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TMI Blog2024 (9) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken from the lendor. HELD THAT:- From the perusal of section 2(22)(e) and the decisions of Hon ble Delhi High Court in the case of CIT Vs. Ankitech Pvt. Ltd. Others [ 2011 (5) TMI 325 - DELHI HIGH COURT ] and Universal Medicare Pvt. Ltd. [ 2010 (3) TMI 323 - BOMBAY HIGH COURT ] it is abundantly clear that the deemed dividend u/s. 2(22)(e) of the Act will liable to be taxed in the hands of the shareholder only. The contention of the DR that since M/s. Agarwal Agri Steel Private Limited was holding more than 10% of shares of both lendor and assessee, the lendor and assessee got automatically related and therefore the loan taken by the assessee from the lendor is covered u/s. 2(22)(e) is not correct. Therefore, we are of the considered opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 16,68,33,979/- on account of deemed dividend u/s. 2(22)(e) of the Act and determining the total income at Rs. 1,73,27,711/-. The addition was made by Ld. AO as per his observations under para no.2.1 of his order, which is reproduced as under : 2.1 After careful consideration of the assessee submission, the argument of the assessee is not tenable, on this issue different judicial authorities have expressed diverse views, the jurisdictional HC in the case of M/s Siddeswari Power Generation Pvt Ltd in ITTA No. 705,400 541 opined that deemed dividend provisions can be applied to the share holder only. The department has contested before the Supreme Court against the case of Siddeswari Power Generation Pvt Ltd. The SLP filed by the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings u/s 271(1)(c) are separately initiated. 3. Aggrieved by the order of Ld. AO the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal of the assessee as per his observation under para no. 6.3 of his order, which is reproduced as under : 6.3 The submissions of the appellant and the assessment order have been carefully considered. The appellant has taken interest free loan from its related company where it is substantially related in shareholding. The Assessing Officer has raised the issue of deemed dividend in this case. The Assessing Officer found that appellant received Rs. 46,29,18,427/- from M/s. Agarwal Industries Pvt Ltd which should have been termed as Dividend. However, the Assessing Officer is correctly invoked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arwal Agri Steel Pvt ltd are two shareholders in appellant M/s.Agarwal sponge Energy Private Limited. The loan has been taken by the M/s. Agarwal Industries Pvt ltd. Hence, deemed dividend has to be worked out in case of the appellant as there are common shareholders. In the appellant company (M/s. Agarwal Sponge Energy Pvt ltd), loan receipt has been from M/s. Agarwal Industries Ltd, in which it owns 18.29% of shares, also another major shareholder in the appellant company (M/s.Agarwal Sponge Energy Pvt ltd) is M/s. Agarwal Agri Steel Pvt ltd, who owns 37.5% of shareholding in the appellant company. It is pertinent to also add, that the M/s. Agarwal Agri Steel Pvt ltd is as 20.68% of shareholding in M/s. Agarwal Industries pvt ltd. All the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities and requested the bench to sustain the addition made by the revenue authorities. The Ld. DR further submitted that M/s. Agarwal Agri Steel Private Limited is holding 20.69% of shares of lendor and 37.57% shares of assessee. Since M/s. Agarwal Agri Steel Private Limited was holding more than 10% of shares of both lendor and assessee, the lendor and assessee got automatically related and therefore the loan taken by the assessee from the lendor is covered u/s. 2(22)(e) of the Act. 6. We have heard the rival contentions and also gone through the records in the light of submissions made by either side. As per the submission of the Ld. AR the assessee had taken a loan of Rs. 46,29,18,427/- from lendor in which the assessee is not a sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits ; 8. From the perusal of section 2(22)(e) and the decisions of Hon ble Delhi High Court in the case of CIT Vs. Ankitech Pvt. Ltd. others (Supra) and Hon ble Bombay High Court in the case of CIT Vs. Universal Medicare Pvt. Ltd.(Supra), it is abundantly clear that the deemed dividend u/s. 2(22)(e) of the Act will liable to be taxed in the hands of the shareholder only. The contention of the Ld. DR that since M/s. Agarwal Agri Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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