Whether when assessee company makes advances in favour of its Director holding 90% stake in the company, such loans are to be treated as deemed dividend in the hands of the company or the Director?

ACIT Vs. Oxford Softeck Pvt. Ltd. (ITAT Delhi)- If it is supposed that all the conditions are fulfilled but then also the same cannot be added as income in the hands of the payer company as such amount can be added only to the income of a person as dividend who is a shareholder to whom such loan and advances made. Keeping in view these facts and the aforementioned case law relied upon by ld. CIT(A) and also the provisions of the Act, we are of the opinion that addition in the hands of the assessee company has rightly been deleted by ld. CIT(A) and to that extent we uphold his order and it is held that addition has rightly been deleted in the hands of the assessee company.

ACIT Vs. Oxford Softeck Pvt. Ltd.,

Decided by – ITAT Delhi

ITA No. 1138/Del/2011

Assessment Year:  2005- 06

Decided on- 28.04.2011

ORDER

PER I.P. BANSAL, J.M.

This is an appeal filed by the revenue. It is directed against order passed by ld. CIT(A) dated 16.11.2010 for A.Y. 2005-06. Grounds of appeal read as under: –

1. “That on the facts and circumstances of the case as well as in law the ld. CIT(A) has erred in deleting the addition of Rs. 45,48,330/- made by the AO u/s 2(22)(e) of the I. T. Act.