The Dy. CIT, Circle-1(1)(2), Ahmedabad V. M/s. Corrtech Energy Ltd., Ahmedabad

ITA 1103/AHD/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5306 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-04-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 05-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARIMA L SINH PARMA; TUSHAR HEMANI SR
• Keywords: Earning of tax free income; Deemed dividend
• Section: 143(3); 2(22)(e); 14A; 143(2); 13

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 DCIT, CIR. 1(1)(2), AHMEDABAD (APPELLANT) VS CORRTECH ENERGY LTD., 22, DHARA CENTRE, NEAR VIJAY CHAR RASTA, NAVRANGPURA, AHMEDABAD PAN: AAACI8838F (RESPONDENT) REVENUE BY: SHRI RAJDEEP SINGH, SR. D.R. ASSESSEE BY: SHRI TUSHAR HEMANI, SR . A.R. AND SHRI PARIMA L SINH PARMAR, A.R. DATE OF HEARING : 22-01-2021 DATE OF PRONOUNCEMENT : 03-02-20 21 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2012-13, ARISES FRO M ORDER OF THE CIT(A)-1, AHMEDABAD DATED 27-02-2017, IN PROCEEDIN GS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. 2. THE ASSESSEE HAS RAISED FOLLOWING ROUNDS OF APPE AL:- (A) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,32,900/- MADE U/S 14A OF THE I.T. ACT. ITA NO. 1103/AHD/2017 ASSESSMENT YEAR 2012-13 I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 2 (B) THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,23,597/- MADE U/S 36(L)(III) OF THE I.T. ACT ON ACCOUNT OF DISALLOWAN CE OF INTEREST. (C) THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS,3,41,L8,332/- MADE U/S 2(22)(E) OF THE I.T. ACT. ON ACCOUNT OF DEEMED DIVIDEND. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER TO THE EXTENT MENTIO NED ABOVE SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME/BOOK PROFIT. 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLA RING LOSS OF RS. (- )1,85,25,248/- WAS FILED ON 30 TH SEP, 2012. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 12 TH AUGUST, 2013. ASSESSMENT ORDER U/S. 143(3) OF THE ACT WAS FINALIZED ON 4 TH MARCH, 2015. THE ASSESSING OFFICER HAS MADE DISALL OWANCE OF 1,32,900/- U/S. 14A R.W.S. 8D OF THE I.T. RULE 1962, DISALLOWA NCE INTEREST OF RS. 3,23,597/- U/S. 36(1)(III) AND DISALLOWANCE OF RS. 3,41,18,332/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE I.T. ACT, 1961. THE ASSESSEE HAS CONTESTED THESE ADDITIONS IN APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS DELETED ALL THESE ADDITIONS MADE BY THE ASSESSING OFFICER. THE GROUNDS OF APPEAL OF THE REVENUE AGAINST DELETING THESE ADDITIONS ARE AD JUDICATED AS UNDER:- GROUND NO. 1 (DELETING ADDITION OF RS. 1,32,900/- U /S. 14A OF THE ACT) 4. DURING THE COURSE OF ASSESSMENT ON VERIFICATION OF THE BALANCE SHEET, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS MADE SUBSTANTIAL INVESTMENT IN SHARES AS PER P & L A/C AND CLAIMED I NTEREST EXPENDITURE INCURRED ON LOAN BUT NOT MADE ANY DISALLOWANCE U/S. 14A R.W.S. 8D OF THE I.T. RULE. ON QUERY, THE ASSESSEE EXPLAINED THAT I T HAS NOT CLAIMED ANY EXEMPT INCOME, THEREFORE, DISALLOWANCE THE U/S. 14A R.W.R. 8D DOES NOT ARISE AT ALL. THE ASSESSEE HAS ALSO SUBMITTED THAT THE H ONBLE GUJARAT HIGH