Dhawani Infrastructure Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(1)(4), Ahmedabad

CO 157/AHD/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0583 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-02-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-04-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 13-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Deemed dividend; TDS
• Section: 143(3); 2(22)(e); 143(1); 13; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER THE ITO, WARD-1(1)(4), AHMEDABAD (APPELLANT) VS DHWANI INFRASTRUCTURE PVT. ISCON HOUSE, B/H, RAMBARDI BUILDING, OPP. ASSOCIATED PETROL PUMP, OFF C.G. ROAD, AHMEDABAD-380009 PAN: AACCD5791Q (RESPONDENT) DHWANI INFRASTRUCTURE PVT. ISCON HOUSE, B/H, RAMBARDI BUILDING, OPP. ASSOCIATED PETROL PUMP, OFF C.G. ROAD, AHMEDABAD-380009 PAN: AACCD5791Q (APPELLANT) VS THE ITO, WARD-1(1)(4), AHMEDABAD (RESPONDENT) ITA NO. 2232/AHD/2016 ASSESSMENT YEAR 2008-09 CROSS OBJECTION NO. 157/AHD/2016 (IN ITA NO. 2232/AHD/2016) ASSESSMENT YEAR 2008-09 I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 2 REVENUE BY: SHRI RAJDEEP SINGH, SR. D.R. ASSESSEE BY: SMT. NUPUR SHAH, A.R. DATE OF HEARING : 21-01-2021 DATE OF PRONOUNCEMENT : 11-02-20 21 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THE APPEAL FILED BY REVENUE AND CROSS OBJECTION FIL ED BY ASSESSEE FOR A.Y. 2008-09, ARISE FROM ORDER OF THE CIT(A)-1, AH MEDABAD-1 DATED 29-06- 2016, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 14 7 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE SOLITARY ISSUE IN THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE DECISION OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 3,30,50,859/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT . 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECL ARING TOTAL INCOME OF RS. 1,53,410/- WAS FILED ON 29 TH SEP, 2008. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WA S REOPENED BY ISSUING OF NOTICE U/S. 148 OF THE ACT ON 27 TH MARCH, 2015. DURING THE COURSE OF REOPENING OF ASSESSMENT, THE ASSESSING OFFICER NOTI CED THAT JP ESCON LTD. COMPANY HAD PROVIDED LOAN OF RS. 6,83,52,624/- TO T HE ASSESSEE COMPANY. THERE WERE COMMON SHAREHOLDERS IN BOTH THE COMPANIE S NAMELY SHRI PRAVIN KOTAK AND SHRI AMIT GUPTA WITH FOLLOWING SHARE HOLD ING RATIO IN BOTH THE COMPANIES:- I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 3 SR. NO. NAME OF THE SHARE HOLDER DHAWANI INFRASTRUCTURE PVT. LTD. J. P. ISCON LIMITED (JPIL) 1 SHRI PRAVIN KOTAK 90% 28.99% 2 SHRI AMIT GUPTA 10% 15.00% IN VIEW OF THE ABOVE CITED COMMON SHARE HOLDING, TH E ASSESSING OFFICER QUESTIONED THE ASSESSEE TO EXPLAIN WHY AN AMOUNT OF RS. 6,83,52,624/- PROVIDED BY THE J.P. ESCON LTD. SHOULD NOT BE TREAT ED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. THE DETAILED SUBMISSION OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT HAS BEEN REPRODUCED BY THE AS SESSING OFFICER AT PAGE NO. 3 TO 8 OF THE ASSESSMENT