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TMI Blog2021 (4) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... is abundantly clear that the payment has to be made to a shareholder being a person who is the beneficial owner of shares. In the present facts of the case payment has been made to assessee a partnership firm who was not a shareholder in the company who has advanced the loan. The accounts placed in the paper book by assessee that these were termed as short-term borrowings by assessee during the year relevant to assessment year 2012-13 amounting to ₹ 81,67,625/- which has been reduced to ₹ 71,64,625/- during the year under consideration. The amount received by assessee from M/s Fateh Agro Builders Pvt Ltd., cannot be considered to be deemed dividend under the section 2(22)(e) of the Act. - Grounds raised by assessee stands allowed. - ITA No.550/Bang/2019 - - - Dated:- 30-3-2021 - Shri. B.R Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri H Guruswamy, I.T.P For the Revenue : Shri Pradeep Kumar, CIT-DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 10/05/2018 passed by Ld.CIT(A)5, Bangalore for assessment year 2013-14 on following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office and obtained the order. 3. The Ld.AR thus submitted before us that, the delay in filing appeal before this (Tribunal) is not attributable to assessee and therefore prayed for confirmation of the delay. 4. The Ld.Sr.DR however opposed the prayer for condoning the delay on the ground that it is in ordinate. 5. We have perused the submissions advanced by both sides in light of records placed before us. 6. In support of condonation of delay in filing the appeal, the Ld.AR reiterated the contents of the affidavit as above, and prayed for delay of 227 day being condoned in filing the present appeal. From the affidavit filed of the erstwhile authorised representative for assessee, it is clear that the delay cannot be attributed to assessee and in the interest of Justice and for principle that substantive right condonation should not be denied by technicalities. We therefore condone the delay in filing the present appeal before this Tribunal. Brief facts of the case on merits are as under: 7. The assessee filed its return of income for year under consideration declaring total income at nil . The case was selected for scrutiny and notice under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CIT v. Ankitech (P.) Ltd. [2011] 11 taxmann.com 100 (Delhi) 11. The Assessee placed reliance on the decision of Hon ble Karnataka High Court in case of CIT vs Sarva Equity Pvt.Ltd., in ITA No.324/2007 dated 08/01/2014, wherein all the above decisions have been considered on similar facts. The Ld.AO, however held that, M/s Fateh Agro Builders Pvt.Ltd. had accumulated profits when the loans were given to assessee and there was a common shareholder/partner being Mr. Dinesh Borha with more than 10% voting power in the lending company and more than 20% interest in the receiving concern (being assessee). 12. Aggrieved by the order of Ld. AO, assessee preferred appeal before the Ld.CIT(A). The Ld.CIT(A) after considering the submissions of the assessee, held as under: 5. I have considered the above grounds of appeal, statement of facts and written submissions filed by the appellant and also perused the assessment order. The appellant has raised mainly two grounds of appeal and the first ground is that the Assessing Officer has considered ₹ 81,67,625/- as deemed dividend uls.2(22)(e) of the Act, 1961 though the provisions of the said section do not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the impounded order passed by the Assessing Officer. The grounds of appeal are not allowed. 13. Aggrieved by the observations of Ld.CIT(A) assessee is in appeal before us now. 14. The Ld.AR submitted that assessee is not registered shareholder of M/s Fateh Agro Builders Pvt.Ltd., and therefore the provisions of section 2(22)e) of the Act is not applicable in respect of loan received by assessee from M/s Fateh Agro Builders Pvt.Ltd. The Ld.AR submitted that Circular 495 issued by CBDT dated 22/09/1987 covers the fiction of deemed dividend only in the hands of a registered shareholder who is alone entitled to the dividend on the share capital invested in the company. He once again placed reliance on the decision of Hon ble Karnataka High Court in case of Serva Equity Pvt. Ltd. (supra). 15. On the contrary, the Ld.CIT.DR placed reliance on orders passed by authorities below. 16. We have perused submissions advanced by both sides in light of records placed before us. 17. We have perused the decision relied upon by the Ld.AR of Hon ble Karnataka High Court in case of M/s Serva Equity Pvt.Ltd (supra). The facts considered by Hon ble Karnataka High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposition that the said payment would stand attracted under the provisions of sec.2(22)(e) when it is paid by a company in which public are not substantially interested by way of advance or loan to shareholder being a person who is the beneficial owner of the shares. Thus it is abundantly clear that the payment has to be made to a shareholder being a person who is the beneficial owner of shares. In the present facts of the case payment has been made to assessee a partnership firm who was not a shareholder in the company who has advanced the loan. 19. We further note from the accounts placed in the paper book by assessee that these were termed as short-term borrowings by assessee during the year relevant to assessment year 2012-13 amounting to ₹ 81,67,625/- which has been reduced to ₹ 71,64,625/- during the year under consideration. 20. Based on the above discussion, we are of the opinion that the amount received by assessee from M/s Fateh Agro Builders Pvt Ltd., cannot be considered to be deemed dividend under the section 2(22)(e) of the Act. Accordingly grounds raised by assessee stands allowed. In the result appeal filed by assessee stands al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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