COURT HAD ADJUDICATED THE SIMILAR ISSUE ON IDENTICAL FACT S IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2009-10 HOLDING THAT NO ADDITION U/S. 14A R.W.S. I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 3 8D IS WARRANTED. HOWEVER, THE ASSESSING OFFICER H AS NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE STATING THAT SECTION 14A R.W.S 8D PROVIDES FOR DISALLOWANCE OF EXPENDITURE EVEN WHERE TAXPAYER IN A PARTICULAR YEAR HAS NOT EARNED EXEMPT INCOME. 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF THE ASSES SEE ITSELF PERTAINING TO ASSESSMENT YEAR 2009-10. 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS NOT RECEIVED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. THE HONBLE GUJARAT H IGH COURT IN THE CASE OF THE ASSESSEE ITSELF VIDE CIT VS. CORRTECK ENGINEERI NG PVT. LTD. 372 ITR 97 HAS HELD THAT IN ABSENCE OF EXEMPT INCOME DISALLOWA NCE U/S. 14A IS UNWARRANTED. TAKING INTO CONSIDERATION, THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIR MITY IN THE FINDING OF LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL OF THE RE VENUE IS DISMISSED. GROUND NO. 2 ( DELETING ADDITION ON INTEREST EXPENS ES OF RS. 3,23,597/- U/S. 36(1)(III) OF THE ACT) 7. DURING THE COURSE OF ASSESSMENT, THE ASSESSING O FFICER NOTICED THAT ASSESSEE COMPANY HAS GIVEN INTEREST FREE ADVANCES O F RS. 26,96,648/- TO ITS RELATED COMPANY NAMELY CROSSTOWN POWER PVT. LTD. T HE ASSESSING OFFICER HAS ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXP LAIN AS TO WHY INTEREST EXPENSES SHOULD NOT BE DISALLOWED TO THE EXTENT OF INTEREST FREE ADVANCES I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 4 GIVEN BY THE ASSESSEE. THE ASSESSEE EXPLAINED THAT OUT OF TOTAL AMOUNT OF RS. 2,95,51,778/- AN AMOUNT OF 26,90,648/- HAS BEEN GIV EN AS A LOAN TO CROSSTOWN POWER PVT. LTD. AND THE REMAINING AMOUNT WERE ADVANCED AS SECURITY DEPOSIT FOR SECURING TENDERS OR CAPITAL A DVANCES TOWARDS ACQUISITION OF MACHINERIES AND ASSETS. THE ASSESSING OFFICER H AS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE AND DETERMINED INTEREST OF RS. 3,23,597/- @ 12% ON THE LOAN AMOUNT OF RS. 26,96,648/- ADVANCED TO I TS ASSOCIATED CONCERN. 8. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF THE AS SESSEE ITSELF ON SIMILAR ISSUE AND IDENTICAL FACTS PERTAINING TO ASSESSMENT YEAR 2009-10 VIDE ITA NO. 1650/AHD/2012 DATED 31 ST OCTOBER, 2011 HOLDING THAT ASSESSEE COMPANY HAD SUFFICIENT INTEREST FREE FUNDS. 9. HEARD BOTH THE SIDES ON THIS ISSUE. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS GI VEN INTEREST FREE ADVANCE OF RS. 26,96,648/- TO ITS RELATED COMPANY NAMELY CR OSSTOWN POWER PVT. LTD.. THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS. 3,23,597/- U/S. 36(1)(III) OF THE ACT. THE LD. CIT(A) HAS DELETED THE DISALLOWANCE AFTER FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF THE ASSESSEE ITSELF ON IDENTICAL ISSUE AND FACTS PERTAI NING TO ASSESSMENT YEAR 2009-10 VIDE ITA NO. 1650/AHD/12. ON PERUSAL OF TH E MATERIAL ON RECORD, IT IS NOTICED THAT ASSESSEE WAS HAVING SUBSTANTIAL INT EREST FREE FUND EVIDENT FROM ANNUAL ACCOUNTS PLACED AS ANNEXURE A IN THE SU