ORDER. IN ITS SUBMISS ION, THE ASSESSEE HAS MAINLY SUBMITTED THAT PROVISIONS OF SECTION 2(22)(E) OF TH E ACT ARE NOT APPLICABLE AS THE ASSESSEE IS NOT A SHARE HOLDER OF J.P. ESCON LT D.. THE ASSESSING OFFICER HAS NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE. HE WAS OF THE VIEW THAT THE PROVISION OF SECTION 2(22)(E) OF THE ACT IS ATT RACTED SINCE BOTH THE COMPANIES HAS COMMON SHARE HOLDER HOLDING SUBSTANTI AL INTEREST IN EACH COMPANY. CONSEQUENTLY, THE ASSESSING OFFICER HAS T REATED THE AMOUNT OF RS. 3,30,50,859/- RECEIVED DURING THE YEAR UNDER CO NSIDERATION BY THE ASSESSEE AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE AC T AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AFTER PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT AND O THER JUDGMENT AS I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 4 ELABORATED IN HIS ORDER. THE RELEVANT PART OF DECI SION OF LD. CIT(A) IS REPRODUCED AS UNDER:- 2.6. I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION MADE BY THE LEARNED A.RS. IT IS OBSERVED THAT IT IS FACT THAT S HRI PRAVIN KOTAK & SHRI AMIT GUPTA WERE HAVING SUBSTANTIAL SHARE HOLDING IN BOTH THE COMPANIES I.E . GIVER COMPANY WELL AS THE RECIPIENT COMPANY. THE EXPRESS PROVISIONS OF SECTION 2(22)(E) SHOW THAT THERE ARE THREE LIMBS OF THE SAID SECTION I.E. (I) THE PAYMENT BY A COMPANY BY WAY OF ADVANCE OR L OAN SHOULD HAVE BEEN MADE TO A SHAREHOLDER WHO IS A BENEFICIAL OWNER OF THE SHARES AND SUBSTAN TIAL INTEREST. (II) OR THE PAYMENT SHOULD BE MADE TO ANY CONCERN IN WHICH SUCH SHARE HOLDER IS A MEMBER OR PARTNER AND IN THAT CONCERN, HE SHOULD HAVE A SUBST ANTIAL INTEREST; & (III) OR THE COMPANY MAKES PAYMENT, OR ON ITS BEH ALF PAYMENT IS MADE FOR INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER TO THE EXTENT TO WHICH THE COM PANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS. 2.7. IN THE CAPTIONED CASE, THE PAYMENT HAS BEEN MADE BY J P ESCON LIMITED, TO THE APPELLANT COMPANY BUT THE APPELLANT COMPANY IS NOT A REGISTER ED SHARE HOLDER OF J P ESCON LIMITED. FROM THE FACTS, IT IS SEEN THAT APPELLANT IS NOT A SHARE HOLDER IN THE LENDER COMPANY HOWEVER, THE ASSESSING OFFICER TREATED THE SAME AS DEEMED DIVIDE ND IN HANDS OF APPELLANT COMPANY. IT IS ALSO SUBMITTED THAT THE TRANSACTION WAS NOT IN THE NATUR E OF ADVANCE OR LOAN AND IT WAS SIMPLY INTER CORPORATE DEPOSITS (ICD). THE APPELLANT HAD PROVIDE D FOR THE INTEREST EXPENSES ON THE SAID ICD BORROWED AND HAVE DEDUCTED THE NECESSARY TDS AND HA VE ALSO PAID BACK THE SAID ICD ALONG WITH INTEREST. APPELLANT'S MAIN OBJECTION WAS THAT IN VI EW OF THE VARIOUS DECISIONS INCLUDING SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF ASSTT. CIT V/S. BHAUMIK COLOUR (P.) LTD.