SHRI RAM SHIPPING INDUSTRIES P.LTD, SURAT V. ADDL CIT RG 8(3), MUMBAI

ITA 399/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83921 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PERMANAND J
• Assessee Lawyers: S ATISH CHANDAK
• Keywords: Question of law; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 399/MUM/2013 ASSESSMENT YEAR: 2009-10 SHRI RAM SHIPPING INDUSTRIES P. LTD. J. VASANIA & ASSOCIATES CHARTERED ACCOUNTANTS 606, RAJHANS, OPP. J.K. TOWER, NR. SUB-JAIL, RING ROAD, SURAT- 395002 PAN:AAHCS 8404 L VS. ADDL. CIT (APPEALS)-8(3) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATISH CHANDAK. REVENUE BY : SHRI PERMANAND J DATE OF HEARING : 14.10.2014 DATE OF PRONOUNCEMENT : 14.10.2014 O R D E R PER I.P. BANSAL, JM: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DI RECTED AGAINST ORDER THE PASSED BY THE LD.CIT(A)-18, MUMBAI DATED 12.10.2012 OF A.Y. 2009-10. 2. GROUND OF APPEAL IS READ AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY AO N ACCOU NT OF ALLEGED DEEMED DIVIDEND U/S 2(22)(E) OF RS.4,14,71,946/- DESPITE T HE DECISIONS OF LARGER BENCH OF ITAT IN CASE OF ACIT VS. BHAUMIK COLOUR PV T. LTD. 313 ITR 146 (AT) AND MUMBAI HIGH COURT IN CASE OF CIT VS. UNIVERSAL MEDICARE PVT. LTD. (324 ITR 263) 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE COMPANY HAD OBTAINED LOAN OF RS.7,93,30,000/- FROM ITS GROUP COMPANY NAMELY M/S. SHREE RAM VESSEL SCRAP PVT. LTD. THE AO REQUIR ED THE ASSESSEE TO SUBMIT THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SHAREHOL DING PATTERN OF THIS COMPANY. ITA NO. 399/MUM/2013 SHRI RAM SHIPPING INDUSTRIES P. LTD. ASSESSMENT YEAR: 2009-10 2 ON PERUSAL OF SUCH DETAILS THE AO OBSERVED THAT ASS ESSEE COMPANY AND M/S. SHREE RAM VESSEL SCRAP PVT. LTD. HAD COMMON SHAREHOLDING PATTERN AS FOLLOW:- S. NO. NAME OF THE SHAREHOLDER NO. OF SHARES & % SHARE IN SHREE RAM SHIPPING INDUSTRIES PVT. LTD. NO. OF SHARES & % SHARE IN SHREE RAM VESSEL SCRAP PVT. LTD. 1 RANJANBEN MUKESBHAI PATEL (AEOPP 1384 G) 4,95,000 SHARES 44.2% 5,00,000 SHARES 16.67% 2 MUKESHBHAI BALABHAI PATEL (AAPPP 8456 N) 1,25,000 SHARES 11.16% 15,62,500 SHARES 52% SINCE THE COMMON SHAREHOLDERS WERE HAVING SUBSTANTI AL INTEREST IN BOTH THE CONCERNS, THE AO INVOKED THE PROVISIONS OF SECTION 2(22)(E) AND REQUIRE THE ASSESSEE TO EXPLAIN AS TO WHY THE LOAN OBTAINED BY THE ASSESSEE COMPANY SHOULD NOT BE CONSIDERED TO BE TAXED AS DEEMED DIVIDEND. IN REPLY IT WAS SUBMITTED THAT SINCE THE ASSESSEE COMPANY IS NOT REGISTERED SHAREH OLDER, APPLYING THE