M/S. Grand International,, Kanpur vs Department Of Income Tax

This is revenue's appeal directed against the order passed by learned CIT(A),II, Kanpur dated 31/05/2012 for assessment year 2006-07.

2. The Revenue has raised 6 grounds of appeal but the only grievance is about deletion of addition made of Rs. 240,45,538 by the A.O. as deemed dividend u/s 2 (22) (e) of the I. T. Act, 1961.

3. Learned DR of the revenue supported the assessment order and Learned AR of the assessee supported the order of learned CIT (A). He also placed reliance on the judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. MCC Marketting Pvt. Ltd. As reported in 343 ITR

350.

4. We have considered the rival submissions and the material on record, orders of the authorities below and the judgment cited by learned AR of the assessee. We find that this is not the case of the A.O. that the assessee is a share holder of the loan giving company i.e. Tread Stone Ltd. (TSL). Case of the A.O. is that Sri K. K. wadhwa and Sri O.P. wadhwa H.U.F. are having substantial interest in TSL and in the assessee firm. As against this, it is noted by learned CIT (A) on page 10 of his order that Sri K. K. Wadhwa and O.O. Wadhwa H.U.F. were holding only 6.462 % and 2

7.989% shares in TSL as against 45.9% and 22.83 respectively as alleged by the A.O. He has also noted that as certified by the Company Secretary after inspection from ROC records, there is no change in the shareholding pattern of TSL between 30.09.2003 to 30.09.2010. Moreover, even if it is accepted that shareholding pattern of TSL as alleged by the A.O. is correct, as per this judgment of Hon'ble Delhi High Court before us, when the recipient of loan is not a shareholder of loan giving company, section 2 (22) (e) cannot be invoked. No contrary decision was brought to our notice. Hence, respectfully following this judgment, we decline to interfere in the order of learned CIT (A) since the assessee firm is not a shareholder in TSL.

5. In the result, the appeal of revenue is dismissed. (Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:16/01/2015. *C.L.Singh

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar