D. P. VORA SECURITIES PVT. LTD., MUMBAI V. DCIT - 4(1)(1), MUMBAI

ITA 5961/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1065 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 07-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDRA SINGH
• Keywords: Deemed to accrue or arise in india; Deemed dividend
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 5961 /MUM/20 1 6 ( / ASSESSMENT YEAR : 2 013 - 14 ) D P VORA SECURITIES PVT LTD ., 21/22/B, 1 ST FLOOR, KHATAU BUILDING, A D MODY MARG, FORT, MUMBAI - 400023 / VS. DY. COMMISSIONER OF INCOME TAX - 4( 1 ) (1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 . ./ PAN : AACCD1947L ( / APPELLANT) : ( / RESPOND ENT ) / APPELLANT BY : SHRI K GOPAL AND SHRI JITENDRA SINGH / ASSESSEE BY : SHRI PURUSHOTTAM KUMAR / DATE OF HEARING : 24.4. 2017 / DATE OF PRONOUNCEMENT : 2 4 . 4. 201 7 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 23.8.2016 PASSED BY THE LD.CIT(A) - 9 , MUMBAI FOR THE ASSESSMENT YEAR 20 13 - 14 . 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN VARIOUS GROUNDS OF APPEAL IS AGAINST TH E CONFIRMATION OF ADDITION OF RS.4,15,05,865/ - BY THE LD.CIT(A) AS MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 2(22)( E) OF THE INCOME TAX ACT,1961 WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE IS NEITHER A 2 ITA NO. 5961 /M/201 6 BENEFICIAL SHAREHOLDER IN M/S T OUCHSTONE CAPITAL MARKET SERVICES PVT LTD FROM WHOM THE FUNDS WERE BORROWED NOR HAVING ANY SUBSTANTIAL INTEREST IN THE SAME AND ALSO THAT THE ADVANCES WERE RECEIVED AS SHORT TERM TRADING ADVANCES TO MEET THE WORKING CAPITAL NEEDS AND WAS REPAID DURING THE ASSESSMENT YEAR ITSELF. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 19.9.2013 DECLARING TOTAL INCOME OF RS.2,12,970/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO NOTICED THAT THE ASSESSEE HAS ACCEPTED A LOAN TO THE TUNE OF RS.5,60 , 00 ,000 / - FROM M/S TOUCHSTONE CAPITAL MARKET SERVICES PVT LTD IN WHICH THE SHRI DEEPAK VORA WAS HOLDING 630000 SHARES CONSTITUT ING 66.315% OF THE TOTAL HOLDINGS . BESIDES, SHRI DEEPAK VORA WAS HOLDING 100 SHARES IN M/S TOUCHSTONE CAPITAL MARKET SERVICES PVT LTD WHICH WORKED OUT TO 0.01% OF THE TOTAL SHARE CAPITAL OF THE SAID COMPANY , WHICH WAS ACCORDING TO THE ASSESSEE INADVERTENTLY TAKEN AS 50,500 SHARES WHICH WORKED OUT T O 38% OF THE TOTAL SHAREHOLDINGS. IN OTHER WORDS, THE AO OBSERVED THAT THE SHRI DEEPAK VORA WAS HOLDING 50,500 SHARES IN M/S TOUCHSTONE CAPITAL MARKET SERVICES PVT LTD AND ALSO 630000 SHARES IN ASSESSEE COMPANY CONSTITUT ING 38% AND 66.31% RESPECTIVELY . THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO SHOW CAUSE AS TO