES PVT LTD 1. GURPREET SINGH 50% 53.10% 2. SANCHITA SINGH 50% 46.90% 3. He further observed that the accumulated profit of M/s. Iris Associates Pvt. Ltd as on 31.03.2012 is ₹ 4,21,40,118/-. He therefore, asked the assessee to explain as to why the provisions of section 2(22)(e) should not be invoked on account of advances received from M/s. Iris Associates Pvt. Ltd. Rejecting the various explanations given by the assessee and holding that the Directors of both the companies are common and hold substantial interest in both the companies which is more than 20% of the voting power, the Assessing Officer invoking the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dividend is applicable only on the registered shareholders. Since, none of the companies are holding shares in each other company, therefore, deemed dividend cannot be assessed in the hands of the person who is not a shareholder. He, therefore, held that application of the provision of Section 2(22)(e) in the hands of the assessee company is not justified. He further noted that advance was received from M/s Iris Associates Pvt. Ltd. for providing consultancy services which was adjusted towards the consultancy provided by the assessee during the year and in subsequent years. The money received was in the normal course of business and therefore, is not covered by the provisions of Section 2(22)(e). He accordingly deleted the addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of the Assessing Officer be restored. 8. Ld. Counsel for the assessee on the other hand while supporting the order of the CIT(A) submitted that the Hon'ble Supreme Court in the case of CIT Vs. Madhur Housing Development Company has upheld the decision of the Hon'ble Delhi High Court holding that although there were persons having substantial interest in the assessee company and the company which gave the loan, the assessee company not being shareholder of the company which gave the loan, the loan was not assessable as deemed dividend in the hands of the assessee. He submitted that the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ankitech (P) Ltd reported in 340 ITR 14 has been approved. He further submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in M/s. IRIS Associates Pvt. Ltd and the money was received in normal course of business and therefore, outside the purview of section 2 (22) (e) of the Act. A perusal of the grounds raised by the revenue shows that the revenue has not challaneged the finding given by the CIT(A) that the money received was in normal course of business and therefore, not covered by the section 2 (22) (e) of the IT Act. We, therefore, uphold the order of the CIT(A) deleting the addition on the ground that the money received being in normal course of business is beyond the purview of section 2 (22) (e) of the IT Act. 12. Even otherwise also an it is an admitted fact that the assessee company is not a shareholder in M/s. IRIS Associates Pvt. Ltd. the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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