Case Law Details
Mahimananda Mishra Vs ACIT (Orissa High Court)
A plain reading of ection 2(22)(e) of the Income Tax Act, 1961 indicates that the taxing of the deemed dividend has to be in the hands of the shareholder of OSL. In the present case, admittedly it is Mr. Mishra in his individual capacity who holds 36.95% of the paid-up share capital of the OSL. On the other hand, M/s. Mahimananda Mishra, the Firm, does not hold any shares in OSL. Consequently, this Court finds that the CIT (A) was right in his conclusion in para 6, which reads as under:
“6. Thus, the amount should be treated as deemed div idend u/s.2(22)(e) of the Act in the hands of Shri Mahimananda Mishra as discussed above. The AO is directed to take remedial measures accordingly.”
The ITAT in the impugned order has, in the considered view of this Court, needlessly remanded the matter to the CIT (A) on the ground that it was not clear whether deemed dividend should be taxed in the hands of Assessee’s partner or in the hands of the Assessee. Since the plain reading of Section 2(22)(e) of the Act makes it clear that the deemed dividend is to be taxed in the hands of individual shareholder and not an entity which does not hold shares in OSL, the question of remanding the matter to the CIT(A) did not arise.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
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