[2009] 118 ITD 1 (MUM.) (SB) AND JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT V/S DAISY PACKERS (P.) LTD [2013] 40 TAXMDNN.COM 480 (GUJARAT), 3. BOMBAY HIGH COURT IN THE CASE OF CIT VS. IMPACT CONTAINERS (P.) LTD 367ITR 346 [2014] (BOMBAY) AND OTHER DECISIONS (SUPRA), THE ADDITION OF DEEMED DIVIDEND CANNOT BE MADE IN THE HANDS OF THE COMPANY. THE VIEW TAKEN BY THE I.T.A.T. MUMBAI SPECIAL BENCH IN THE CASE OF ACIT MUMBAI VS. BHAUMIK COLOUR (P) LTD HAS BEEN APPROVED BY THE HON 'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. UNIVERSAL MEDICARE PRIVATE LIMITED (2010) 324 I TR 263 (BOM.) THE GUJARAT HIGH COURT IN THE CASE OF CIT V/S DAISY PACKERS (P) LTD DECIDED THE I SSUE IN FAVOUR OF THE ASSESSES, RELYING ON THE DECISION OF THE DIVISION BENCH OF THE HIGH COURT IN CIT V. ANKITECH (P.) LTD. (2012) 340 ITR 14 (DEL) WHEREIN IT WAS HELD THAT IF THE ASSESSEE-COMP ANY DOES NOT HOLD A SHARE IN OTHER COMPANY FROM WHICH IT HAD RECEIVED DEPOSIT THEN IT CANNOT B E TREATED TO BE A DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. FROM THE READING OF TH E PROVISIONS OF SECTION 2(22)(E), IT IS SEEN THAT THE PROVISION IS INTENDED TO TAX THE DIVIDEND IN TH E HANDS OF A SHAREHOLDER AND THE DEEMING PROVISION AS IT APPLIES TO THE CASE OF LOAN OR ADVA NCE BY A COMPANY TO A CONCERN IN WHICH IS SHAREHOLDER AND HAS SUBSTANTIAL INTEREST, IS BASED ON THE PRESUMPTION THAT THE LOAN OR ADVANCE WOULD ULTIMATELY BE MADE AVAILABLE TO THE SHAREHOLD ER OF THE COMPANY GIVING LOAN OR ADVANCE. VARIOUS COURT DECISIONS E.G. ACIT V/S. BHAUMIK COLO UR (P.) LTD.[2009] 118 ITD 1 (MUM.) (SB) & JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF C IT V/S DAISY PACKERS (P.) LTD [2013] 40 TAXMANN.COM 480 (GUJARAT), CIT VS. IMPACT CONTAINER S (P.) LTD 367 ITR 346 [2014] (BOMBAY) AND OTHER VARIOUS DECISIONS SUPRA SUPPORT THIS VIEW THAT THE DEEMED DIVIDEND U/S. 2(22)(E) CAN ONLY BE ASSESSED IN THE HANDS OF THE PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN THE SHAREHOLDER. I N VIEW OF THE ABOVE FACTS AND ON THE BASIS OF THE ABOVE REFERRED DECISIONS (SUPRA), THE ADDITION MADE BY THE ASSESSING OFFICER U/S.2(22)(E) IS HELD TO BE NOT JUSTIFIED AND THE SAME IS DELETED. THE ADDIT IONS MADE BY THE A,O AS DEEMED DIVIDEND U/S 2(22)(E) OF IT ACT FOR RS. 3,30,50,859/- IN THE HAN DS OF THE APPELLANT COMPANY IS DIRECTED TO BE DELETED. THE GROUND OF THE APPELLANT IS ALLOWED. I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 5 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, LD. COUNSEL HAS FURNISHED PAPER BOOK COMPRISING COPIES OF DOCUMENT AND DETAIL FILED BEFORE THE LOWER AUTHORITIES. THE LD. COUNSEL HAS CONTENDE D THAT FOR THE APPLICABILITY OF SECTION 2(22)(2) OF THE ACT, IT IS REQUIRED THAT THE ASSESSEE MUST BE A SHAREHOLDER IN THE COMPANY FROM WHOM THE LOAN OR AD VANCE HAS BEEN TAKEN. THE LD. COUNSEL HAS SUPPORTED THE ORDER OF LD. CIT( A). ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED T HE ORDER OF ASSESSING OFFICER. 