RATIO OF SPECIAL BENCH DECISION IN THE CASE OF ACIT VS. BHAU MIK COLOUR PVT. LTD. 313 ITR 146 (AT) AND THE DECISION IN THE CASE OF CIT VS. UNIVE RSAL MEDICARE PVT. LTD. (324 ITR 263) THE AMOUNT OBTAINED BY THE ASSESSEE COULD NOT BE TREATED AS DEEMED DIVIDEND. HOWEVER, AO DID NOT ACCEPT SUCH SUBMISSION OF THE A SSESSEE AND ADDED A SUM OF RS.4,14,71,946/- WHICH REPRESENTED THE AMOUNT SHOW N AS RESERVE AND SURPLUS IN THE BOOKS OF SHREE RAM VESSEL SCRAP PVT. LTD. THE ADDITION MADE BY THE AO HAS BEEN UPHELD BY LD.CIT(A). THE ASSESSEE IS AGGRIEVE D HENCE HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 4. LD. AR AFTER NARRATING THE FACTS SUBMITTED BEF ORE US COPY OF RECENT DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. IMPACT CONTAINERS PVT. LTD. AND OTHERS IN ITA NO. 114 OF 2012 AND OTHERS. THE DECIS ION IS DATED 04.07.2014. THEIR LORDSHIPS IN THAT DECISION HAVE CONSIDERED THIS ISS UE IN DETAIL AND THEY HAVE CONCURRED WITH THE VIEW TAKEN BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANKITECH PVT. LTD , 340 ITR 14 (DEL), IN WHICH IT I S HELD THAT WHERE THE RECIPIENT OF THE AMOUNT IS NOT A SHARE HOLDER OF THE LENDER COMP ANY THEN PROVISIONS OF SECTION 2(22)(E) CANNOT BE APPLIED. REFERENCE CAN BE MADE T O FOLLOWING OBSERVATIONS OF THEIR LORDSHIPS. ITA NO. 399/MUM/2013 SHRI RAM SHIPPING INDUSTRIES P. LTD. ASSESSMENT YEAR: 2009-10 3 WE HAVE PERUSED THE PROVISION CAREFULLY AND EQUALL Y THE JUDGMENT IN THE CASE OF UNIVERSAL MEDICARE AND THE VIEW FOLLOWI NG THE SAME RENDERED BY SEVERAL HIGH COURTS. WE ARE OF THE OPINION THAT THE RE IS NO MERIT IN THE CONTENTIONS OF THE REVENUE, THAT UNIVERSAL MEDICARE WAS EITHER ERRONEOUSLY DECIDED OR THAT THE VIEW TAKEN IN UNIVERSAL MEDICAR E REQUIRES RECONSIDERATION. IN THAT REGARD, WE MUST NOT BRUSH ASIDE THE BINDING PRECEDENT OR THE JUDGMENT OF A CO-ORDINATE BENCH SIMPLY BECAUSE SOME OF THE ARGUMENTS CANVASSED BEFORE US WERE EITHER NOT CANVASSED OR IF CANVASSED WERE NOT CONSIDERED. THE BINDING PRECEDENT CAN BE IGNORED ON LY IF IT IS PER-INCURIAM. SUCH IS NOT THE STAND BEFORE US. ALL THAT IS URGED IS SEVERAL FACETS AND WHICH EMERGE FROM A READING OF SECTION2(22)(E) TOGETHER W ITH ITS SUB-CLAUSES HAVE NOT BEEN NOTICED BY THE DIVISION BENCH WHILE DECIDI NG UNIVERSAL'S CASE. WE ARE UNABLE TO AGREE WITH THE REVENUE IN THIS BE HALF. WHAT WE HAVE NOTED IS THAT THE LEGISLATURE HAS INCORPORATED ANS INSERTED THE DEFINITION OF THE TERM DIVIDEND. IT IS MADE INCLUSIVE OF DIS TRIBUTION OF PROFITS, ANY DISTRIBUTION TO THE SHAREHOLDERS BY A COMPANY OF DE BENTURES, DEBENTURE- STOCK, OR DEPOSIT CERTIFICATE IN ANY FORM, OR DISTR IBUTION MADE TO THE SHAREHOLDERS UPON LIQUIDATION OF A COMPANY. EQUALLY , AMOUNT DISTRIBUTED ON REDUCTION OF CAPITAL IS TERMED AS DIVIDEND. WHAT IS ALSO THEN INCLUDED IS A PAYMENT MADE BY A COMPANY TO ITS SHAREHOLDERS. THAT IS BY WAY OF ADVANCE OR LOAN TO HIM. THIS IS INCLUDED SO AS TO VISIT THE SHAREHOLDER WITH A LIABILITY TO PAY TAX. IT IS EVENTUALLY, THE SHAREHOLDER WHO WILL PAY TAX ON THE SAME. THE SHAREHOLDER CANNOT ESCAPE THAT LIABILITY MERELY BEC AUE THE LOAN OR ADVANCE HAS BEEN OVER TO ANY CONCERN IN WHICH SUCH SHAREHOL DER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS SUBSTANTIAL INTEREST. E ARLIER, LEGISLATURE NOTED THAT THE SHAREHOLDER WOULD RECEIVE THE SUM FROM A COMPAN Y AND WHICH IS NOT STRICTLY FALLING WITHIN THE CONCEPT OF DIVIDEND . FIRSTLY, BECAUSE THAT WAS RECEIVED BY WAY OF ADVANCE OR LOAN, SECONDLY, AN AT TEMPT WAS MADE TO SHOW THAT THE ADVANCE OR LOAN IS NOT TO THE SHAREHOLDER WHO IS REGISTERED AS SUCH BUT TO A CONCERN IN WHICH HE IS A MEMBER OR A PARTN ER AND IN WHICH HE MAY HAVE A SUBSTANTIAL INTEREST BUT THAT CANNOT B TERME D AS ADVANCE OR LOAN TO THE SHAREHOLDER. WITH A VIEW TO TAKE CARE OF SUCH S TAND OF THE SHAREHOLDERS AND NOT ALLOW THEM TO ESCAPE THE LIABILITY TO PAY T AX THAT THE DEFINITION CAME TO BE BROADLY WORDED BY INDICATING THEREIN THE REFE RENCE TO ANY CONCERN. EQUALLY, ANY PAYMENT MADE BY SUCH COMPANY ON BEHALF OF THE SHAREHOLDER OR FOR INDIVIDUAL BENEFIT OF ANY SHAREHOLDER TO THE EX TENT TO WHICH THE COMPANY IN OTHER CASE POSSESSES ACCUMULATED PROFIT HAS ALSO BEEN BROUGHT IN. THUS, IN ADDITION TO DISTRIBUTION OF ACCUMULATED PROFIT, DEB ENTURE STOCK OR DEPOSIT CERTIFICATE ETC, A PAYMENT OF THE AFORESAID NATURE HAS BEEN TERMED AS DIVIDEND AND INCLUDED IN THE DEFINITION. AT THE S AME TIME, THE LEGISLATURE HAS TAKEN CARE NOT TO INCLUDE ANY ADVANCE OR LOAN M ADE TO A SHAREHOLDER OR THE SAID CONCERN IN WHICH SUCH SHAREHOLDER IS A MEM BER OR A PARTNER AND IN WHICH HE HAS SUBSTANTIAL INTERST IN THE ORDINARY CO URSE OF THE BUSINESS OF THE COMPANY AND WHERE LENDING OF MONEY IS SUBSTANTIAL P ART OF THE BUSINESS OF THE COMPANY. EQUALLY, ANY DIVIDEND PAID BY THE COMP ANY WHICH IS SET OFF BY THE COMPANY AGAINST THE WHOLE OR ANY PART OF ANY SU M PREVIOUSLY PAID BY IT AND TREATED AS A DIVIDEND WITHIN THE MEANING OF SUB CLAUSE (E), TO THE EXTENT TO WHICH IT IS SO SET OFF, IS ALSO EXCLUDED ADVISED LY. ITA NO. 399/MUM/2013 SHRI RAM SHIPPING INDUSTRIES