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TMI Blog2024 (10) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend u/s 2(22)(e) - AO treated a loan received by the assessee from its wholly owned subsidiary as deemed dividend - HELD THAT:- We observed that GFPL is the wholly owned subsidiary company of the assessee and the Assessing Officer observed that the assessee has taken certain loan from them and considering the fact that it is a wholly owned subsidiary, he treated the transaction as deemed dividend u/s 2(22)(e) - we observed from the ledger copy submitted before us which shows that assessee has taken certain advances from the company and incurs certain expenditure on behalf of them which basically relates to travelling, conveyance expenditure and certain expenditure incurred on behalf of them. As per the transactions involved between these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short the Act ), at the time of hearing, ld. DR for the Revenue submitted that ld. CIT (A) deleted the above disallowance based on the finding that there is no exempt income declared by the assessee during this year. He agreed that assessee has not declared any exempt income during the year, however he relied on the CBDT circular and findings of the Assessing Officer. 3. On the other hand, ld. AR for the assessee submitted that the issue raised by the Revenue is covered issue and he brought to our notice page 88 of the paper book in assessee s own case in which coordinate Bench decided the issue in favour of the assessee in ITA No.6056/Del/2017 for AY 2010-11 vide order dated 28.02.2023 by observing that there is no exempt income. 4. Consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applies, which will also include _any company which may be subsidiary of a holding company. In other words, the requirements of sub-clause (c) could be fulfilled either by any company to which this clause applies or any subsidiary company of such company, where such subsidiary company fulfills the conditions laid down in clause (b) of Section-2(l8) applies. Accordingly, in the present case, the assessee company is not a private company as defined in the Companies Act, 1956 and also, it wholly owned subsidiary company i.e. M/s Gripwel Fasteners Pvt. Ltd., from whom loan had been accepted, and which is not a private company as defined in the Companies Act, 1956. Further, the assessee company was holding the whole of the share capital of its w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see company had mentioned in its audit report total amount of all the transactions and not the maximum amount advances at any time during the year under assessment and thus, the total amount mentioned in the report cannot be considered as deemed dividend and maximum amount outstanding on any day during the year should be considered as deemed dividend. 6. After considering the above submissions of the assessee, Assessing Officer rejected the same and observed that a substantial shareholding to the extent of 70.79% are in the hands of four individuals belonging to one family and also rejected the free transfer of shares claimed by the assessee by referring to the Article of Association of the company which revealed that any allotment of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance expenses are incurred on behalf of GFPL and basically in the nature of current account wherein assessee receives certain advance and incurs expenditure on behalf of them. Therefore, this can never be considered as loan transaction. In this regard, he relied on the case laws page 48 of the paper book in which ITAT, Mumbai Bench decided the similar issue in favour of the assessee in the case of Ravindra R Fotedar vs. ACIT 167 ITD 100 (Mumbai). 10. Considered the rival submissions and material placed on record. We observed that GFPL is the wholly owned subsidiary company of the assessee and the Assessing Officer observed that the assessee has taken certain loan from them and considering the fact that it is a wholly owned subsidiary, he tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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