M/s. Morgan Exim Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 147/DEL/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9838 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI ABY T. VARKEY, JUDICIAL MEMBER ITA NO.1798/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 5 (4), VS. M/S. MORGAN EXIM PVT. LTD., NEW DELHI. F 1/12, HAUZ KHAS, NEW DELHI 110 016. (PAN : AADCM8800E) CO NO.147/DEL/2013 (IN ITA NO.1798/DEL./2013) (ASSESSMENT YEAR : 2009-10) M/S. MORGAN EXIM PVT. LTD., VS. ITO, WARD 5 (4), F 1/12, HAUZ KHAS, NEW DELHI. NEW DELHI 110 016. (PAN : AADCM8800E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.R. WADHWA, AR REVENUE BY : SHRI GUNJAN PRASHAD, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE EMANATE FROM THE ORDER OF CIT (APPEALS)-VI II, NEW DELHI DATED 07.01.2013 FOR THE ASSESSMENT YEAR 2009-10. ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 2 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY INCORP ORATED WITH THE OBJECT FOR MAKING INVESTMENT IN SHARES/SECURITIES OF LISTE D COMPANIES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT CARR Y OUT ANY ACTIVITIES AS MENTIONED IN THE OBJECTS OF THE COMPANY. HOWEVER, ASSESSEE HAS EARNED DIVIDEND OF RS.4,88,353/- AND MISC. INCOME OF RS.33 /- ONLY. THE ASSESSING OFFICER FOUND THAT M/S. MORGAN CREDITS PVT. LTD. HA S DISCHARGED THE LIABILITY OF THE ASSESSEE COMPANY BY REPAYMENT OF LOAN TO HDF C LTD. ON BEHALF OF THE ASSESSEE COMPANY. MS. RAKHI KAPOOR IS A COMMON SHA REHOLDER IN BOTH THE COMPANIES, VIZ., ASSESSEE COMPANY AND M/S. MORGAN C REDITS PVT. LTD., HAVING SHAREHOLDING OF 96% AND 45.5% RESPECTIVELY. ASSESS ING OFFICER HELD THAT SHE WAS A MAJOR SHAREHOLDER IN BOTH THE COMPANIES AND B OTH THE COMPANIES WERE CLOSELY HELD COMPANIES AND THE DIRECTORS OF BOTH TH E COMPANIES ARE COMMON. THE LOAN AMOUNT OF RS.27,75,00,000/- WAS TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME-TAX ACT, 1961 IN THE ASSESSE ES COMPANY HAND AND THE ADDITION WAS MADE. THE CIT (A) DELETED THE ADDITIO N BY HOLDING AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLAN T FINDINGS OF THE AO AND THE FACTS ON RECORD. SECTION 2(22) (E) OF TH E ACT READS AS UNDER: 'DIVIDEND' INCLUDES-------- (A) TO (D) ------------------- (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WH ETHER AS REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) MAD E AFTER THE 31 ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLD ER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE OF CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHIC H SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTI AL INTEREST (HEREAFTER IN ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 3 THIS CLAUSE REFERRED TO AS THE SAID CONCERN)] OR AN Y PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, O F ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE P OSSESSES ACCUMULATED