P. LTD. ASSESSMENT YEAR: 2009-10 4 WE ARE ALSO OF THE OPINION THAT ANY REFERENCE TO EX PLANATION 3 AND PARTICULARLY THE DEFINITION OF TERM 'CONCERN' WILL NOT ADVANCE OR CARRY THE REVENUE'S CASE ANY FURTHER. EVENTUALLY, IT IS THE SHAREHOLDER WHO IS REGISTERED AS SUCH WHO IS ENTITLED TO RECEIVE THE D IVIDEND. MERELY BECAUSE THE PAYMENT IS MADE TO HIM BY WAY OF ADVANCE OR LOAN WA S NOT TERMED AS SUCH EARLIER THAT THE LEGISLATURE HAS INSERTED SUCH A PA YMENT IN THE DEFINITION OF THE TERM DIVIDEND AND MADE THE DEFINITION WIDE A ND BROAD SO ALSO INCLUSIVE. WE DO NOT SEE WITH THIS LEGAL POSITION AND THE STAT US OF THE SHAREHOLDER RECOGNIZED IN LAW CAN BE IGNORED WHIL E INTERPRETING SECTION 2 (22) (E) OF THE L T. ACT. PRECISELY, THIS IS WHAT H AS BEEN DONE BY THIS COURT IN THE JUDGMENT RENDERED IN THE (~~ OF UNIVERSAL MEDIC ARE. IT IS NOT NECESSARY FOR US TO MAKE A DETAILED REFERENCE TO THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHAUMIK COLOUR PVT LTD. SUF FICE IT TO HOLD THAT THE VIEW TAKEN BY THIS COURT IN THE CASE OF MZS. UNIVERSAL M EDICARE DOES NOT REQUIRE ANY RECONSIDERATION. WE ARE NOT IN AGREEMENT WITH SHRI GUPTA THAT THE DEFINITION DOES NOT CONTEMPLATE OR DOE NOT STIPULAT E ANY REQUIREMENT OF ASSESSEE BEING A SHAREHOLDER OF THE ASSESSEE LIKE T HE ONE IN THE PRESENT CASE. THE VIEW TAKEN IN THE PRESENT CASE THAT THE R ECIPIENT/ASSESSEE WAS NOT A SHAREHOLDER, THUS IS IN CONSONANCE WITH THE LEGAL POSITION NOTED BY US HEREINABOVE. WE ARE OF THE FURTHER VIEW THAT THIS COURT MERELY R ESTATED THIS PRINCIPLE AND WHICH REMAINS UNALTERED THROUGHOUT FR OM THE CASE OF RAMESHWARLAL SANWARMAL VS. COMMISSIONER OF INCOME T AX REPORTED IN 1980 (122) ITR PAGE 1 (SC). THE HONBLE SUPREME COURT HE LD THAT IT IS ONLY WHERE A LOAN IS ADVANCED BY THE COMPANY TO THE REGISTERED SHAREHOLDER AND OTHER CONDITIONS SET OUT IN SECTION 2(6A)(E) OF THE THEN PREVAILING I.T. ACT 1922 ARE SATISFIED THAT THE AMOUNT OF THE LOAN WOULD BE LIAB LE TO BE REGARDED AS DEEMED DIVIDEND WITHIN THE MEANING OF THAT PROVISIO N. THE LOAN GRANTED TO THE BENEFICIAL OWNER OF THE SHARE, WHO IS NOT REGIS TERED SHAREHOLDER WOULD NOT FALL WITHIN THE MEANING OF SECTION 2(6A)(E) OF THE IT ACT. WHAT THE SECTION IS DESIGNED TO STRIKE AT IS ADVANCE OR LOAN TO A SH AREHOLDER AND THE WORK SHAREHOLDER CAN MEAN ONLY THE REGISTERED SHAREHOLDE R. THE HONBLE SUPREME COURT FOLLOWING THE JUDGMENT IN THE CASE OF COMMISS IONER OF INCOME TAX VS. C.P. SARATHY REPORTED IN 1972 (83) ITR 170 (SC) HEL D THAT THE BENEFICIAL OWNER