JHV Construction Co. Pvt. Ltd. Vs DCIT (ITAT Kolkata)
ITAT Kolkata – Revision u/s 263 on Deemed Dividend Issue Quashed; Loan to Concern Not Taxable in Company’s Hands
In JHV Construction Co. Pvt. Ltd. (AY 2014-15), the Pr.CIT invoked revision u/s 263 alleging that loan received from Welcome Distilleries Pvt. Ltd. should have been treated as deemed dividend u/s 2(22)(e) due to common shareholding. The ITAT noted that although a common shareholder held substantial interest in both companies, the assessee-company itself was not a registered shareholder of the lending company.
Relying on Supreme Court rulings including Madhur Housing & Development Co., the Tribunal held that deemed dividend can be taxed only in the hands of the shareholder and not in the hands of the borrowing concern. Since the AO’s order was in accordance with law, it was neither erroneous nor prejudicial to Revenue. Accordingly, the revision order passed u/s 263 was quashed and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of the Pr. Commissioner of Income Tax (Central), Kolkata-1 [hereinafter referred to Ld. ‘Pr. CIT’] passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2014-15 dated 27.03.2024.
