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Income Tax Appellate Tribunal, ‘C’ BENCH: BANGALORE
Before: SMT. P. MADHAVI DEVI & SHRI ABRAHAM P GEORGE
This is an appeal filed by the assessee against the order of the CIT(A)-I, Bangalore, dated 23/2/2013 confirming the addition made by the Assessing Officer (AO) u/s 2(22)(e) of the Income- tax Act, 1961 [hereinafter referred to as 'the Act' for short] for the assessment year 2003-04.
M/s.Namdhari Seeds. Page 2 of 3 2. Brief facts relating to this issue are that Shri Thakur Uday Singh who holds 64% stake in the company M/s.Namdhari Seeds Pvt. Ltd., and also has substantial interest in the assessee- firm i.e. M/s.Namdhari Seeds, had taken a loan of Rs.2,02,74,802/- from the company. The AO treated the same as deemed dividend u/s 2(22)(e) of the Act, in the hands of the firm. On appeal, the CIT(A) has confirmed the order of the AO and the assessee is in second appeal before us.
Learned counsel for the assessee, while reiterating the assessee’s submissions before the authorities below, has placed reliance upon the decision of the Hon’ble High Court of Karnataka in the assessee’s own case for the assessment years 2006-07 to 2008-09 in to 324/2012 wherein it was held that it is only where loan is advanced by the company to the registered shareholder and where other conditions set out in sec.2(22)(e) are also satisfied, that the amount of loan would be liable to be regarded as deemed dividend within the meaning of sec.2(22)(e) of the Act. The learned counsel for the assessee submitted that in the relevant assessment year also, it is the partner and not the assessee-firm who has taken loan from the company and also that the assessee-firm is not the registered shareholder of the company. The learned Departmental Representative, however, supported the orders of the authorities below.
M/s.Namdhari Seeds. Page 3 of 3 4. Having regard to the rival contentions and the decision of the jurisdictional High Court in the assessee’s own case for the subsequent assessment years, we hold that addition u/s 2(22)(e) cannot be made in the hands of the assessee.
In the result, the assessee’s appeal is allowed.