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON THE RECORD. DURING THE YEAR UNDER CONSIDERATION, THE J. P. ESCON LTD. HAS GIVEN INTER CORPORATE DEPOSIT TO THE ASSESSE COMPANY. THE CASE OF THE AS SESSEE WAS REOPENED FOR THE REASONS THAT J.P. ESCON LTD. HAD PROVIDED LOAN OF RS. 68,35,2624/- TO THE ASSESSEE COMPANY WHICH ATTRACTS THE PROVISION OF S ECTION 2(22)(E) OF THE ACT. AT THE ASSESSMENT STAGE, THE ASSESSEE HAS CA TEGORICALLY EXPLAINED AFTER REFERRING VARIOUS JUDICIAL PRONOUNCEMENTS THAT THE AMOUNT RECEIVED FROM J.P. ESCON LTD. CANNOT BE TAXED AS DEEMED DIVIDEND IN ITS HAND AS IT WAS NOT THE REGISTERED SHARE HOLDER OF J.P. ESCON LTD. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBSTANTIAL COMMON SHARE HOLDING OF SHRI PRAVIN KOTAK AND SHRI AMIT GUPTA, TREATED THE AMOUNT OF RS. 3,30,50, 859/- UPTO THE ACCUMULATED PROFIT RECEIVED BY THE ASSESSEE COMPAN Y FROM J.P. ESCON LTD. AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. THE L D. CIT(A) HAS DELETED THE ADDITION HOLDING THAT ASSESSEE COMPANY WAS NOT A RE GISTERED SHARE HOLDER OF J.P. ESCON LTD. AFTER PLACING RELIANCE ON THE VARIO US JUDICIAL PRONOUNCEMENTS AS ELABORATED IN HIS FINDINGS AS CITED ABOVE IN THI S ORDER. AFTER PERUSAL OF THE MATERIAL ON RECORD, IT IS NOTICED THAT ASSESSEE COM PANY WAS NOT A REGISTERED I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 6 SHARE HOLDER IN J.P. ESCON LTD. WHO HAS GIVEN INTER CORPORATE DEPOSIT TO THE ASSESSEE COMPANY. THE SIMILAR ISSUE ON IDENTICAL F ACTS HAS BEEN ADJUDICATED BY THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF PR. CIT VS. MAHAVIR INDUCTO PVT. LTD. DATED 12 TH JAN, 2017 ON THE BASIS OF WHICH THE CO-ORDINATE BENCH OF THE ITAT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S. PRECIMETAL CAST PVT. L TD. VS. ITO DATED 16.12.2020 WHEREIN IT IS HELD THAT FOR THE APPLICAB ILITY OF SECTION 2(22)(E) OF THE ACT IT IS REQUIRED THAT ASSESSEE COMPANY MUST B E A SHARE HOLDER IN THE COMPANY FROM WHOM THE LOAN OR ADVANCE HAS BEEN TAKE N. THE RELEVANT PART OF THE DECISION OF THE CO-ORDINATE BENCH IS REPRODU CED AS UNDER:- 7. HEARD BOTH THE SIDES AND PERUSED THE MATERIA L ON RECORD. THE ASSESSING OFFICER NOTICED THAT ASSESSEE COMPANY HAS OBTAINED UNSECURED LOAN FROM GAURAV SECURITIES PVT. LTD. WHEREIN ONE OF THE MAIN SHAREHOLDERS OF THE ASSESSEE COMPANY SH RI UMESH BHATIYA WAS HOLDING SUBSTANTIAL SHARES IN GAURAV SECURITIES PVT. LTD. LOOKING TO T HE ABOVE FACTS, THE ASSESSING OFFICER HAS MADE AN ADDITION TO THE EXTENT OF RS. 13,21,198/- BEING ACCUMULATED PROFIT OF GAURAV SECURITY PVT. LTD. FOR THE REASON THAT SECTION 2(22)(E) PROHIBITS ADVA NCING MONEY AMONG ENTITIES HAVING COMMON SHAREHOLDERS WITH SUBSTANTIAL INTEREST IN THE CASE OF CLOSELY HELD COMPANY HAVING ACCUMULATED PROFIT. AFTER PERUSAL OF THE JUDICIAL PRONOUNCEMEN TS IT IS NOTICED THAT IDENTICAL ISSUE ON COMMON FACTS HAVE BEEN ADJUDICATED BY THE CO-ORDINATE BENC H OF THE ITAT AHMEDABAD IN THE CASE OF ACIT VS. LEELA SHIP RECYLING PVT. LTD. VIDE ITA NO. 1658 /AHD/2012 DATED 12 TH MARCH, 2020 AND BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS . MAHAVIR INDUCTO PVT. LTD. DATED 12-01-2017. