Case Law Details
DCIT Vs Gilbarco Veeder Root India Pvt. Ltd (ITAT Mumbai)
The appellant before us is a company which has received a sum of Rs.90 crores from other concern, i.e. Portescap. The assessee-company as well as the other concern, i.e. Portescap, have common shareholders inasmuch as the entire shareholding of the assessee-company as well as that of Portescap is held by Kollmorgen, either by itself or through its nominee. The case of the Assessing Officer is that the amount of Rs.90 crores received by the assessee-company from Portescap is assessable as ‘deemed dividend’ u/s 2(22)(e) of the Act. The CIT(A) has rejected the stand of the Assessing Officer primarily on the ground that ‘deemed dividend’ can only be assessed in the hands of the registered shareholder, and that the assessee-company is not a shareholder of Portescap. The Revenue contends, and as is manifested in the assessment order, that Sec. 2(22)(e) of the Act, inter-alia, includes in its sweep payment to any concern in which such shareholder is a member or a partner and has a substantial interest.
We have considered this aspect of the matter as also the provisions of 2(22)(e) of the Act. Shorn of other details, Sec. 2(22)(e) of the Act covers within its sweep three categories of payments. Firstly, the payment by way of loan or advance to a shareholder; secondly, payment to any concern in which such shareholder is a member or a partner; and, thirdly, any payment made on behalf of or for the individual benefit of any such shareholder. Ostensibly, assessee-recipient is not a shareholder in the payer company, i.e. Portescap and, therefore, it is not covered by the first category of payment. In fact, it is the second category which is sought to be invoked by the Assessing Officer. No doubt, there is a common shareholder, both in the assessee-company and Portescap, and even if we were to assume that the amount received by the assessee-company is for the benefit of the stated aforesaid common shareholder, yet, it could only be assessed in the hands of such registered shareholder and not in the hands of the assessee-company.
FULL TEXT OF THE ITAT JUDGMENT
The captioned appeal by the Revenue is directed against the order of CIT(A)-2, Mumbai dated 16.11.2016, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 29.02.2016 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’).
Please become a Premium member. If you are already a Premium member, login here to access the full content.
