Arihant Fertiliser And Chemicals India Ltd. Vs DCIT (ITAT Indore)
ITAT Indore held that Deemed Dividend under section 2(22)(e) of the Income Tax Act is not taxable in hands of borrower-company who doesn’t hold shares in lender-company. Accordingly, appeal of the assessee allowed and addition set aside.
Facts- The assessee-company filed its return of income of relevant AY 2015-16 declaring a total income of Rs. 8,39,47,820/- which was assessed by way of scrutiny-assessment u/s 143(3) at a total income of Rs. 8,44,32,990/-.
Thereafter, the case of assessee was re-opened u/s 147 through a notice u/s 148 dated 23.03.2019. Ultimately, the AO completed assessment at a total income of Rs. 8,93,89,110/- after making an addition of Rs. 49,56,118/- on account of deemed dividend u/s 2(22)(e) pertaining to loan taken by assessee-company from another company “M/s Arihant Bio-Chem Ltd”. CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- In CIT v. Venkatesh Beverages Ltd. (2011) 18 ITJ 851 (Trib-Indore) it is held that assessee-company received loan from other company-AO noted that shareholder of assessee-company and that of lender company was same holding more than requisite shares u/s 2(22)(e). AO therefore held that it was deemed dividend-HELD- Dividend is taxable in the hands of shareholder, who shall be both a registered and a beneficial shareholder. Dividend is not taxable in hands of assessee-borrower, who does not hold shares in lender-company.