PROFITS' PERUSAL OF THE FACTS ON RECORD SHOW THAT THE APPELL ANT HAD SHOWN A LOAN OF RS.27.75 CRORES AS HAVING BEEN RECEIVED FRO M M/S. MORGAN CREDITS (P) LTD. IN ITS BOOK OF ACCOUNTS. THE AO HAS ADDED THE ABOVE AMOUNT OF LOAN AS DEEMED DIVIDEND IN THE HANDS OF THE APPELLA NT U/S 2(22)(E) ON THE GROUND THAT ONE OF THE SHARE HOLDERS OF THE APPELLA NT \VAS ALSO A SHAREHOLDER OF M/S. MORGAN CREDITS (P) LTD. PERUSAL OF THE FACTS ON RECORD SHOW THAT THE APPELLANT WAS NOT A SHAREHOLDER IN M/ S. MORGAN CREDITS (P) LTD. MOREOVER M/S. MORGAN CREDITS (P) LTD. WAS ALSO NOT A SHAREHOLDER IN THE APPELLANT COMPANY. THE ABOVE FACTS ARE CLEAR FR OM THE ASSESSMENT ORDER WHEREIN EVEN THE AO HAS NOT HELD THAT THE APPELLANT WAS A REGISTERED SHAREHOLDER OF M/S. MORGAN CREDITS (P) LTD. THE HON 'BLE DELHI HIGH COURT IN THE CASE OF C1T VS. ANKITECH (P) LTD. (2011)-TIO L-290-HC-DEL-IT HAS HELD THAT AN ASSESSEE WHO WAS NOT A SHAREHOLDER OF THE COMPANY FROM WHICH HE HAD RECEIVED A LOAN OR AN ADVANCE CANNOT B E TREATED AS COVERED BY THE DEFINITION OF THE WORD 'DIVIDEND' AS CONTAINING IN SECTION 2.(22)(E) OF THE IT ACT. THE HON'BLE HIGH COURT HAS HELD AS UNDE R:- '24. THE INTENTION BEHIND ENACTING PROVISIONS OF S. 2(22) (E) IS THAT CLOSELY- HELD COMPANIES (I.E. COMPANIES IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED), WHICH ARE CONTROLLED BY A GROUP OF MEM BERS, EVEN THOUGH THE COMPANY HAS ACCUMULATED PROFITS WOULD NOT DISTRIBUT E SUCH PROFIT AS DIVIDEND BECAUSE IF SO DISTRIBUTED THE DIVIDEND INC OME WOULD BECOME TAXABLE IN THE HANDS OF A THE SHAREHOLDERS. INSTEAD OF DISTRIBUTING ACCUMULATED PROFITS AS DIVIDEND, COMPANIES DISTRIBU TE THEM AS LOANS OR ADVANCES TO SHAREHOLDERS OR TO CONCERNS IN WHICH SU CH SHAREHOLDERS HAVE SUBSTANTIAL INTEREST OR MAKE ANY PAYMENT ON BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF SUCH SHAREHOLDER. IN SUCH AN EVENT, BY T HE DEEMING PROVISIONS, SUCH PAYMENT BY THE COMPANY IS TREATED AS DIVIDEND. THE INTENTION BEHIND THE PROVISIONS OF S. 2 (22) (E) OF THE ACT IS TO TA X DIVIDEND IN THE HANDS OF SHAREHOLDERS. THE DEEMING PROVISION AS IT APPLIES T O THE CASE OF LOANS OR ADVANCES BY A COMPANY TO A CONCERN IN WHICH ITS SHA REHOLDER HAS SUBSTANTIAL INTEREST, IS BASED ON THE PRESUMPTION T HAT THE LOANS OR ADVANCES WOULD ULTIMATELY BE MADE AVAILABLE TO THE SHAREHOLD ERS OF THE COMPANY GIVING THE LOAN OR ADVANCE. 25. FURTHER, IT IS AN ADMITTED CASE THAT UNDER NORM AL CIRCUMSTANCES, SUCH A LOAN OR ADVANCE GIVEN TO THE SHAREHOLDERS OR TO A CONCERN, WOULD NOT QUALIFY AS DIVIDEND. IT HAS BEEN MADE SO BY LEGAL F ICTION CREATED UNDER S. 2(22) (E) OF THE ACT. WE HAVE TO KEEP IN MIND THAT THIS LEGAL PROVISION RELATES TO 'DIVIDEND'. THUS, BY A DEEMING PROVISION , IT IS THE DEFINITION OF DIVIDEND WHICH IS ENLARGED. LEGAL FICTION DOES NOT EXTEND TO 'SHAREHOLDER'. WHEN WE KEEP IN MIND THIS ASPECT, THE CONCLUSION WO ULD BE OBVIOUS, VIZ., LOAN