WHY THE LOAN ACCEPTED BY THE ASSESSEE SHOULD NOT BE TREATED AS DEEMED DIVIDEND UNDER THE PROVIS IONS OF SECTION 2(22) ( E) OF THE ACT FOR THE REASONS THAT 3 ITA NO. 5961 /M/201 6 SHRI DEEPAK VORA WAS HAVING SUBSTANTIAL INTEREST IN BOTH THE COMPANIES. THE ASSESSEE REPLIED THE SHOW CAUSE NOTICE BY SUBMITTING BEFORE THE AO THAT THE ASSESSEE HOLDING ONLY 100 SHARES IN M/S TOUCHSTONE CAPITAL MARKET SERVICES PVT LTD AND WAS NOT HOLDING 10% OF THE TOTAL HOLDINGS . THE AO ALSO OBSERVED THAT BOTH THE COMPANIES WERE OPERATING FROM THE SAME PREMISES AND HAVE BEEN AIDING AND HELPING TO EACH OTHER TO MEET THEIR OBLIGATIONS TO THE STOCK EXCHANGES AS BOTH THE COMPANIES WERE HAVING IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES ON BSE AND NSE . THE OBSERVATIONS OF THE AO ARE REPRODUCED BELOW: 6.6. ON PLAIN READING OF SECTION THE DEEMED DIVIDEND WILL ALSO BE ATTRACTED TO A COMPANY FULFILLING THE FOLLOWING CONDITIONS: I) ANY PAYMENT BY A COMPANY NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTEREST. M/S. TOUCHSTONE CAPITAL MARKET SERVICES PVT. LTD. IS NOT A PUBLIC LIMITED COMPANY IN WHICH PUBLIC NOT SUBSTANTIALLY INTERESTED. II) ANY SUM BY WAY OF ADVANCES OR LOANS. MLS TOUCHSTONE CAPITAL MARKET SERVICE S PVT. LTD. HAS GIVEN A LOAN OF RS.5,60,00,000/ - TO THE ASSESSEE COMPANY. III) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER. SHRI DEEPAK VORA IS HAVING HOLDING OF 66.315% WHICH IS MORE THAN 10%. IV) TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER [(A) 'CONCERN' MEANS A HINDU UNDIVIDED FAMILY, OR A FIRM OR AN ASSOCIATION OF PERSONS OR 3 BODY OF INDIVIDUALS OR A COMPANY]. SHRI DEEPAK VORA IS HAVING SHAREHOLDING OF 38% IS M/S. TOUCHSTONE CAPITAL MARKET SERVICES PVT. LTD. V) 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 ACCUMULATED PROFITS. IN THIS 4 ITA NO. 5961 /M/201 6 CASE, IT IS SEEN FROM THE BALANCE SHEET OF M/S.TOUCHSTONE CAPITAL MARKET SERVICES P VT. LTD. THAT THERE IS AN ACCUMULATED PROFIT OF RS.4,15,05,865/ - . 6.7 FROM THE ABOVE, IT IS CLEAR THAT THE LOAN TAKEN BY THE ASSESSEE COMPANY FROM M/S TOUCHSTONE CAPITAL MARKET SERVICES PVT LTD. HAS FULFILLED ALL THE CONDITIONS LAID DOWN AS PER THE PR OVISIONS OF SECTION 2(22)(E) OF THE ACT. FINALLY, THE AO ADDED THE SUM OF RS.4,15,05,865/ - AS DEEMED DIVIDEND INCOME IN TERMS OF SECTION 2(22)(E) OF THE ACT BY FRAMING THE ASSESSMENT VIDE ORDER DATED 8.3.2016 PASSED UNDER SECTION 143(3) OF THE ACT BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.4,19,80,950/ - BY MAKING VARIOUS DISALLOWANCE S INTERALIA DEEMED INCOME U/S 2(22)(E) OF THE ACT OF RS.4,15,05,865/ - . AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). 