OF SHARES WHOSE NAME DOES NOT APPEAR IN THE R EGISTERED OF THE SHAREHOLDERS OF THE COMPANY CANNOT BE SAID T BE A S HAREHOLDER THROUGH HE MAY BE BENEFICIALLY ENTITLED TO THE SHARES BUT HE I S NOT A SHARE HOLDER. MR. GUPTA, APPEARING BEFORE US FOR THE REVENUE WOULD SU BMIT THAT MUCH WAT HAS FLOWN AFTER THE DECISION IN THE CASE OF RAMESHWARLA L AND C.P. SARATHY (SUPRA) BECAUSE THE PROVISION HAS BEEN AMENDED SINCE THE. T HE FICTION THEREFORE MUST BE CARRIED TO ITS LOGICAL END AND ITS PURPOSE SHOULD NOT BE DEFEATED BY NARROW CONSTRUCTION AS WAS PLACED ON THE PROVISION PRIOR TO ITS AMENDMENT. IN OTHER WORDS, THE AMENDMENT WAS BROUGHT IN ONLY B ECAUSE OF SUCH VIEW HAVING TAKEN EARLIER, IS HIS SUBMISSION. ITA NO. 399/MUM/2013 SHRI RAM SHIPPING INDUSTRIES P. LTD. ASSESSMENT YEAR: 2009-10 5 WE ARE UNABLE TO ACCEPT IT BECAUSE OF THE CONSISTEN T VIEW TAKEN AND THAT EVEN IF THE WORDS AS NOTED BY US HEREIN-ABOVE HAVE BEEN INSERTED IN THE DEFINITION SO AS TO MAKE REFERENCE TO THE BENEFICI AL OWNER OF THE SHARES, STILL THE DEFINITION ESSENTIALLY COVERS ,THE PAYMENT TO T HE SHAREHOLDER AND THE POSITION OF THE SHAREHOLDERS NOTED IN THE SUPREME C OURT'S DECISION, CANNOT CHANGE. THAT LEGAL POSITION AND STATUS OF THE SHARE HOLDER THE SAME, WE DO NOT SEE HOW THE VIEW PREVAILING FROM COMMISSIONER O F INCOME TAX VS. C. P. SARATHY(SUPRA) IS IN WAY SAID TO BE CHANGED. THAT I S HOW ALL THE JUDGMENT THERETO HAVE BEEN RENDERED. THE RELIANCE PLACED BY MS. VISSANJEE ON THE JUDGMENT OF THE' DIVISION BENCH OF THIS COURT IN TH E CASE OF COMMISSIONER OF INCOME TAX, PATIALA V / S SHAHZADA NAND AND SONS AN D ORS, REPORTED IN (1966) 177 ITR 393, IS THEREFORE, APPOSITE. EQUALIT Y, HER RELIANCE ON THE JUDGMENT OF THE DIVISION BENCH OF DELHI HIGH COURT IS WELL PLACED. WE HAVE NOTED THAT THE DELHI HIGH COURT AND EVEN AFTER EXHA USTIVE AMENDMENT TO SECTION THE PURVIEW OF THIS SUB-CLAUSE SO LONG AS I T CONTEMPLATED SHAREHOLDERS. THE DIVISION BENCH OF DELHI HIGH COUR T HAS MADE DETAILED REFERENCE TO ALL THE DECISIONS IN THE FIELD. IT HAS ALSO REFERRED TO THE ORDER PASSED BY THE SPECIAL BENCH OF THE TRIBUNAL IN ARRI VING AT THE SAME CONCLUSION. IN THE COMMISSIONER OF INCOME TAX VS A NKITECH PVT LTD REPORTED IN 2012 (340) ITR PAGE 14, THE HON'BLE DELHI HIGH C OURT REFERRED TO BOTH SARATHY MUDALIAR AND RAMESHWARLAL SANWARMAL (SUPRA) ALSO REFERRED TO THE ARGUMENTS OF THE REVENUE WHICH SOMEWHAT SIMILAR TO THOSE RAISED BEFORE US. IT IS IN DEALING WITH THESE ARGUMENTS THAT THE DIVI SION BENCH CONCLUDED THAT ALL THE