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE AFORESAID TWO JUDICIAL PRONOUNCEMENTS, IT IS NOTICED THAT IN THE CASE OF A CIT VS. LEELA SHIP RECYCLING PVT. LTD. SUPRA THE CO-ORDINATE BENCH OF THE ITAT HAS ADJUDICATED THE I DENTICAL ISSUE ON SAME FACTS AS UNDER:- 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE AND THE APPLICABLE LEG AL POSITION. 5. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE I SSUE IN APPEAL IS NOW COVERED BY HON'BLE JURISDICTIONAL HIGH COURT'S JUDGMENT IN THE CASE OF CIT VS MAHAVIR INDUCTOMELT PVT LTD (TA NO. 890 OF 2011; JUDGMENT DATED 13 TH JANUARY 2017) WHEREIN THEIR LORDSHIPS HAVE EXTENSIVELY REPRODUCED FROM HON'BLE DELHI HIGH COURT'S JUDGMENT IN THE CASE OF ANITECH PVT LTD (SUPRA), AND CONCURRED WITH THE SAME. THUS, IN A CASE IN WHICH AN AMOUNT IS RECEIVED FROM A PERSON OTHER THAN THE SHA REHOLDER, AS IS THE ADMITTED POSITION IN THIS CASE, THE PROVISIONS OF SECTION 2(22)(E) CA NNOT INDEED BE INVOKED. THE CIT(A) WAS THUS JUSTIFIED IN GRANTING THE IMPUGNED RELIEF IN R ESPECT OF THE ADDITION UNDER SECTION 2(22)(E). WE, THEREFORE, APPROVE THE CONCLUSION ARR IVED AT BY THE LEARNED CIT(A) IN THIS REGARD, AND DECLINE TO INTERFERE IN THE MATTER ON T HAT COUNT. WE HAVE ALSO THROUGH THE DECISION OF HONBLE GUJARA T HIGH COURT IN THE CASE OF PR. CIT VS. MAHAVIR INDUCTO PVT. LTD. SUPRA WHEREIN THE IDENTIC AL ISSUE ON SAME FACTS WAS DECIDED IN FAVOUR OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF BOM BAY HIGH COURT IN THE CASE OF CIT VS. IMPACT CONTAINERS PVT. LTD. AND OTHERS VIDE IT APPEAL NO. 114 OF 2012 AND THE DECISION OF DELHI HIGH I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 7 COURT IN THE CASE OF CIT VS. ANKITECH PVT. LTD. LTD . REPORTED IN 340 ITR 14 DELHI. THE RELEVANT PART OF THE DECISION IS REPRODUCED AS UNDER:- 50. IDENTICAL QUESTION CAME TO BE CONSID ERED BY THE DIVISION BENCH OF THIS COURT IN TAX APPEAL NO. 253 OF 2015. AFTER CONSIDERING THE DECISI ON OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. IMPACT CONTAINERS PRIVATE LIMITED & ORS RENDERED IN ITA NO. 114 OF 2012 AND THE DECISION O F THE DELHI HIGH COURT IN THECA SE OF CIT VS. ANKITECH PVT LTD REPORTED IN 340 ITR 14 (DEL) AND ON INTERPRETING S ECTION 2 (22)(E), IN PARA 4 HAS OBSERVED AND HELD AS UNDER: 4.SHRI BHATT, LEARNED COUNSEL APPEARING ON BEHALF OF THE REVENUE HAS AS SUCH TRIED TO JUSTIFY THE DECISION OF THE DELHI C OURT IN THE CASE OF ANKITECH PVT. LTD. (SUPRA) AND HAS VEHEMENTLY SUBMITTED THAT THE DELHI HIGH COURT HAS NOT CONSIDERED THE THIRD CATEGORY I.E. SHAREHOL DER IN THE ASSESSEE COMPANY HOLDING NOT LESS THAN 10% OF THE VOTING PO WER IN THE COMPANY FROM WHOM THE LOAN OR ADVANCE IS TAKEN. HOWEVER, ON CONSIDERING SECTION 2(22)(E) OF THE ACT, WE ARE NOT AT ALL IMPRESSED WITH THE AFORESAID. IF THE CONTENTION ON BEHALF OF THE REVENUE IS ACCEPTED, IN THAT CASE, IT WILL BE CREATING THE THI RD CATEGORY / CLASS, WHICH IS NOT PERMISS IBLE. WHAT IS PROVIDED UNDER SECTION 2(22) (E) OF THE ACT SEEMS TO BE THAT THE ASSESSEE HC-NIC PAGE 4 OF 5 CREATED ON SAT AUG 12 04:34:00 IST 2017 O/TAXAP/891/2016 JUDGM ENT COMPANY MUST BE A SHAREHOLDER IN THE COMPANY FROM WHOM THE LOAN OR ADVANCE HAS BEEN TAKEN AND SH OULD BE HOLDING NOT LESS THAN 10% OF THE VOTING POWER. IT DOES NOT PROVIDE THAT ANY S HAREHOLDER IN THE ASSESSEE- COMPANY WHO HAD TAKEN ANY LOAN OR ADVANCE FROM ANOTHER COMPANY IN WHICH SUCH SHAREHOLDER IS ALSO A SHAREHOLDER HAVING SUBS TANTIAL INTEREST, SECTION 2(22)(E) OF THE ACT MAY BE APPLICABLE. 