4 . IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING VARIOUS SUBMISSIONS AND CONTENTIONS FILED BY THE ASSESSEE WHICH HAS BEEN INCORPORATED IN PARA 6.3 OF THE APPEAL ORDER BY OBSERVING AND HOLDING AS UNDER : 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE ORDER PASSED BY THE A.O. IT HAS BEEN NOTICED FROM THE SCHEDULE 24B WHEREIN THE DETAILS OF LOAN ACCEPTED HAVE BEEN GIVEN, AND WHERE IT HAS BEEN FOUND THAT THE APPELLANT ACCEPTED A LOA N OF RS 5,60,00,000/ - FROM M/S TOUCHSTONE CAPITAL MARKET SERVICES P LTD. THE AO HAS OBSERVED THAT FROM THE SHAREHOLDING PATTERN OF THE APPELLANT COMPANY, SHRI DEEPAK P. VORA WAS HAVING 6,30,000 SHARES WHICH IS SUBSTANTIAL SHARE HOLDING OF 66.31 %. THE AO HAS FURTHER OBSERVED THAT FROM THE FINANCES OF TOUCHSTONE CAPITAL MARKET SERVICES PLTD, IT IS FOUND THAT SHRI DEEPAK VORA WAS HAVING 50,500 SHARES WITH SUBSTANTIAL SHARE HOLDING OF 38%. THUS, IT IS CLEAR THAT THE APPELLANT SHRI DEEPAK P VORA HAS RECEIVE D CER TAIN AMOUNT FROM TOUCHSTONE CAPITAL MARKET SERVICES P LTD. DURING THE APPELLA TE P ROCEEDING THE APPELLANT HAS FAILED TO REFUTE THIS FACTUAL 5 ITA NO. 5961 /M/201 6 OBSERVATION OF THE A O .UN DISPUTEDLY, SHRI D EEPAK POPATLAL VORA IS ALSO THE DIRECTOR IN THE PRESE NT APPELLA NT COMPANY I.E. D.P. VORA SECURITIES PVT LTD AND IN THIS CAPACITY HE HAS GOT SUBSTANTIA L CONTROL OVER BOTH THE COMPANIES WHICH CAN BE OBSERVED FROM THE PATTERN OF SHAREHOLDINGS. THE AO HAS FURTHER OBSERVED THAT FROM THE BALANCE SHEET OF M/ S TOUCHSTONE CAPIT AL MARKET SERVICES PVT LTD THERE WAS AN ACCUMULATED PROFIT TO A N EXTENT OF R S. 4,15,05,865/ - . THUS, ALTHOUGH THE TRANSACTION OF AMOUNT IN THE GARB OF LOA N RECEIVED BY THE APPELLANT COMPANY FROM TOUCHSTONE CAPITAL MARKET SERVICES PVT L TD AMOUNTING TO RS 5,6 0,00,000/ - IS HIT BY SECTION 2(22)(E) OF THE I T. ACT, 1 9 16 . BUT BECAUS E THE ACCUMULATED PROFIT ITSELF OF M/ S TOUCHSTONE CAPITAL MARKET SERVICES PVT LTD WA S ONLY TO THE EXTENT OF RS 4,15,05,865/ - ONLY, THE AO ACTION OF THE AO IS FOUND TO B E JUDICIOUS AND JUSTIFIED BY ADDING RS . 4,15,05,865/ - ONLY AND NOT THE FULL AMOUNT OF R S. 5,60,00,000/ - . IN THIS REGARD REFERENCE IS MADE TO THE DECISION OF JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE STAR CHEMICALS P LTD VS CIT, 72 TAXMAN 279 (BOMBAY), WHERE IT HAS BEEN HELD AS UNDER : THE EXPLANATION TO SECTION 2(22)(E) WHICH EXPLAINS THE EXPRESSION 'ACCUMULATED PROFITS' IN SECTION 2(22), DID NOT SUPPORT THE THIRD CONTENTION OF THE ASSESSEE. EXPLANATION 1 TO SECTION 2(22) CLEARLY PROVIDES WHAT IS EXCLUDED FROM THE AMBIT OF THIS EXPRESSION. IT ONLY EXCLUDES CAPITAL GAINS ARISING OVER A CERTAIN