K.P.T. Thangal, Vice President: This appeal by Revenue is for asst. yr. 2001-02. Though Revenue has urged as many as five grounds, it is confined to one and directed against order of CIT(A) in deleting addition of Rs. 13,14,326 being deemed dividend under s. 2(22)(e) of IT Act, 1961. facts leading to dispute, briefly, are as under: Assessee filed return on 31st Oct., 2001 declaring nil income. case was processed under s. 143(1) on 24th Dec., 2002 and subsequently, selected f o r scrutiny. Assessee is engaged in business of financing, investments, placing deposits, leasing, etc. It was noticed by AO that assessee received unsecured loans of Rs. 41,30,000 under head "Loan funds" from M/s Surya Spices Vyapar (P) Ltd. Assessee filed confirmation letters along with P&L a/c and balance sheet of M/s Surya Spices Vyapar (P) Ltd. Assessee was asked to explain its shareholding pattern and that of M/s Surya Spices Vyapar (P) Ltd. From shareholding pattern furnished by assessee, it was noticed, Shri Sharan P. Khanna and Mrs. Bharti S. Khanna were beneficial owners of shares with more than 10 per cent of voting power of lending company M/s Surya Spices Vyapar (P) Ltd. and Shri Sharan P. Khanna is having more than 20 per cent of voting power in assessee company. By virtue of provisions of s. 2(22)(e), AO held, this will fall within ambit of deemed dividend. It is not disputed that assessee is company in which public is not substantially interested. AO observed that Shri Sharan P. Khanna, equity shareholder is having 49.50 per cent shareholding in M/s Surya Spices Vyapar (P) Ltd., lending company, and 50 per cent shareholding in assessee company. All conditions laid down in s. 2(22)(e) are satisfied for assessing loan amount from M/s Surya Spices Vyapar (P) Ltd. as deemed dividend. When questioned, assessee stated, s. 2(22)(e) is not applicable. Shri Sharan P. Khanna became shareholder of company only on 9th April, 2001 as per annual return filed with RoC on 29th Oct., 2001. loan was advanced by M/s Surya Spices Vyapar (P) Ltd. much prior to this. AO did not accept above claim. He held that return of income clearly establishes t h e information to be required with regard to particulars of persons who are beneficial owners of equity shares holding not less than 10 per cent of voting power at any time of previous year, i.e., 1st April, 2000 to 31st March, 2001. He found that Shri Sharan P. Khanna was having percentage of beneficial ownership of equity shares of more than 20 per cent in assessee company. claim of assessee was rejected by AO. matter was carried before CIT(A) by assessee. It was reiterated before CIT(A) that Shri Sharan P. Khanna became shareholder of assessee company only on 9th April, 2001 when 100 equity shares were transferred in favour of him. chronology of events relating to transactions was also submitted before CIT(A), which is reflected at p. 3 of his order. It reads as under: Mr. Sharan Khanna and Mr. Tapin Khanna became directors of Sagar. SSV advanced loan of Rs. 41,30,000 to Sagar. Cheque deposited in Sagar s account. On same day, Mr Sharan Khanna, Mrs. Bharati Khanna and Sharan Khanna (HUF) collectively applied for 99,800 shares of Sagar. shares of Sagar were transferred in favour of Mr. Sharan Khanna and Mr. Tapin Khanna. Nayna Shah and Kiran Shah ceased to be members of Sagar as reflected in register of members. Allotment of shares was made. Form No. 2 filed with RoC. It was contended that though Shri Sharan P. Khanna was major shareholder in lending company and was director in assessee company, he became shareholder of assessee company only in succeeding financial year. It was further submitted, at time loan was advanced, Shri Sharan P. Khanna was not registered shareholder of assessee company, which is crucial under provisions of s. 2(22)(e). Assessee also relied upon decision of Hon ble Supreme Court in case of CIT vs. C.P. Sarathy Mudaliar (1972) 83 ITR 170 (SC). CIT(A) held, for invoking s. 2(22)(e), lender company should be either member or partner in concern and he should have substantial interest in such concern. In instant case of assessee, assessee company is not partnership firm and therefore question of there being any partner does not arise. Assessee is corporate entity and only shareholder can be treated as member of assessee. He held, crucial issue would be whether Shri Sharan P. Khanna was member of assessee company on date of advancing loan by lender company. There is no evidence on record to show that Shri Sharan P. Khanna became member of assessee company on or before 31st March, 2001. He became shareholder only on 9th April, 2001. AO only relied on return of income for allegation that Shri Sharan P. Khanna was beneficial owner of shares of more than 100 per cent of assessee company. CIT(A) further held, this was position as on date of filing of return and not on date of close of assessment year under consideration. Hence, he allowed claim of assessee. learned Departmental Representative supported order of AO and submitted that actually, there was no verification of record by CIT(A). T h e learned Departmental Representative, relying upon decision of Hon ble Allahabad High Court in case of Sri Krishna vs. CIT (1983) 36 CTR (All) 75: (1983) 142 ITR 618 (All), submitted that submission of assessee that Shri Sharan P. Khanna was actually not shareholder at that relevant point of time is only self-serving statement. There is no evidence and CIT(A) has not tried to ascertain facts as well. Hence, he submitted that this contention of assessee cannot be accepted. He further submitted that in absence of verification of facts by CIT(A), matter needs to go back. Learned Representative for assessee, on other hand, relying upon decision of Hon ble Supreme Court in case of CIT vs. C.P. Sarathy Mudaliar (supra), submitted that at that particular point of time, Shri Sharan P. Khanna was not shareholder of assessee company. loan was given on 29th March, 2001. Shri Sharan P. Khanna became shareholder only on 9th April, 2001. He also relied upon decision of Hon ble Allahabad High Court in case of CIT vs. H.K. Mittal (1996) 219 ITR 420 (All) and decision of Hon ble Supreme Court in case of Rameshwarlal Sanwarmal vs. CIT (1980) 14 CTR (SC) 372: (1980) 122 ITR 1 (SC). Considering rival submissions and facts brought on record, we are o f view that there is no material to disturb order of learned first appellate authority, particularly in light of decision of Hon ble Supreme Court in case of CIT vs. C.P. Sarathy Mudaliar cited supra, wherein Hon ble Supreme Court held that when section speaks of "shareholder", it refers to registered shareholder and not to beneficial owner. In instant case of assessee, Shri Sharan P. Khanna became registered shareholder of assessee company much subsequent to event of loan. In view of above, we have no reason to disturb order of learned first appellate authority. As such, appeal of Revenue is liable to be dismissed. In result, appeal of Revenue stands dismissed. *** INCOME TAX OFFICER v. SAGAR SAHIL INVESTMENT (P) LTD.