Institute of Fire Safety Disaster Management Studies Vs ACIT (Gujarat High Court)
Income Tax Act | Trustee’s Shareholding Doesn’t Make Public Trust A ‘Concern’ Under Deemed Dividend Provision: Gujarat High Court
The Gujarat High Court considered a writ petition filed by a public Trust challenging the order dated 30.06.2022 passed under Section 148A(d) of the Income Tax Act, 1961, along with notices issued under Section 148 dated 30.06.2022 and 06.04.2021. The petitioner had filed its return of income for Assessment Year 2013-14 declaring nil income.
The reassessment proceedings were initiated on the basis that M/s. Checkmate Services Private Limited had allegedly advanced loans amounting to ₹8,85,97,971 to the petitioner, which were reflected as “Trade Payables” in the books. The Assessing Officer treated the amount as deemed dividend under Section 2(22)(e), alleging that the petitioner had not offered it to tax.
The petitioner objected that Section 2(22)(e) was inapplicable because it was not a shareholder of M/s. Checkmate Services Private Limited. It also contended that although its Managing Trustee, Mr. Vikram Mahurkar, held 50% shareholding and was a Director in the company, he was not a beneficiary of the Trust. Therefore, the statutory conditions for treating the transaction as deemed dividend were not satisfied. Despite these objections, the Assessing Officer passed the order under Section 148A(d) and issued the impugned notice under Section 148.