PERIOD OF TIME. THE POSITION IS FURTHER CLARIFIED BY EXPLANATION 2 WHICH SAYS THAT THE EXPRESSION 'ACCUMULATED PROFITS' IN SUB - CLAUSES (A), (B), (D) AND (E) SHALL INCLUDE ALL PROFITS OF THE COMPANY UP TO THE DATE OF DISTRIBUTION OR PAYMENT REFERRED TO IN THOSE SUB - CLAUSES. FURTHER, THE SUPREME COURT IN THE CASE OF P.K. BADIANI V . CIT [197 6] 105 ITR 642 HAS HELD THAT THE TERM 'PROFITS' APPEARING IN SECTION 2(6A)(E) OF THE INDIAN INCOME - TAX ACT, 1922 WHICH CORRESPONDS TO SECTION 2(22)(E) OF THE 1961 ACT MEANS PROFITS IN THE COMMERCIAL SENSE, I.E., PROFITS MADE BY THE COMPANY IN THE USUAL AN D TRUE SENSE OF THE TERM. IT HAS ALSO HELD THAT DEVELOPMENT REBATE RESERVES CREATED OUT OF THE COMPANY'S PROFITS CONSTITUTE A PART OF THE ACCUMULATED PROFITS OF THE COMPANY. HENCE, THE DEVELOPMENT REBATE RESERVES CREATED BY THE SUBSIDIARY COMPANY FORMED A PART OF THE ACCUMULATED PROFITS FOR PURPOSES OF SECTION 2(22)(E), AND, THEREFORE, THE APPROPRIATIONS MADE TO THE DEVELOPMENT REBATE RESERVE ACCOUNT IN THE ACCOUNTS OF THE SUBSIDIARY COMPANY UP TO 31 - 3 - 1970 WERE ACCUMULATED PROFITS OF THE SAID COMPANY FOR T HE PURPOSE OF DETERMINING THE AMOUNT OF DIVIDEND UNDER SECTION 2(22)(E) IN THE HANDS OF THE ASSESSEE. THUS, IN VIEW OF THE AFORESAID, THE SUM OF RS. 2,83,346 WAS 6 ITA NO. 5961 /M/201 6 INCLUDIBLE IN THE ASSESSMENT OF THE ASSESSEE FOR 1971 - 72 UNDER SECTION 2(22)(E). FURTHER, UND ER SECTION 8(A) FOR THE PURPOSES OF INCLUSION IN THE TOTAL INCOME OF AN ASSESSEE ANY DIVIDEND DECLARED BY A COMPANY OR DISTRIBUTED OR PAID BY IT WITHIN THE MEANING OF SUB - CLAUSE (A) OR SUB - CLAUSE (B) OR SUB - CLAUSE (C) OR SUB - CLAUSE (D) OR SUB - CLAUSE (E) OF CLAUSE (22) OF SECTION 2 SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH IT IS SO DECLARED, DISTRIBUTED OR PAID, AS THE CASE MAY BE. THEREFORE, WHAT WAS TO BE TAKEN INTO ACCOUNT WAS THE PAYMENT RECEIVED BY THE COMPANY DURING THE RELEVANT PR EVIOUS YEAR. THEREFORE, THE ACCUMULATED PROFITS OF THE SUBSIDIARY COMPANY UP TO THE END OF THE ASSESSMENT YEAR 1970 - 71 HAD TO BE IGNORED FOR DETERMINING THE AMOUNT TAXABLE AS DIVIDEND IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1971 - 72 UNDER SECTI ON 2(22)(E) BECAUSE WHAT ONE HAD TO TAKE INTO ACCOUNT FOR THE PURPOSES OF SECTION 2(22)(E) FOR INCLUSION AS DIVIDEND INCOME OF THE ASSESSEE WAS THE AMOUNT RECEIVED BY THE ASSESSEE AS A LOAN OF THE KIND SET OUT IN SECTION 2(22)(E) IN THE ASSESSMENT YEAR 197 1 - 72. AGGRIEVED BY THE ORDER OF LD.CIT(A) FILED AN APPEAL BEFORE THIS TRIBUNAL. 