Namadhari Seeds Pvt. Ltd.,, vs Assessee

M/s.Namdhari Seeds, 'Sri Sai Arcade', No.8, 12th Cross, 1st Phase, Ideal Homes Township, Rajarajeshwarinagar, Bangalore-98. ... Appellant PAN: AABFN 0971 G

Vs.

Asst. Commissioner of Income-tax, Circle 2(1), Bangalore. ... Respondent

Appellant by: Shri H.N.Khincha, CA. Respondent by: Dr.K.Shankar Prasad, JCIT(DR).

Date of hearing : 10/02/2015 Date of pronouncement: 20/02/2015

Per Smt. P.MADHAVI DEVI, JM:

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.

ITA No.1746/Bang/2013

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.

3. 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 ITA Nos.322/2012 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.

ITA No.1746/Bang/2013

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.

5. In the result, the assessee's appeal is allowed.

Pronounced in the open court on 20th of February, 2015.

sd/- sd/- (Abraham P George) (Smt. P.Madhavi Devi) ACCOUNTANT MEMBER JUDICIAL MEMBER eksrinivasulu

Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore