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TMI Blog2021 (2) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act on 27th March, 2015. During the course of reopening of assessment, the Assessing Officer noticed that JP Escon Ltd. Company had provided loan of Rs. 6,83,52,624/- to the assessee company. There were common shareholders in both the companies namely Shri Pravin Kotak and Shri Amit Gupta with following share holding ratio in both the companies:- Sr. No. Name of the Share holder Dhawani Infrastructure Pvt. Ltd. J. P. Iscon Limited (JPIL) 1 Shri Pravin Kotak 90% 28.99% 2 Shri Amit Gupta 10% 15.00% In view of the above cited common share holding, the Assessing Officer questioned the assessee to explain why an amount of Rs. 6,83,52,624/- provided by the J.P. Escon Ltd. should not be treated as deemed dividend u/s. 2(22)(e) of the Act. The detailed submission of the assessee during the course of assessment has been reproduced by the Assessing Officer at page no. 3 to 8 of the assessment order. In its submission, the assessee has mainly submitted that provisions of section 2(22)(e) of the Act are not applicable as the assessee is not a share holder of J.P. Escon Ltd.. The Assessing Officer has not agreed with the submission of the assessee. He was of the view that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Asstt. CIT v/s. Bhaumik Colour (P.) Ltd.[2009] 118 ITD 1 (Mum.) (SB) and jurisdictional High Court decision in the case of CIT v/s Daisy Packers (P.) Ltd [2013] 40 taxmdnn.com 480 (Gujarat), 3. Bombay High Court in the case of CIT vs. impact Containers (P.) Ltd 367ITR 346 [2014] (Bombay) and other decisions (supra), the addition of deemed dividend cannot be made in the hands of the company. The view taken by the I.T.A.T. Mumbai Special Bench in the case of ACIT Mumbai vs. Bhaumik Colour (P) Ltd has been approved by the Hon'ble Bombay High Court in the case of CIT vs. Universal Medicare Private Limited (2010) 324 ITR 263 (Bom.) The Gujarat High Court in the case of CIT v/s Daisy Packers (P) Ltd decided the issue in favour of the assesses, relying on the decision of the Division Bench of the High Court in CIT v. Ankitech (P.) Ltd. (2012) 340 ITR 14 (Del) wherein it was held that if the assessee-company does not hold a share in other company from which it had received deposit then it cannot be treated to be a deemed dividend under Section 2(22)(e) of the Act. From the reading of the provisions of section 2(22)(e), it is seen that the provision is intended to tax the divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share holder of J.P. Escon Ltd. The Assessing Officer after considering the substantial common share holding of Shri Pravin Kotak and Shri Amit Gupta, treated the amount of Rs. 3,30,50,859/- upto the accumulated profit received by the assessee company from J.P. Escon Ltd. as deemed dividend u/s. 2(22)(e) of the act. The ld. CIT(A) has deleted the addition holding that assessee company was not a registered share holder of J.P. Escon Ltd. after placing reliance on the various judicial pronouncements as elaborated in his findings as cited above in this order. After perusal of the material on record, it is noticed that assessee company was not a registered share holder in J.P. Escon Ltd. who has given inter corporate deposit to the assessee company. The similar issue on identical facts has been adjudicated by the Hon'ble Jurisdictional High Court of Gujarat in the case of Pr. CIT vs. Mahavir Inducto Pvt. Ltd. dated 12th Jan, 2017 on the basis of which the Co-ordinate Bench of the ITAT has decided the issue in favour of the assessee in the case of M/s. Precimetal Cast Pvt. LTD. Vs. ITO dated 16.12.2020 wherein it is held that for the applicability of section 2(22)(e) of the Act it is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, approve the conclusion arrived at by the learned CIT(A) in this regard, and decline to interfere in the matter on that count." We have also through the decision of Hon'ble Gujarat High Court in the case of Pr. CIT vs. Mahavir Inducto Pvt. Ltd. supra wherein the identical issue on same facts was decided in favour of the assessee after following the decision of Bombay High Court in the case of CIT vs. Impact Containers Pvt. Ltd. and others vide IT Appeal No. 114 of 2012 and the decision of Delhi High Court in the case of CIT vs. Ankitech Pvt. Ltd. Ltd. reported in 340 ITR 14 Delhi. The relevant part of the decision is reproduced as under:- "50. Identical question came to be considered by the Division Bench of this Court in Tax Appeal No. 253 of 2015. After considering the decisi on of the Bombay High Court in the case of CIT vs. Impact Containers Private Limited & ors rendered in ITA No. 114 of 2012 and the decision of the Delhi High Court in theca se of CIT vs. Ankitech Pvt Ltd reported in 340 ITR 14 (Del) and on interpreting Section 2 (22)(e), in para 4 has observed and held as under: "4.Shri Bhatt, learned Counsel appearing on behalf of the revenue has as such t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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