THREE LIMBS OF THE SECTION ANALYZED IN UNIV ERSAL MEDICARE DENOTE THE INTENTION THAT CLOSELY HELD COMPANIES NAMELY COMPAN IES IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED WHICH ARE CONTROLLED B Y A GROUP OF MEMBERS, EVEN THOUGH HAVING ACCUMULATED PROFITS WOULD NOT DI STRIBUTE SUCH PROFIT AS DIVIDEND BECAUSE IF SO DISTRIBUTED THE DIVIDEND INC OME WOULD BECOME TAXABLE IN THE HANDS OF THE SHAREHOLDERS. INSTEAD OF DISTRI BUTING ACCUMULATED PROFITS AS END, COMPANIES DISTRIBUTE THEM AS LOAN OR ADVANC ES TO SHAREHOLDERS OR TO CONCERN IN WHICH SUCH SHAREHOLDERS HAVE V SUBSTANTI AL INTEREST OR MAKE ANY PAYMENT ON BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF SUCH SHAREHOLDER. IN SUCH AN EVENT, BY THE DEEMING PROVISION, SUCH PAYME NT BY THE COMPANY IS TREATED AS DIVIDEND. THE PURPOSE IS TO TAX DIVIDEND IN THE HANDS OF THE SHAREHOLDER. WE DO NOT SEE HOW SUCH A VIEW TAKEN BY THE DELHI HI GH COURT AND WHICH REAFFIRMS THAT OF THIS COURT IN UNIVERSAL MED ICARE CAN BE SAID TO BE CONTRARY TO THE LEGAL FICTION OR THE INTENT AND PUR POSE OF THE LEGISLATURE IN ENACTING IT. THE VIEW TAKEN BY THE DELHI HIGH COURT IN THE COMMISSIONER OF INCOME TAX VS. ANKITECH PVT LTD (SU PRA) HAS THUS OUR RESPECTFUL CONCURRENCE. WE DO NOT REFERENCE TO THE OTHER JUDGMENTS BECAUSE THIS LINE OF REASONING HAS BEEN FOLLOWED IN THE SAME. IT IS NOT NECESSARY TO MULTIPLY OUR JUDGMENT BY MAKING REFERENCE TO EACH OF THE ORDERS FOLLOWING THE JUDGMENT IN ANKITECH PVT LTD AND RENDERED BY DELHI HIGH COURT OR BY THE ALLAHABAD HIGH COURT AND GUJARAT HIGH COURT . WE ARE OF THE VIEW THAT SO LONG AS THE TRIBUNAL IN THE MATTERS AND THE APPEALS WHICH ARE BROUGHT BEFORE US HOLDS THAT THE ASSESSEE COMPANY BEFORE IT WAS NOT A SHAREHOLDER IN ANY OF THE ENTITIES WH ICH HAVE ADVANCED AND LENT ITA NO. 399/MUM/2013 SHRI RAM SHIPPING INDUSTRIES P. LTD. ASSESSMENT YEAR: 2009-10 6 SUMS, THEN, THE ADDITION IS REQUIRED TO BE DELETED AND FOLLOWING THE JUDGMENT IN UNIVERSAL MEDICARE(SUPRA) OF THIS COURT. SUCH A VIEW TAKEN IN THE PRESENT CASE BY THE TRIBUNAL, THEREFORE, CANNOT BE AS PRESE RVE OR VITIATED BY ANY ERROR OF LAW APPARENT ON THE FACE OF RECORD. THE APPEAL, THEREFORE, DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. OUR JUDGMENT PASSED TODAY, SHALL COVER ALL SUCH CAS ES IN WHICH RECIPIENT IS NOT SHAREHOLDER OF THE LENDER COMPANY. THE APPEALS RAISING SUCH GROUNDS, THEREFORE, WOULD FOLLOW THIS ORDER AND EVE N THEY WOULD STAND DISMISSED AS THEY DO NOT RAISE ANY SUBSTANTIAL QUES TION OF LAW. (EMPHA SIS OURS) 5. IN THIS VIEW OF THE MATTER, WE HAVE HEARD BOTH T HE PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY CONSIDERED. THE LD. DR R ELIED UPON THE ORDER PASSED BY AO AND LD.CIT(A) AND LD. AR RELIED UPON FOR AFOREM ENTIONED OF HONBLE BOMBAY HIGH COURT. 