5 . BEFORE US THE LD.AR VEHEMENTLY ARGUED BEFORE US THAT THE FAA HAS GROSSLY ERRED IN UPHOLDING THE ORDER OF AO BY CONFIRMING THE ADDITION OF RS.4,15,05,865 / - UNDER SECTION 2(22)(E) OF THE ACT WHEREAS BY IGNORING THE FACTS OF THE CASE THAT THE NECESSARY CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT SATISFIED AND THEREFORE THE ORDER OF THE LD.CIT(A) SUFFERED FROM SERIOUS LEGAL AND FACTUAL I NFIRMITIES . THE LD. AR BROUGHT TO OUR NOTICE THE SHAREHOLDING POSITIONS WHICH IS REPRODUCED BELOW: COMPANY SHAREHOLDER MR.DEEPAK P VORA TCMSPL DPVSPL TOUCHSTONE CAPITAL (TCMSPL) 38.10% 0.01% D P VORA SECURITIES DPVSPL - THE ASSESSEE COMPANY AND AP PELLANT IN THIS CASE 66.32% 0.01% 7 ITA NO. 5961 /M/201 6 THE LD. AR SUBMITTED BEFORE US THAT BOTH THE COMPANIES WERE CARRYING OUT BUSINESS IN DIFFERENT STOCK EXCHANGES I.E. BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE. THE LD. AR SUBMITTED THAT THE ASSESSEE AND THE TCMSPL WERE HAVING MUTAL ARRANGE MENTS FOR TAKING AND GIVING MONEY IN ORDER TO MEET THEIR TRADING REQUIREMENTS AND COMMITMENTS IN STOCK EXCHANGES. THE LD. AR FURTHER SUBMITTED THAT MONEY SO RECEIVED FROM TCMSPL WERE USED FOR THE ASSESSEE FOR MAKING PAYMENT S TO THE STOCK EXCHANGE AND NOT FOR THE DIRECTOR SHRI DEEPAK VORA AND THEREFORE MONEY RECEIVED WAS IN THE ORDINARY COURSE OF BUSINESS WHICH WAS A TRADING ADVANCE AND WAS NOT COVERED BY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT THE ADDITION CAN ONLY BE MADE IN THE HANDS OF REGISTERED SHAREHOLDER AND NOT THE ASSESSEE WHO IS NOT A REGISTERED SHAREHOLDER OF THE COMPANY. IN DEFENCE OF HIS ARGUMENT, THE LD. AR RELIED ON THE FOLLOWING DECISIONS : I ) CIT V/S CREATIVE DYEIN G AND PRINTING P LTD(2009) 318 ITR 476 (DEL); II ) CIT V/S GOPAL CLOTHING CO.P.LTD (2013) 350 ITR 67 (DELHI); III ) CIT V/S IMPACT CONTAINERS P LTD (2014) 367 ITR 346 (BOM). THE LD. AR FINALLY SUBMITTED THAT IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HI GH COURT AND OTHER HIGH COURTS THE ISSUE WAS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND THEREFORE THE ADDITION AS CONFIRMED BY THE FAA SHOULD DELE T ED. 8 ITA NO. 5961 /M/201 6 6 . ON THE OTHER HAND, THE LD.DR SUBMITTED THAT THE FACTS OF THE CASE AND RELIED ON THE ORDERS OF AUTHORITIES BELOW. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAW S CITED BEFORE US. WE FIND FROM THE PARA 6.8 OF THE ASSESSMENT ORDER , WHER EIN IT HAS BEEN CLEARLY ADMITTED BY THE AO THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT WHICH IS EXTRACTED BELOW: 6.8 AS FAR AS JUDICIAL PRECEDENTS ARE CONCERNED, THIS ISSUE WAS DECIDED BY TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT - 10 V/S M/S UNIVERSAL MEDICARE PVT.LTD NO.2264 OF 2009 DATED 22, MARCH 2010 IN FAVOUR OF THE ASSESSEE AND HELD THAT THE DEEMED DIVIDEND