5.1. CONSIDERING THE AFORESAID DECISION OF THE DIVISION BENCH OF THIS COURT AND THE FACTS NARRATED HEREIN ABOVE, MORE PARTICULARLY,CONSIDERING THE FACT THAT THE ASSESSEE WAS NOT SHARE HOLDER OF MAHAVIR ROLLIN G MILLS PVT LTD TO WHOM LOAN WAS GIVEN, IT CANNOT B E SAID THAT THE LEARNED TRIBUNAL HAS C OMMITTED ANY ERROR IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON DEEMED DIVIDEND. IN VIEW OF THE FINDINGS AS SUPRA HONBLE JURISDICTIONAL HIGH COURT WHEREIN IT IS HELD THAT FOR THE APPLICABILITY OF SECTION 2(22)(E), IT IS REQUIRED THAT THE ASSESSEE COMPANY MUST BE A SHAREHOLDER IN THE COMPANY FROM WHOM THE LOAN OR AD VANCE HAS BEEN TAKEN AND IT DOES NOT PROVIDE THAT ANY SHAREHOLDER IN THE ASSESSEE COMPAN Y WHO HAD TAKEN ANY LOAN OR ADVANCE FROM ANOTHER COMPANY IN WHICH SUCH SHAREHOLDER IS ALSO A SHAREHOLDER HAVING SUBSTANTIAL INTEREST. SINCE THE FACTS OF THE CASE OF THE ASSESSEE ARE SQU ARELY COVERED BY THE AFORESAID DECISIONS OF HONBLE HIGH COURT AND CO-ORDINATE BENCH OF THE ITA T, THE IMPUGNED ADDITION IS DELETED. ACCORDINGLY, THIS GROUND OF THE ASSESSE IS ALLOWED. AFTER TAKING INTO CONSIDERATION, THE AFORESAID FACT S AND JUDICIAL FINDINGS AS REFERRED ABOVE, IT IS UNDISPUTED FACT THAT ASSESSEE COMPANY WAS NOT A REGISTERED SHARE HOLDER IN J.P. ESCON LTD. FROM WHO M IT HAS OBTAINED LOAN DURING THE YEAR UNDER CONSIDERATION. THEREFORE, TH E ADDITION MADE BY THE ASSESSING OFFICER AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT IS NOT I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 8 JUSTIFIED. IN THE LIGHT OF THE ABOVE FACTS AND FIND INGS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A), THEREFORE, THIS APPEAL OF THE REVENUE IS DISMISSED. CROSS OBJECTION NO. 157/AHD/2016 FILED BY ASSESSEE 7. THE CROSS OBJECTION HAS BEEN FILED BY THE ASSESS EE ONLY SUPPORTING THE ORDER OF ORDER OF LD. CIT(A) VIDE WHICH THE IMPUGNE D ADDITION ON ACCOUNT OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT WAS DELETE D. SINCE VIDE ITA NO. 2232/AHD/2016 WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THEREFORE, THIS CROSS OBJECTION HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED. 8. IN THE RESULT, BOTH THE APPEAL FILED BY REVENUE AND CROSS OBJECTION FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-02-2021 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT A CCOUNTANT MEMBER AHMEDABAD : DATED 11/02/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 2232 & C.O. NO. 157/AHD/2016 A.Y. 2008-0 9 PAGE NO ITO VS. M/S. DHWANI INFRASTRUCTURE PVT. LTD. 9 BY ORDER/ , / ,