COMMISSIONER OF INCOME TAX vs. CARGILL INDIA PVT. LTD.

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ITA/651/2018HC DelhiDLHC01095323201811 September 2018Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE CHANDER SHEKHAR2 pages
AI SummaryDismissed

What did the High Court hold?

The tribunal held that the loan cannot be treated as 'deemed dividend' under Section 2(22)(e) as the respondent-assessee is not a shareholder or beneficial owner of the lender company. The contention of the Revenue was found to be misconceived.

What were the facts?

The Revenue contended that a loan given by M/s Cargill Global Trading India Private Limited to the respondent-assessee, M/s Cargill India Private Limited, should be treated as 'deemed dividend'. Both companies are subsidiaries of M/s Cargill Inc USA, but their step-up subsidiaries are different.

What were the issues?

Whether a loan advanced by a subsidiary to another subsidiary of the same parent company, where the subsidiaries have different downstream entities, can be considered 'deemed dividend' under Section 2(22)(e).

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

$~8 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 651/2018

COMMISSIONER OF INCOME TAX

..... Appellant Through: Mr. Ashook K. Manchanda, Sr. Standing Counsel, Income Tax Department with Mr. Aditya and Mr. Amar, Panwar, Advocates.

versus

CARGILL INDIA PVT. LTD.

..... Respondent Through: Mr. Percy Pardiwala, Sr. Advocate with Ms. Ananya Kapoor, Ms. Soumya Singh and Mr. Sumit Lalchandani, Advocates.

CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR

O R D E R %

11.09.2018

CM No. 22926/2018 Delay of 30 days in refiling of appeal is condoned for the reasons stated in the application. The application is disposed of. CM No. 22927/2018 Exemption allowed subject to all just exceptions. ITA 651/2018 Contention of the Revenue is that loan given by M/s Cargill Global Trading India Private Limited to the respondent-assessee namely M/s Cargill India Private Limited should be treated as “deemed dividend” under Section 2(22)(e) of the Income Tax Act,1961 is misconceived.

2.

It is an accepted and admitted position that M/s Cargill Global Trading India Private Limited is one step down subsidiary of M/s Cargill Inc USA. The respondent-assessee is a two step down subsidiary of M/s Cargill Ink USA. The step up subsidiary(ies) of M/s Cargill Global Trading India Private Limited and M/s Cargill India Private Limited are different and not common. It is not possible to accept the contention that the respondent- assessee should be treated as a shareholder or beneficial owner of the shares in M/s Cargill Global Trading India Private Limited. 3. In these circumstances, we do not think that the loan given by M/s Cargill Global Trading India Private Limited can be treated as “deemed dividend” paid to the respondent-assessee. 4. The appeal has no merits and is accordingly dismissed.

SANJIV KHANNA, J.

CHANDER SHEKHAR, J. SEPTEMBER 11, 2018 MR

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