WILL BE ATTRACTED IN THE HANDS OF THE SHAREHOLDER WHO IS HAVING SUBSTAN TIAL INTEREST IN BOTH THE COMPANIES. HOWEVER, THE DEPARTMENT HAS NOT ACCEPTED THE DECISION AND FILED SLP BEFORE THE APEX COURT ACCORDING TO THE AO THE ADDITION HAS BEEN MADE IN ORDER TO KEEP THE ISSUE ALIVE AS THE DEPARTMENT HAS NOT ACCEPTED THE DECI SION OF THE JURISDICTIONAL HIGH COURT ON THE ISSUE AND FILED SLP BEFORE THE HONBLE SUPREME COURT. WE ARE OF THE VIEW THAT EVEN ON THE BASIS OF SAID FINDINGS THE AO THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE AND DESERVES TO BE DELETED. 8 . IN TH E PRESENT CASE, WE ALSO FIND THAT THE MONEY RECEIVED BY THE ASSESSEE FROM TCMSPL WERE USED TO MEET ITS TRADING COMMITMENTS ON THE STOCK EXCHANGE AND SIMILAR ASSISTANCE WAS RENDERED TO TCMSPL WHICH WAS ALSO USED BY THE SAID COMPANY TO MEET ITS TRADING COMMI TMENTS ON STOCK EXCHANGE FOR DOING BUSINESS . SIMILAR ASSISTANCE WAS RENDERED TO TCMSPL TO MEET ITS TRADING 9 ITA NO. 5961 /M/201 6 COMMITMENTS TO STOCK EXCHANGE . IT HAS BEEN CLEARLY DECIDED BY THE HONBLE DELHI HIGH COURT IN THE CASE S OF CREATIVE DYEING AND PRINTING P LTD (S UPRA) THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT , WERE NOT APPLICABLE TO THE BUSINESS TRANSACTIONS. ON THE SECOND PLEA TAKEN BY THE LD.AR THAT THE DIVIDEND IF AT ALL CONSIDERED AS INCOME THEN HAS TO BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF T HE ACT THEN ONLY BE ADDED IN THE HANDS OF SHAREHOLDER AND NOT IN THE HANDS OF THE ASSESSEE WHO IS NOT HOLDING REQUISITE SHARES IN TCMSP. THE ISSUE IS NOW COVERED BY THE RATIO LAID DOWN BY THE DECISION IN THE CASE OF M/S UNIVERSAL MEDICARE PVT.LTD (SUPR A), IMPACT CONTAINERS P LTD (SUPRA) , W HEREIN IT HAS BEEN HELD TH A T THE ADVANCES RECEIVED BY THE ASSESSEE FROM THE COMPANIES HAVING RESERVED ACCUMULATED PROFIT COULD ONLY BE ADDED IN THE HANDS OF THE REGISTERED SHAREHOLDER WHO IS ENTITLED TO RECEIVED DIVI DEND AND NOT IN THE HANDS OF ANY OTHER BUSINESS ENTITY . WE THEREFORE ARE OF THE VIEW THAT THE RATIO LAID DOWN BY THE VARIOUS HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT ARE INCLINED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT TH E E AO TO DELETE THE ADDITION BY HOLDING THAT THE PROVISIONS OF SECTION 2(22 ) (E) OF THE ACT ARE NOT ATTRACTED IN THE CASE OF BUSINESS TRANSACTIONS AND ALSO THE ASSESSEE IS NOT HOLDING 10% OF THE SHARE HOLDING IN TCMSP. 10 ITA NO. 5961 /M/201 6 9 . IN THE RESULT, THE APPEAL OF THE ASSES SEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24TH APRIL , 2017 . S D SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24. 4 .2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI