ACIT - 16(1), MUMBAI V. CINE STUDIOS, MUMBAI

ITA 2794/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6963 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Deemed dividend

Judgement Text

P A G E | 1 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, M UMBAI BEFORE SHRI RAJENDRA, AM AND SHRI RAVISH SOOD, JM ITA NO.2794/MUM/2016 ( / ASSESSMENT YEARS:2011 - 12) A CI T - 16 ( 1 ), R OOM . NO. 439, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20 / VS. M/S CINE STUDIOS SHREE SOUND COMPLEX, MADHAV DAS PASTA ROAD, DADAR (E) MUMBAI - 400014 ./ ./ PAN NO. AAAFC2778B ( / REVENUE) : ( / ASSESSEE) / REVENUE BY : SHRI RAJAT MITTAL, D.R / ASSESSEE BY : SHRI MEHUL SHAH , A.R / DATE OF HEARING : 08.05.2018 / DATE OF PRONOUNCEMENT : 2 3 .05.2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 4, MUMBAI DATED 22.01.2016 WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) OF THE INCOME TAX ACT, 1961, (FOR SHORT ACT),DATED 26.02.2014 FOR A.Y 2011 - 12 . THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE F OLLOWING GROUNDS OF APPEAL: - 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY P A G E | 2 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX THE AO AMOUNTING TO RS.2,98,96,696/ - ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME TAX ACT, 1961. 2) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3) THE APPELLANT CRAVES LEAVE TO AME ND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM HAD E - FILED ITS RETURN OF INCOME FOR A.Y 2011 - 12 ON 24.09.2011, DECLARING TOTAL INCOME OF RS.66,92,475/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC.143(2). 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE FIRM HAD RECEIVED AN AMOUNT OF RS.2,98,96,969/ - TOWARDS F INANCE CREDITORS UNDER THE HEAD C URRENT LIABILITIES AND P ROVISION S IN THE BALANCE SHEET. IT WAS OBSERVED BY THE A.O THAT THE PARTNERS OF THE ASSESSEE FIRM I.E. M/S CINE STUDIO WERE ALSO DIRECTORS OF THE SISTER CONCERN S , VIZ. (I) M/S NAGINDAS PROPERTIES PVT. LTD.; (II) M/S SHR EE SOUND P. LTD.; AND (III) M/ S PUTCO P. LTD. THE A.O NOTED THAT TH E PARTNERS OF THE ASSESSEE FIRM WERE HAVING SUBSTANTIAL SHARE HOLDING OF APPROXIMATELY 90% IN THE AFOREMENTIONED THREE COMPANIES. THE ASSESSEE ON BEING CALLED UPON BY THE A.O TO EXPLAIN AS TO WHY THE A FORESAID AMOUNT MA Y NOT BE ASSESSED IN ITS HANDS AS DEEMED DIVIDEND UNDER SEC. 2(22)(E) OF THE ACT, SUBMITTED THAT AS IT WAS NOT A SHAREHOLDER IN EITHER OF THE SAID COMP ANIES, THEREFORE, THE AMOUNT COUL D NOT BE ASSESSED AS DEEMED DIVIDEND IN ITS HANDS . HOW EVER, THE EXPLANATION OF THE ASSESSEE D ID NOT FIND FAVOUR WITH THE A.O WHO ASSESSED THE AMOUNT OF RS.2,98,96,969/ - AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE FIRM. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE CIT(A) THAT AS THE ASSESSEE FIRM WAS NEITHER A REGISTERED SHAREHOLDER NOR A BENEFICIAL SHAREHOLDER OF EITHER OF THE AFORESAID COMPANIES, THEREFORE, THE A.O HAD ERRED IN ASSESSING THE AFORESAID AMOUNT OF RS.2,98,96,969/ - AS DEEMED DIVIDEND IN ITS HANDS. THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE IN THE BACKDROP OF THE ORDER PASSED BY THE A.O, OBSERVED THAT THE ASSESSEE FIRM DURIN G THE YEAR P A G E | 3 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX UNDER CONSIDERATION HAD RECEIVED AN AMOUNT OF RS.8 8 ,56,686/ - FROM M/ S NAGINDAS PROPERTIES PVT. LTD. IT WAS FURTHER OBSERVED BY THE CIT(A ) THAT THE ASSESSEE WAS HAVING OPENING BALANCE OF LOAN OF RS.49,20,834/ - FROM M/S SHR EE SOUND PVT. LTD; RS.1, 52,38 ,831/ - FROM M/S PUTCO PVT. LTD; AND RS.74,30,118/ - FROM M/S NAGINDAS PROPERTIES PVT. LTD. THE CIT(A) HOLDING A CONVICTION THAT THE OPENING BALANCE S OF LOANS COULD NOT BE A SUBJECT MATTER OF ADDITION DURING THE YEAR UNDER CONSIDERATION, THUS CONCLUDED THAT THE A.O HAD ERRED IN INCLUDING THE SAME WHILE WORKING THE ADDITION UNDER SEC. 2(22)(E) OF THE ACT. THE CIT(A) ON THE BASIS OF HIS AFORESAID DELIBERATIONS CONCLUDED THAT THE ADDITIONS UNDER SEC. 2(22)(E) DURING THE YEAR, IF ANY, WERE LIABLE TO BE RESTR ICTED UP TO THE AMOUNT OF LOAN OF RS.88,56,686/ - RECEIVED BY THE ASSESSEE FROM M/S NAGINDAS PROPERTIES PVT. LTD DURING THE YEAR UNDER CONSIDERATION . 5. THE CIT(A) FURTHER DELIBERATING ON THE SCOPE AND GAMU T OF THE ADDITIONS CONTEMPLATED UNDER SEC. 2(22)(E) OF THE ACT , OBSERVED THAT AS THE ASSESSEE FIRM WAS NOT A SHAREHOLDER OF EITHER OF THE AFORESAID COMPANIES, THEREFORE, NO ADDITION TOWARDS DEEMED DIVIDEND UNDER SEC. 2(22)(E) WAS CALLED FOR IN ITS HANDS. THE CIT(A) OBSERVED THAT OUT OF THE SIX PARTNERS OF THE ASSESSEE FIRM , ONLY THREE PARTNERS I.E. SMT. SMITA D. PATEL, MR. DHARMESH PATEL AND SMT. BASU B. PATEL WERE HAVING SUBSTANTIAL INTEREST IN THE ASSESSEE FIRM . THE CIT(A) OBSERVED THAT AS PER THE PROVISIONS OF LAW CONTEMPLATED UNDER SEC.2(22)(E) , IF ANY COMPANY MAKES A PAYMENT TO A CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER HAVING SUBSTANTIAL INTEREST OR THERE IS ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER TO THE EXTENT TO WHIC H THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS, THE SAME WOULD FALL WITHIN THE SWEEP OF THE EXPRESSION DEEMED DIVIDEND AS CONTEMPLATED UNDER SEC.2(22)(E) OF THE ACT. THE CIT(A) ON THE BASIS OF HIS AFORESAID DELIBERATIONS THAT AS THE ASSESSEE FIRM WAS NOT A SHAREHOLDER IN THE AFORESAID COMPANIES, THEREFORE, CONCLUDED THAT THE DEEMED DIVIDEND COULD NOT BE BROUGHT TO TAX IN ITS HANDS . THE CIT(A) ON THE BASIS OF HIS P A G E | 4 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX AFORESAID OBSERVATIONS DELETED THE ADDITION OF RS.2,98,96,969/ - MADE BY THE A.O UN DER SEC.2(22)(E) OF THE ACT. 6. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FO R SHORT D.R) SUBMITTED THAT THE AS SESSEE FIRM WAS IN RECEIPT OF AN AMOUNT OF RS.2,98,96,969/ - FROM THE AFORESAID COMPANIES I.E M/S NAGINDAS PROPERTIES PVT. LTD., M/S SHRI SOUND P VT. LTD. AND M/S PUTCO PVT. LTD. THE LD. D.R SUBMITTED THAT AS THE PARTNERS HAVING SUBSTANTIAL INTEREST IN THE FIRM WERE ALSO BENEFICIAL OWNERS OF SHARES I N EXCESS OF 10% OF THE VOTING POWER IN THE AFORE SAID COMPANIES, THEREFORE, T HE A.O HAD RIGHTLY BROUGHT THE AFORE SAID AMOUNT OF RS.2,98,96,969/ - TO TAX AS DEEMED DIVIDEND UNDER SEC.2(22)(E) IN THE HANDS OF THE ASSESSEE FIRM . THE LD. A.R IN ORDER TO IMPRESS UPON US THAT THE A.O HAD RIGHTLY BROUGHT THE AMOUNT TO TAX AS DEEMED DIVIDEND UNDER SEC. 2(22)(E) IN THE HANDS OF THE ASSESSEE FIRM, TOOK SUPPORT OF THE JUDGMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL TRAVEL SERVICES VS. CIT - VIII, DELHI (201 8) 89 TAXMAN.COM 332 (SC) A ND GOPAL & SONS (HUF) VS. CIT, K OLKATA - XI (2017) 391 ITR 1 (SC). PER CONTRA, THE L D. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE SUBMITTED THAT AS THE ASSESSEE FIRM WAS NEITHER THE BENEFICIAL OWNER N OR A REGISTER ED OWNER OF THE SHARES OF EITHER OF THE AFORESAID COMPANIES, THEREFORE, NO ADDITION IN RESPECT OF DEEMED DIVIDEND UNDER SEC. 2(22)(E) WAS CALLED FOR IN ITS HANDS. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE DEEMED DIVIDEND CONTEMPLATED UNDER SEC.2(22)(E) C OULD ONLY BE BROUGHT TO TAX IN THE HANDS OF A SHAREHOLDER, THEREFORE, AS THE ASSESSEE FIRM WAS NOT A SHAREHOLDER IN EI THER OF THE AFORESAID COMPANIES, THE AMOUNT OF LOAN/ADVANCE RECEIVED FROM THE AFOREMENTIONED COMPANIES HAD THUS WRONGLY BEEN BROUGHT TO TAX IN ITS HANDS. THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CLAIM THAT WHERE A FIRM WHOSE PARTNER S HOLDING SUBSTANTIAL INTEREST WERE THE BENEFICIAL OWNERS OF SHARES OF A COMPANY (NOT BEING SHARES ENTITLED TO A FIXED R ATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN 10% OF THE VOTING POWER, IS IN RECEIPT OF A LOAN/ADVANCE FROM SUCH COMPANY , THEN THE SAID AMOUNT COULD ONLY BE ASSESSED AS DEEMED DIVIDEND P A G E | 5 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX IN THE HANDS OF THE SHAREHOLDERS AND NOT IN THE HANDS OF THE FIRM, RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 9 VS. IMPACT CONTAINERS (P.) LTD. (2014) 367 ITR 346 (BOM). THE LD. A.R FURTHER RELIED ON A JUDGMENT OF THE HONBLE HIGH COURT OF R AJASTHAN IN THE CASE OF COMMISSIONER OF INCOME TAX, UDAIPUR VS. HOTEL HILL TOP (2012) 18 TAXMANN.COM 308 (RAJ ) AND THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RAMESHWARLAL SANWARMAL VS. COMMISSIONER OF INCOME TAX (1980) 3 TAXMAN 1 (SC). 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT CASE LIES IN A NARROW COMPASS. OUR INDULGENCE HAS BEEN SOUGHT B Y THE R EVENUE TO ADJUDICATE AS TO WHERE A FIRM WHOSE PARTNERS HAVING SUBSTANTIAL INTEREST ARE BENEFICIAL OWNER OF SHARES OF A COMPANY (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN 10% OF THE VOTING POWER, THEN AS TO WHETHER THE AMOUNT OF LOAN/ADVANCE RECEIVED BY THE FIRM FROM SUCH COMPANY COULD JUSTIFIABLY BE ASSESSED AS THE DEEMED DIVIDEND UNDER SEC.2(22)(E) IN THE HANDS OF THE ASSESSEE FIRM OR NOT. BEFORE PROCEEDING FURTHER, WE CONSIDER IT APT TO REPRODUCE THE RELEVANT STATUTORY PROVISION, VIZ. SEC. 2(22)(E) , WHICH READS AS UNDER: SEC. 2 . IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES: - (22) DIVIDEND INCLUDES: - (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS REPRE SENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE) [MADE AFTER THE 31ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO I S THE BENEFICIAL OWNER OF SHARES ( NOT BE ING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEM BER 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 ACCUMU LATED PROFITS ; P A G E | 6 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX STILL FURTHER, THE TERM CONCERN AND A PERSON HAVING SUBSTANTIAL INTEREST IN A CONCERN HA S BEEN DEFINED IN EXPLANATION 3 OF SEC. 2(22)(E), WHICH READS AS UNDER: - [EXPLANATION 3 - FOR THE PURPOSES OF THIS CLAUSE, - (A) CONCERN MEANS A HINDU UNDIVIDED FAMILY, OR A FIRM OR AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS OR A COMPANY; (B) A PERSON SHALL BE DEEMED TO HAVE A SUBSTANTIAL INTEREST IN A CONCERN, OTHER THAN A COMPANY, IF HE IS, AT ANY TIME DURING THE PREVIOUS YEAR, BENEFICIALLY ENTITLED TO NOT LESS THAN TWENTY PERCENT OF THE INCOME OF SUCH CONCERN;] WE FIND , A BARE PERUSAL OF TH E AFORESAID STATUTORY PROVISION REVEALS BEYOND ANY SCOPE OF DOUBT THAT THE SAME CO N TEMPLATES THE DEEMING OF AN AMOUNT RECEIVED AS A DIVIDEND UNDER CERTAIN CIRCUMSTANCES . HOWEVER, WE ARE OF A STRONG CONVICTION THAT THOUGH THE DEEMING ASPECT OF THE AFORESAID STATUTORY PROVISION APPLIES TO TREATING OF CERTAIN AMOUNTS RECEIVED FROM A COMPANY AS DIVIDEND IN THE HANDS OF THE SHAREHOLDER , HOWEVER, THE SAID DEEMING PROVISION CANNOT BE CARRIED ANY FURTHER TO EN LARGE THE MEANING OF THE TERM S HAREHOLDER . T O BE BRIEF AND EXPLICIT, THOUGH THE RECEIPT OF AMOUNTS UNDER CERTAIN SPECIFIED CIRCUMSTANCES IS TO BE CONSTRUED AS A DEEMED DIVIDEND IN THE HANDS OF A SHAREHOLDER , BUT THE SAID STATUTORY PROVISION DOES NOT IN ANY WAY CONTEMPLATES T HE DEEMING OF A PERSON WHO IS NOT A SHAREHOLDER, AS BEING ONE. WE ARE OF THE CONSIDERED VIEW THAT THE SELF - SUITING INTERPRETATION ACCORDED BY THE LD. D.R TO THE SCOPE AND GAMUT OF THE DEEMING PROVISIONS OF SEC. 2(22)(E) , IN ORDER TO IMPRESS UPON US TO RETU RN A FINDING THAT THE AMOUNT RECEIVED BY A FIRM FROM A COMPANY WHOSE SHAREHOLDER IS A PARTNER HAVING SUBSTANTIAL INTEREST IN THE FIRM IS TO BE ASSESSED AS DEEMED DIVIDEND UNDER SEC. 2(22)(E) IN THE HANDS OF THE FIRM, IS ABSOLUTELY MISCONCEIVED. WE FURTHER FIND THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOPAL & SONS (HUF) VS. CIT, K OLKATA - XI (2017) 391 ITR 1 (SC) RELIED UPON BY THE LD. D.R WAS IN CONTEXT OF AN ISSUE THAT WHERE THE ASSESSEE HUF BEING A BENEFICIAL OWNER OF SHARES , HOLDING MO RE THAN 10% VOTING POWER IN THE COMPANY, WAS HOLDING SUCH SHARES IN THE NAME OF ITS K ARTA, THEN WHETHER THE AMOUNT SO RECEIVED BY THE ASSESSEE HUF COULD BE ASSESSED AS DEEMED P A G E | 7 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX DIVIDEND UNDER SEC.2(22)(E) OR NOT. WE FIND THAT IT WAS IN THE BACKDROP OF THE AF ORESAID FACTS THAT THE HONBLE APEX COURT HAD OBSERVED THAT EVEN IF THE HUF IS NOT A REGISTERED SHAREHOLDER IN THE LENDING COMPANY, THE LOANS / ADVANCES RECEIVED BY THE ASSESSEE HUF WOULD BE TAXABLE AS DEEMED DIVIDEND UNDER SEC. 2(22)(E) IN ITS HANDS IF THE K ARTA - SHAREHOLDER HAD SUBSTANTIAL INTEREST IN THE HUF. WE FURTHER FIND THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL TRAVEL SERVICES V S. CIT, DELHI (2018) 89 TAXMAN.COM 332 (SC) WAS ALSO DELIVERED IN A DIFFERENT CONTEXT. IN THE AFOREMENTIONED CASE , IT WAS OBSERVED BY THE HONBLE APEX COURT THAT THE MOMENT THERE IS A SHAREHOLDER, WHO NEED NOT NECESSARILY BE A MEMBER OF THE COMPANY ON ITS REGISTER AND IS A BENEFICIAL OWNER OF THE SHARES, THE PROVISIONS OF SEC. 2(22)(E) GETS ATTRACT ED AND THE AMOUNT IS LIABLE TO BE AS SESSED AS DEEMED DIVIDEND IN THE HANDS OF SUCH SHAREHOLDER . WE ARE THUS OF THE CONSIDERED VIEW THAT THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID JUDICIAL PRONOUNCEMENT S IN NO WAY ASSISTS THE CONTENTIONS SO A DVANCE D BY HIM. ON THE CONTRARY, WE FIND THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 9 VS. IMPACT CONTAINERS PVT. LTD. (2014) 367 ITR 346 (BOM) AS RELIED UPON BY THE LD. A.R , HAD OBSERVED THAT WHERE CERTAIN COMPANIES HAD ADVANCED MONEY TO AN ASSESSE E COMPANY WHOSE ONE OF THE DIRECTOR WAS HOLDING MORE THAN 10% EQUITY SHARES OF THE LENDING COMPANY , THE AMOUNT SO RECEIVED BY THE ASSESSEE COMPANY WHICH WAS NOT A SHAREHOLDER IN THE AFORESAID LENDING COMPANIES COULD NOT BE ASSESSED AS DEEMED DIVIDEND IN IT S HANDS BY INVOKING THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT. WE FURTHER FIND THAT THE RELIANCE PLACED BY THE LD. A.R ON THE JUDGMENT OF THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT, UDAIPUR VS. HOTEL HILL TOP (2012) 18 TAXMAN.COM (RAJ) IS ALSO WELL PLACED. THE HIGH COURT IN THE AFOREMENTIONED JUDGMENT HAD OBSERVED THAT WHERE AN ASSESS EE FIRM HAD RECEIVED AN ADVANCE FROM A COMPANY AND THE PARTNERS OF THE ASSESSEE FIRM AND NOT THE ASSESSEE FIRM WERE THE SHAREHOLDERS IN THE SAID COMPANY , THEN SUCH AN ADVANCE COULD NOT BE TAXED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE FIRM. P A G E | 8 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE FIRM WAS NOT A SHAREHOLDER IN EITHER OF THE AF ORESAID COMPANIES, VIZ . (I) M/S SHREE SOUND PVT. LTD; (II) M/S PUTCO PVT. LTD; AND (III) M/S NAGINDAS PROPERTIES PVT. LTD, THEREFORE, THE AMOUNT OF LOAN/ADVANCE RECEIVED BY THE ASSESSEE FIRM FROM THE SAID COMPANIES COULD NOT HAVE BEEN ASSESSED AS DEEMED DI VIDEND UNDER SEC. 2(22)(E) IN THE HANDS OF THE ASSESSEE FIRM . WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS , FINDING OURSELVES TO BE IN AGREEMENT WI TH THE VIEW TAKEN BY THE CIT(A), UPHOLD H IS ORDER. 9. THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 23 .05.2018 SD/ - SD/ - ( RAJENDRA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 23 .05 .201 8 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 9 ITA NO.2794/MUM/2016 A.Y 2011 - 12 ACIT - 16(1) M/S CINE STUDIOS SHREE SOUND COMPLEX