BMISSION OF THE ASSESSEE AS UNDER:- I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 5 SHARE CAPITAL RS. 2,10,00,000/- RESERVES & SURPLUS RS. 27,05,05,249/- TOTAL RS. 29,15,05,249/- IT IS DEMONSTRATED FROM THE ACCOUNT OF THE ASSESSEE THAT IT WAS HAVING INTEREST FREE FUND OF RS. 29,15,05,249/- AS AGAINST INTEREST FREE LOAN OF RS. 26,96,648/-. WE HAVE ALSO CONSIDERED THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LD. COUNSEL IN THE CASE OF CIT VS. RELIANCE INDUSTRIES LTD. 410 ITR 466 (SC), CIT VS. TORRENT POWER LTD. - 363 ITR 474 (GUJ.), CIT VS. SUZLON ENERGY LTD. - 354 ITR 630 (GUJ), CIT VS. GUJARAT POWER CORPORATION LTD.-352 ITR 583 (GUJ) , CIT VS. RELIANCE UTILITIES POWER LTD. - 313 ITR 340 (BOM) AND MUNJAL SALES CORPORATION VS. CIT- 298 ITR 298 (SC). PARTICULARLY ON THE ISSUE THAT WHEN ASSESSEE HAS SUBSTANTIAL INTEREST FREE FUNDS DISALL OWANCE U/S. 36(1) (III) IS UNWARRANTED. IN THE LIGHT OF THE ABOVE FACTS AND F INDINGS, WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A). THEREFORE, TH IS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 3 ( DELETING ADDITION OF RS. 3,41,18,332 U/S. 2(22)(E) OF THE ACT) 10. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR THE ASSESSEE COMPANY HAD RECEIVED A N AMOUNT OF RS. 3,33,33,000/- FROM CORRTECK INTERNATIONAL PVT. LTD. AND RS. 7,85,332/- FROM CROSSTOWN POWER INDIA PVT. LTD. AND BOTH THESE COMP ANIES WERE HAVING SUBSTANTIAL INTEREST IN THE ASSESSEE COMPANY WITHIN THE MEANING U/S. 2(22)(E) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHEN ONE SUBSIDIARY I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 6 COMPANY RECEIVES LOAN AND ADVANCES FROM ANOTHER SUB SIDIARY COMPANY THE PROVISION OF SECTION 2(22)(E) OF THE ACT ARE ATTRAC TED. THEREFORE, THE LOAN AND ADVANCES OF RS. 3,41,18,332/- FROM CORRTECK I NTERNATIONAL AND CROSSTOWN INDIA PVT. LTD. DURING THE YEAR WAS TREA TED AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT A ND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 11. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE ADDITION AFTER FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE ITAT ON SIMILAR ISSUE AND IDENTICAL FA CTS IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2009-10 SINCE T HE ASSESSEE COMPANY WAS NOT A SHAREHOLDER IN THE CORRTECK INTERNATIONAL PV T. LTD. AND IN THE CROSSTOWN POWER INDIA PVT. LTD. 12. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL O N RECORD. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS RECEIVED FUNDS FROM CORRTECK INTERNATIONAL PVT. LTD . TO THE AMOUNT OF RS. 3,33,33,000/- AND AN AMOUNT OF RS. 7,85,332/- FROM CROSSTOWN POWER INDIA PVT. LTD. TOTALING TO RS. 3,45,18,232/-. THE ASSES SING OFFICER HAS MADE ADDITION OF RS. 3,41,18,332/- U/S. 2(22)(E) OF THE ACT AS DEEMED DIVIDEND ON THE GROUND THAT THE ASSESSEE COMPANY WAS A SUBSIDIA RY OF CORRTECK ENERGY LTD. AND CROSSTOWN POWER INDIA PVT. LTD. WAS A SUBS IDIARY OF CORRTECK INTERNATIONAL PVT. LTD. DURING THE COURSE OF APP ELLATE PROCEEDINGS, THE LD. COUNSEL HAS PLACED RELIANCE ON THE FOLLOWING JUDICI AL PRONOUNCEMENTS:- DCIT VS. CORRTECH ENERGY LTD. ITA 1970/AHD/2015 AND OTHERS, M/S. PRECIMETAL CAST. PVT. LTD. VS. ITO -ITA 3499/A HD/2015, I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 7 ACIT VS. LEELA SHIP RECYCLING PVT. LTD. ITA 1658/A HD/2012, CIT VS. MAHAVIR INDUCTO PVT. LTD. TAX APPEAL 891 OF 2016, ACIT VS. BHAUMIK COLORS PVT. LTD. -118 ITR 1 (MUM)( SB) & CIT VS. ANKITECH (P.) LTD.- 340 ITR 14 (DEL) THE IDENTICAL ISSUE ON SIMILAR FACT HAS BEEN ADJUDI CATED BY THE CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF M/S. PRECIMETAL CA STS PVT. LTD. VS. ITO VIDE ITA NO. 3499/AHD2015 DATED 16-12-2020 AFTER F OLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS. MAHAVIR INDUCTO PVT.LTD. DATED 12 TH JAN, 2017 HOLDING THAT FOR THE APPLICABILITY OF SE CTION 2(22)(E) IT IS REQUIRED THAT THE ASSESSEE COMPANY M UST BE A SHARE HOLDER IN THE COMPANY FROM WHOM THE LOAN OR ADVANCES HAS BEEN TAKEN AND IT DOES NOT PROVIDE THAT ANY SHARE HOLDERS IN THE ASSESSEE COMP ANY WHO HAD TAKEN ANY LOAN OR ADVANCE FROM ANOTHER COMPANY IN WHICH SUCH SHARE HOLDER IS ALSO A SHARE HOLDER HAVING SUBSTANTIAL INTEREST. THE REL EVANT PART OF THE DECISION IS REPRODUCED AS UNDER:- 7. HEARD BOTH THE SIDES AND PERUSED THE MATERI AL 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 IS SUE 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 I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 8 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 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 COURT IN THE CASE OF ANKITECH PVT. LTD. (SUPRA) AND HAS VEHEMENTLY SUB MITTED THAT THE DELHI HIGH COURT HAS NOT CONSIDERED THE THIRD CATEGORY I.E. SHAREHOLDER IN THE ASSESSEE COMPANY HOLDING NOT LESS THAN 10% OF THE V OTING POWER 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 AFO RESAID. IF THE CONTENTION ON BEHALF OF THE REVENUE IS ACCEPTED, IN THAT CASE, IT WILL BE CREATING THE THIRD CATEGORY / CLASS, WHICH IS NOT PERMISSIBLE. WHAT IS PROVIDED UNDER SECTION 2(22) ( E) OF THE ACT SEEMS TO BE THAT THE ASSESSEE HC-NIC PAGE 4 OF 5 CREAT ED ON SAT AUG 12 04:34:00 IST 2017 O/TAXAP/891/2016 JUDGMENT COMPANY MUST BE A SHAREHOLDER IN THE COMPANY FROM WHOM THE LOAN OR ADVANCE HAS BEEN TAKEN AND SH OULD BE HOLDING NOT LESS T HAN 10% OF THE VOTING POWER. IT DOES NOT PROVIDE TH AT ANY SHAREHOLDER IN THE ASSESSEECOMPANY WHO HAD TAKEN ANY LOAN OR ADVA NCE FROM ANOTHER COMPANY IN WHICH SUCH SHAREHOLDER IS ALSO A SHAREHOLDER HAVING SUBSTANTIA L 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 J URISDICTIONAL HIGH COURT WHEREIN IT IS HELD THAT FO R THE APPLICABILITY OF SECTION 2(22)(E), IT IS REQUIR ED 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. I.T.A NO. 1103/AHD/2017 A.Y. 2012-13 PAGE NO DY. CIT VS. CORRTECH ENERGY LTD. 9 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. TAKING INTO CONSIDERATION THE FINDINGS OF THE CO-OR DINATE BENCH AS SUPRA, WE DO NOT FIND ANY ERROR IN THE DECISION OF THE LD. CI T(A). THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE STANDS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03-02-2021 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 03/02/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,