OR ADVANCE GIVEN UNDER THE CONDITIONS SPECIFIE D UNDER S. 2(22)(E) OF THE ACT WOULD ALSO BE TREATED AS DIVIDEND. THE FICT ION HAS TO STOP HERE AND ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 4 IS NOT TO BE EXTENDED FURTHER FOR BROADENING THE CO NCEPT OF SHAREHOLDERS BY WAY OF LEGAL FICTION. IT IS A COMMON CASE THAT ANY COMPANY IS SUPPOSED TO DISTRIBUTE THE PROFITS IN THE FORM OF DIVIDEND TO I TS SHAREHOLDERS/MEMBERS AND SUCH DIVIDEND CANNOT BE GIVEN TO NON-MEMBERS. T HE SECOND CATEGORY SPECIFIED UNDER S. 2(22)(E) OF THE ACT, VIZ., A CON CERN (LIKE THE ASSESSEE HEREIN), WHICH IS GIVEN THE LOAN OR ADVANCE IS ADMI TTEDLY NOT A SHAREHOLDER/MEMBER OF THE PAYER COMPANY. THEREFORE, UNDER NO CIRCUMSTANCE, IT COULD BE TREATED AS SHAREHOLDER/ME MBER RECEIVING DIVIDEND. IF THE INTENTION OF THE LEGISLATURE WAS T O TAX SUCH LOAN OR ADVANCE AS DEEMED DIVIDEND AT THE HANDS OF 'DEEMING SHAREHO LDER', THEN THE LEGISLATURE WOULD HAVE INSERTED DEEMING PROVISION I N RESPECT OF SHAREHOLDER AS WELL, THAT HAS NOT HAPPENED. MOST OF THE ARGUMEN TS OF THE LEARNED COUNSEL FOR THE REVENUE WOULD STAND ANSWERED, ONCE WE LOOK INTO THE MATTER FROM THIS PERSPECTIVE'. THE HON'BLE DELHI HIGH COURT IN THE CASE OF M/S. GO PAL CLOTHING (P) LTD. VS. CIT 2012-TIOL-225-HC-DEL-IT HAS HELD A S UNDER:- '6. ON CROSS-APPEALS BEING PREFERRED BOTH BY THE RE VENUE AND THE ASSESSEE, THE TRIBUNAL BY THE IMPUGNED ORDERS HAS D ELETED THE ADDITION ON VARIOUS GROUNDS. IT HAS BEEN HELD THAT PROVISIONS O F SECTION 2(22)(E) WERE NOT ATTRACTED AS THE ASSESSEE WAS NOT HOLDING THE M INIMUM PRESCRIBED VOTING RIGHTS IN M/S EAST INDIA IMPEX(DELHI) PRIVAT E LIMITED. THE SHARE HOLDING OF A COMMON SHAREHOLDER OR A DIRECTOR CANNO T BE TAKEN INTO CONSIDERATION. THE FACT THAT TWO COMPANIES, I.E. TH E ASSESSEE AND THE EAST INDIA IMPEX (DELHI) PRIVATE LIMITED HAD COMMON SHAR EHOLDERS, CANNOT BE A GROUND TO INVOKE SECTION 2(22)(E) OF THE ACT, IF TH E ASSESSEE DID NOT HAVE THE PRESCRIBED VOTING RIGHTS. THE TRIBUNAL ALSO EXA MINED THE MERITS OF THE CASE AND HELD THAT THE TRANSACTIONS BETWEEN THE ASS ESSEE AND THE EAST INDIA IMPEX (DELHI) PRIVATE LIMITED WERE. BUSINESS TRANSA CTIONS AND CANNOT BE TREATED AS LOANS OR ADVANCE. 7. WE NEED NOT EXAMINE THE SECOND ASPECT ON MERITS. THE FIRST ASPECT, I.E., WHETHER OR NOT THE RESPONDENT ASSESSEE HAD TH E REQUISITE VOTING RIGHTS AND SHAREHOLDING OF COMMON SHAREHOLDERS CAN BE TAKE N INTO CONSIDERATION FOR APPLYING SECTION 2(22)(E) OF THE ACT STANDS DEC IDED BY THIS COURT IN CIT VERSUS ANKITECH PRIVATE LIMITED (2011) 242 CTR 129 (DELHI) = (2011- TIOL-290-HC-DEL-IT). IN THE SAID DECISION, IT HAS B EEN HELD THAT TO ATTRACT. THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, PAYMENT MUST BE MADE TO THE PERSON, WHO IS' A REGISTERED HOLDER 'OF SHARES AND THE SHAREHOLDER ALONE. EVEN AFTER THE AMENDMENT WITH EF FECT FROM 1988 AND INTRODUCTION OF THE WORDS 'A