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TMI Blog2009 (9) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the order of CIT(A) dated 28.5.2008 for the AY 2002-03, in the matter of order passed u/s 143(3)/147 of the IT Act wherein following solitary ground has been taken by the assessee :- The learned Assessing Authority has grossly erred in making an addition of Rs.8,00,000/- as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961, to the returned income of the assessee on account of advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee u/s 147 by issue of notice u/s 148 of the Act. In response to the notice assessee filed return of income for the year on 19.7.2006. During course of reassessment proceeding, the AO had held that deemed dividend of Rs.8 lakh received by assessee from Indian company was liable to be taxed u/s 56(2) read with Section 2(22)(e) of the Act as well as under Article 10(2) read with Article 10(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e beneficial to the assessee. It means the Act gets modified in regard to the assessee insofar as the agreement is concerned, if it falls within the category stated therein. Hon'ble Supreme Court in the case of P.V.A.L. Kulandagan Chettiar 267 ITR 654 held that where tax liability is imposed by the Act, the agreement may be resorted to either for reducing the tax liability or altogether avoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of deemed dividend has been brought into tax net. Only the income from shares or other rights, not being debts claims, participating in profits, as well as income assimilated to income from shares by the taxation laws of the state of which the company making the distribution is resident falls within the term dividend. The amount of loan paid cannot be treated as dividend paid as defined in Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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