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TMI Blog2022 (6) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... older then also the provisions of section 2(22)(e) of the Act would not apply. While in the case at hand the ITAT noted that the assessee was not a shareholder at all and hence the provisions of section 2(22)(e) of the Act would not apply. - Decided against revenue. - I.T.A. No.380/Chny/2020 - - - Dated:- 8-6-2022 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri G. Johnson, Addl. CIT For the Respondent : Shri Saroj Kumar Parida, Advocate ORDER PER V. DURGA RAO, JUDICIAL MEMBER: The appeal filed by the Revenue are directed against common order of the ld. Commissioner of Income Tax (Appeals) 1, Chennai dated 16.12.2019 relevant to the assessment year 2013-14. The first ground raised in the appeal of the Revenue relates to restriction of disallowance made under section 14A r.w. Rule 8D. 2. Brief facts of the case are that the assessee is engaged in the business of investment and finance and filed its return of income for the assessment year 2013-14 on 28.09.2013 admitting a total income of Nil after computing a business loss of ₹.3,45,01,882/-. The case was selected for scrutiny. A notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of working the net disallowance which in this case is worked out at ₹.1,84,90,144/- [₹.2,04,12,283 ₹.19,22,139]. Accordingly, the ld. CIT(A) has rightly directed the Assessing Officer to modify the disallowance under section 14A of the Act. We find no infirmity in the order of the ld. CIT(A) and thus, the ground raised by the Revenue is dismissed for the assessment year 2012-13. 2.3 In view of the above decision of the Coordinate Benches of the Tribunal, the ld. CIT(A) has rightly confirmed the disallowance under section 14A of the Act after reducing the expenditure apportioned by the assessee from the exempt income earned. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. 3. The next ground raised in the appeal of the Revenue relates to deletion of addition under section 2(22)(e) of the Act. The Assessing Officer examined the details of the shareholding patterns of the company and while verifying the loan of ₹.1,19,00,031/- obtained during the year by the company from M/s. Aban Infrastructure Pvt. Ltd., the Assessing Officer has noticed that one of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have common shareholders holding more than 10% of shareholding, the Assessing Officer treated it as deemed dividend and brought to tax under section 2(22)(e) of the Act. Before the ld. CIT(A), it was the submissions of the assessee that it was not a shareholder of Aban Infrastructure Pvt. Ltd. or Aban Hotels Resorts Pvt. Ltd. from whom it had received the loans and hence, the provisions of section 2(22)(e) could not be made applicable to the assessee. Further, the assessee also contended before the ld. CIT(A) that the loan received were in the nature of inter corporate deposits advanced in the course of business and interest has been charged by both the companies. Such deposits therefore would not constitute loans advances contemplated u/s 2(22)(e) of the Act. After considering the submissions of the assessee as well as shareholding pattern given in the assessment order, the ld. CIT(A) has observed that since the individuals being shareholders viz., Saley Abraham, Deepa Reji Abraham, Shema Renny Abraham holding more than 10% shares in one of the three concerns or some of the concerns as has been tabulated in the assessment order, the deemed dividend would therefore arise in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grounds of appeal and the same is reproduced hereunder: 4. Whether on facts circumstances of the case and in law learned CIT(A) erred in deleting the disallowance u/s 2(22)(e) in light of the Judgement of the Hon ble Supreme Court in the case of CIT vs. National Travel Services in CA No. 2068 to 2071 of 2012 837 of 2018 dated Jan 18, 2018, where it has been held that to attract section 2(22)(e), a shareholder has only to be a person who is beneficial owner of shares; he need not necessarily be a registered shareholder. 3.4 The above case law relied on by the Revenue has not been finally disposed off by the Apex Court but has been referred to the Hon ble Chief Justice of India for constitution of an appropriate Bench of 3 judges in order to have a relook at the entire question of taxability of deemed dividend. It has also referred the case of Ankitech for reconsideration since applying the ratio of Ankitech, the case of National Travel Services gets relief from the rigours of section 2(22)(e) of the Act. The Apex Court is of the opinion that after the amendment by Finance Act, 1987, the condition of shareholder being a registered shareholder has been removed and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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