Sahir Sami Khatib Vs. ITO (Bombay High Court)
It is not in dispute before us that the appellant in Income Tax Appeal No.722 of 2015 is a 15% shareholder in M/s MLPL and a 45% shareholder in M/s OFPL. Similarly, it is also not in dispute that the appellant in Income Tax Appeal No. 724 of 2015 is a 15% shareholder in M/s MLPL and a 99% shareholder in M/s SHCPL. In both these appeals, it was found that M/s MLPL had given a loan and advances to M/s OFPL and M/s SHCPL respectively. The appellant in both the appeals, is not only holding more than 10% in M/s MLPL but also having a substantial interest in M/s OFPL as well as M/s SHCPL. The appellant in Income Tax Appeal No. 722 of 2015 admittedly holds 45% of the shareholding in M/s OFPL and the appellant in Income Tax Appeal No.724 of 2015 admittedly holds 99% of the
shareholding in M/s SHCPL. It, therefore, can hardly be disputed that both the appellants have a substantial interest in the borrowing companies. These facts are not disputed. It is, in these facts, that the ITAT, after examining the definition of the word ‘dividend’ in Section 2(22)(e) of the I. T. Act, 1961 as well as the ratio of this Court in the case of Universal Medicare Pvt. Ltd. (supra) came to a finding that since the assessees were shareholders holding more than 10% of the equity shares of the lending company (M/s. MLPL) and also having a substantial interest in the borrowing companies (45% in OFPL and 99% in SHCPL), the conditions as prescribed under Section 2(22)(e) of the I. T. Act, 1961 were satisfied to include the appellants within the ambit of deemed dividend to be taxed in the hands of the appellant – assessee. We do not find that this issue decided by the Tribunal gives rise to any substantial question of law. All that the ITAT has done is, come to a conclusion that the assessee who is the shareholder in both the lending company as well as borrowing company and having substantial interest therein, the deemed dividend would have to be taxed in the appellant – assessee’s hand. In coming to this conclusion the ITAT has correctly relied upon a decision of this Court in the case of Universal Medicare Pvt. Ltd. (supra). Since this issue is already decided against the appellant – assessees by a decision of this Court, we do not think that this finding of the ITAT gives rise to any substantial question of law.