6. AFTER CAREFUL CONSIDERATION, WE ARE OF THE OPINI ON THAT IN VIEW OF THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COUR T, IT HAS TO BE HELD THAT SINCE ASSESSEE COMPANY IS NOT A SHARE HOLDER OF THE LENDE R COMPANY, THE ADDITION IN THE HANDS OF THE ASSESSEE IS NOT CALLED FOR AND THEREF ORE, IS LIABLE TO BE DELETED. ACCORDINGLY WE DELETE THIS ADDITION IN THE HANDS OF THE ASSESSEE. 7. HOWEVER, WE HAVE GONE THROUGH THE DECISION OF HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANKITECH PVT. LTD. (SUPRA), AS THIS DECISION OF HONBLE DELHI HIGH COURT HAS BEEN CONCURRED WITH BY THE HONBLE BOMBA Y HIGH COURT. IN THE CASE OF CIT VS. ANKITECH PVT. LTD.(SUPRA) , THEIR LORDSHIPS HAVE OBSERVED THAT SINCE THE CONDITIONS STIPULATED IN SECTION 2(22)(E) OF THE AC T TREATING THE LOAN AND ADVANCES AS DEEMED DIVIDEND ARE ESTABLISH IN SUCH CASES, TH EREFORE IT WOULD ALWAYS BE OPEN TO THE REVENUE TO TAKE CORRECTIVE MEASURE BY TREAT ING THIS DIVIDEND INCOME AT THE HANDS OF THE SHARE HOLDERS AND TAX THEM ACCORDINGL Y. AS OTHERWISE IT WOULD AMOUNT TO ESCAPEMENT OF INCOME AT THE HANDS OF THOSE SHAR EHOLDERS. REFERENCE CAN BE MADE TO THE FOLLOWING OBSERVATIONS OF THEIR LORDSHI PS OF DELHI HIGH COURT IN THE SAID DECISION. BEFORE WE PART WITH, SOME COMMENTS ARE TO BE NECES SARILY MADE BY US. AS POINTED OUT ABOVE, IT IS NOT IN DISPUTE THAT THE CO NDITIONS STIPULATED IN SECTION 2(22)(E) OF THE ACT TREATING THE LOAN AND ADVANCE A S DEEMED DIVIDEND ARE ESTABLISHED IN THESE CASES. THEREFORE, IT WOULD ALW AYS BE OPEN TO THE REVENUE TO TAKE CORRECTIVE MEASURE BY TREATING THIS DIVIDEND INCOME AT THE ITA NO. 399/MUM/2013 SHRI RAM SHIPPING INDUSTRIES P. LTD. ASSESSMENT YEAR: 2009-10 7 HANDS OF THE SHAREHOLDERS AND TAX THEM ACCORDINGLY. AS OTHERWISE, IT WOULD AMOUNT TO ESCAPEMENT OF INCOME AT THE HANDS OF THOS E SHAREHOLDERS. IN VIEW OF THE AFOREMENTIONED OBSERVATION OF THEIR LORDSHIPS, BEFORE PARTING WITH THIS DECISION, WE MAKE SIMILAR OBSERVATIONS. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE AFOREMENTIONED TERMS. 0 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF OCTOBER, 2014. SD/- SD/- (R. C. SHARMA) (I. P. BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.10.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.