PERSON WHO IS THE BENE FICIAL OWNER OF SHARES' CANNOT BE CONSTRUED TO IN A WAY ALTER THE POSITION THAT THE SHAREHOLDER HAS TO BE THE REGISTERED SHAREHOLDER. THE AMENDMENT IMPOSE S AN ADDITIONAL CONDITION THAT THE REGISTERED SHAREHOLDER MUST ALSO BE THE BENEFICIAL SHAREHOLDER OF THE COMPANY THAT HAS FURNISHED LOAN/ ADVANCE. THE FACT THAT THE SHAREHOLDERS OF THE ASSESSEE COMPANY WERE ALSO SHAREHOLDERS OF THE COMPANY WHICH HAD GIVEN 'LOAN/ADVANCES' IS NOT SUFF ICE AND DOES NOT MEET ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 5 THE REQUIREMENT OF SECTION 2 (22)(E). THE VOTING RI GHTS OF THE SHAREHOLDER, I.E., THE ASSESSEE CAN AND SHOULD BE TAKEN INTO CON SIDERATION. . 8. WHEN WE APPLY THE AFORESAID LEGAL POSITION TO TH E ADMITTED FACTS AS ELUCIDATED AND STATED ABOVE, THE QUESTION OF LAW HA S TO BE ANSWERED IN NEGATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF M/S. NA VYUG PROMOTERS (P) LTD. VS. CIT 2011- TIOL-806-HC-DEL-IT HAS HELD AS UNDER:- '4. THE REVENUE IS IN APPEAL RAISING THE QUESTIONS EXTRACTED ABOVE. THE CONTROVERSY IS NOW CONCLUDED BY THE JUDGMENT OF A D IVISION BENCH OF THIS COURT IN THE CASE OF CIT V ANKITECH PVT LTD (ITA NO .462/2009) = (2011- TIOL-290-HC-DEL-IT) AND CONNECTED APPEALS ON 11 TH MAY, 2011. A COPY OF THE JUDGMENT HAS BEEN FILED BEFORE US. WE HAVE C AREFULLY GONE THROUGH THE SAME. AFTER AN ELABORATE DISCUSSION OF THE ISSU E, AND THE CASE-LAW ON THE SUBJECT, THE DIVISION BENCH HAS HELD THAT AN ASSESS EE WHO IS NOT A SHAREHOLDER OF THE COMPANY, FROM WHICH HE RECEIVED A LOAN OR AN ADVANCE CANNOT BE TREATED AS BEING COVERED BY THE DEFINITIO N OF THE WORD 'DIVIDEND' AS PROVIDED IN SEC.2(22)(E) OF THE ACT. IT HAS BEEN HELD:- '24. THE INTENTION BEHIND ENACTING PROVISIONS OF SE CTION 2 (22)(E) IS THAT CLOSELY HELD COMPANIES (I.E. COMPANIES IN WHICH PUB LIC ARE NOT SUBSTANTIALLY INTERESTED), WHICH ARE CONTROLLED BY A GROUP OF MEMBERS, EVEN THOUGH THE COMPANY HAS ACCUMULATED PROFITS WOULD NO T DISTRIBUTE SUCH PROFIT AS DIVIDEND BECAUSE IF SO DISTRIBUTED THE DI VIDEND INCOME WOULD BECOME TAXABLE IN THE HANDS OF THE SHAREHOLDERS. IN STEAD OF DISTRIBUTING ACCUMULATED PROFITS AS DIVIDEND, COMPANIES DISTRIBU TE THEM AS LOAN OR ADVANCES TO SHAREHOLDERS OR TO CONCERN IN WHICH SUC H SHAREHOLDERS HAVE SUBSTANTIAL INTEREST OR MAKE ANY PAYMENT ON BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF SUCH SHAREHOLDER. IN SUCH AN EVENT, BY T HE DEEMING PROVISIONS, SUCH PAYMENT BY THE COMPANY IS TREATED AS DIVIDEND. THE INTENTION BEHIND THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS TO TAX DIVIDEND IN THE HANDS OF SHAREHOLDERS. THE DEEMING PROVISIONS AS IT APPLI ES TO THE CASE OF LOANS OR ADVANCES BY A COMPANY TO A CONCERN IN WHICH ITS SHA REHOLDER HAS SUBSTANTIAL INTEREST, IS BASED ON THE PRESUMPTION T HAT THE LOANS OR ADVANCES WOULD ULTIMATELY BE MADE AVAILABLE TO THE SHAREHOLD ERS OF THE COMPANY GIVING THE LOAN OR ADVANCE. 25. FURTHER, IT IS AN ADMITTED CASE THAT UNDER NORM AL CIRCUMSTANCES, SUCH A LOAN OR ADVANCE GIVEN TO THE SHAREHOLDERS OR TO A CONCERN, WOULD NOT QUALIFY AS DIVIDEND. IT HAS BEEN MADE SO BY LEGAL F ICTION CREATED UNDER SECTION 2(22)(E) OF THE ACT. WE HAVE TO KEEP IN MIN D THAT THIS LEGAL PROVISION RELATES TO 'DIVIDEND'. THUS, BY A DEEMING PROVISION, IT IS THE DEFINITION OF DIVIDEND WHICH IS ENLARGED. LEGAL FIC TION DOES NOT EXTEND TO 'SHAREHOLDER '. WHEN WE KEEP IN MIND THIS ASPECT, T HE CONCLUSION WOULD BE OBVIOUS, VIZ., LOAN OR ADVANCE GIVEN UNDER THE COND ITIONS SPECIFIED UNDER SECTION 2(22)(E) OF THE ACT WOULD ALSO BE TREATED A S DIVIDEND. THE FICTION ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 6 HAS TO STOP HERE AND IS NOT TO BE EXTENDED FURTHER FOR BROADENING THE CONCEPT OF SHAREHOLDERS BY WAY OF LEGAL FICTION. IT IS A COMMON CASE THAT ANY COMPANY IS SUPPOSED TO DISTRIBUTE THE PROFITS I N THE FORM OF DIVIDEND TO ITS SHAREHOLDERS/MEMBERS AND SUCH DIVIDEND CANNOT B E GIVEN TO NON-MEMBERS. THE SECOND CATEGORY SPECIFIED UNDER SE CTION 2(22)(E) OF THE ACT, VIZ., A CONCERN (LIKE THE ASSESSEE HEREIN), WH ICH IS GIVEN THE LOAN OR ADVANCE IS ADMITTEDLY NOT A SHAREHOLDER/MEMBER OF T HE PAYER COMPANY. THEREFORE, UNDER' NO CIRCUMSTANCE, IT COULD BE TREA TED AS SHAREHOLDER/MEMBER RECEIVING DIVIDEND. IF THE INTEN TION OF THE LEGISLATURE WAS TO TAX SUCH LOAN OR ADVANCE AS DEEMED DIVIDEND AT THE HANDS OF 'DEEMING SHAREHOLDER ', THEN THE LEGISLATURE WOULD HAVE INSERTED DEEMING PROVISION IN RESPECT OF SHAREHOLDER AS WELL, THAT H AS NOT HAPPENED. MOST OF THE ARGUMENTS OF THE LEARNED COUNSELS FOR THE REVEN UE WOULD STAND ANSWERED, ONCE WE LOOK INTO THE MATTER FROM THIS PE RSPECTIVE.' 5. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER HOLDING THE REQUIRED PERCENTAG E OF SHARES IN ANY OF THE TWO COMPANIES. THEREFORE, THE JUDGMENT OF THIS COU RT IN ANKITECH PVT. LTD. (SUPRA) FULLY APPLIES TO THE PRESENT CASE. WE ACCORDINGLY HOLD, FOLLOWING THE SAID JUDGMENT, THAT NO SUBSTANTIAL QU ESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL. 6. THE APPEAL IS ACCORDINGLY DISMISSED WITH NO ORDE R AS TO COSTS.' IN THE INSTANT CASE THE APPELLANT IS NOT A REGISTER ED SHAREHOLDER OF M/S. MORGAN CREDITS (P) LTD. AND M/S. MORGAN CREDIT S (P) LTD. WAS NOT A REGISTERED SHAREHOLDER IN THE APPELLANT COMPANY. I N VIEW OF THE ABOVE FACTS, RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE DELHI HIGH COURT DISCUSSED ABOVE IT IS HELD THAT THE LOAN OF RS.27.7 5 CRORES RECEIVED BY THE APPELLANT IS NOT TO BE TREATED AS DEEMED DIVIDEND U /S 2(22)(E) OF THE IT ACT. HOWEVER, THE HON'BLE IT AT DELHI IN THE CASE OF DCI T VS. M/S. GP & CO. (P) LTD. 2012-TIOL-341-ITAT-DEL HAS HELD THAT THE S HAREHOLDERS SHOULD NOT GO SCOT-FREE. IT HAS BEEN HELD THAT IT WOULD BE PERMISSIBLE FOR THE REVENUE TO TAKE REMEDIAL STEPS BY ROPING THE SHAREH OLDERS AND TAX THE DEEMED' DIVIDEND IN THEIR HANDS. THE ADDITION MADE BY THE AO UNDER THE PROVISIONS OF SECTION 2(22)(E) IS DELETED. HOWEVER, THE AO MAY TAKE NECESSARY ACTION AT DEEMED FIT AS PER THE OBSERVATI ONS OF THE HON'BLE ITAT DELHI DISCUSSED ABOVE. THIS GROUND OF APPEAL IS ALL OWED. 3. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.27.75 CR WHICH THE AO HAD TREATED AS DEEMED DIVIDEND U/S 2(22)(E) BY HOLDING THAT THE AS SESSEE COMPANY IS NOT A SHAREHOLDER IN THE COMPANY WHICH ADVANCED THE LOANS WHILE IGNORING THE FACT THAT ONE OF THE SHAREHOLDER HAD MORE THAN 10% SHAREHOLDING IN BOTH THE COMPANIES? ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 7 2. THAT THE ORDER OF THE ID. CIT(A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FORGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 4. AT THE OUTSET OF THE HEARING, LD. AR SUBMITTED T HAT THIS ISSUE IS COVERED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DCIT VS. M/S. GP & CO. (P) LTD. REPORTED IN 2012-TIOL-341-ITAT-DEL. LD. DR WAS ALSO NOT HAVING ANY DIFFERENT VIEW. 5. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE SUBMISSIONS MADE AND ALSO GONE THROUGH THE CASE LAWS RELIED UPON, WE FIN D NO MERITS IN THE APPEAL OF THE REVENUE AND THE SAME IS DISMISSED. 6. IN THE CROSS OBJECTION, THE GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE AMOUNT OF RS. 27.75 CRORES PAID BY M/S MORGAN CREDITS PVT. LT D TO HDFC LTD. ON BEHALF OF ASSESSEE COMPANY WAS NOT IN THE NATURE OF LOAN OR ADVANCE BUT WAS PURELY A BUSINESS TRANSACTION NOT LIABLE TO BE ASSESSED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME-TAX ACT, 1961 A S HELD BY THE HON'BLE DELHI HIGH COURT IN CIT V. ARVIND KUMAR JAIN (2012) 205 TAXMAN 44 (DEL) AND CIT V. ANTITECH PVT. LTD (2011) 199 TAXMA N 341 (DEL) (PARA-35). 2. THAT THE ASSESSEE COMPANY CRAVES LEAVE TO ADD, A LTER OR AMEND ANY GROUND OF CROSS OBJECTION ON OR AT THE TIME OF HEAR ING OF THE APPEAL. 7. LD. AR SUBMITTED THAT HE IS NOT PRESSING GROUNDS RAISED IN THE CROSS OBJECTION. HOWEVER, HE MENTIONED THAT THE AMOUNT O F RS.27,75,00,000/- PAID BY M/S. MORGAN CREDITS PVT. LTD. TO HDFC LTD. ON BE HALF OF THE ASSESSEE COMPANY WAS NOT IN THE NATURE OF LOAN OR ADVANCE BU T WAS PURELY A BUSINESS ITA NO.1798/DEL./2013 CO NO.147/DEL/2013 8 TRANSACTION WHICH IS NOT LIABLE TO BE ASSESSED AS D EEMED DIVIDEND U/S 2(22)(E) OF THE ACT. HE SUBMITTED THAT SUCH A PROPOSITION H AS BEEN HELD BY HON'BLE DELHI HIGH COURT IN THE CASES OF CIT VS. ARVIND KUM AR JAIN (2012) 205 TAXMAN 44 (DEL) AND CIT VS. ANTITECH PVT. LTD. (201 1) 199 TAXMAN 341 (DEL.). HOWEVER, HE HAS NOT PRESSED THE CROSS OBJE CTION AND THE SAME IS DISMISSED AS NOT PRESSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF AUGUST, 2014. SD/- SD/- (ABY T. VARKEY) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 22 ND DAY OF AUGUST , 2014. TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.