The Commissioner v. M/S Makson Nutrition Food India Pvt Ltd
[Citation -2015-LL-0423]

Citation 2015-LL-0423
Appellant Name The Commissioner
Respondent Name M/S Makson Nutrition Food India Pvt Ltd
Court HIGH COURT OF MADHYA PRADESH
Relevant Act Income-tax
Date of Order 23/04/2015
Judgment View Judgment
Keyword Tags deemed dividend • unsecured loan • substantial question law
Bot Summary: In this appeal under Section 260-A of the Income Tax Act, 1961 challenge is made to an order passed by the Income Tax Appellate Tribunal, Indore Bench on 21.11.2011 in the matter of deleting the addition of Rs.1,25,02,687/- from the total income of the assessee in view of the interpretation given to Section 2(22)(e) of the Income Tax Act. The Assessing Officer treated the aforesaid amount as deemed dividend in the hands of the assessee Company and thereby added it to the total income of the assessee under Section 2(22)(e) of the Act. Even though various submissions were made by Shri S. Lal in support of the contentions to say that the additions made treating the dividend to be the income of the Company, the revenue has not committed any error but on going through the findings and reasons given by the Tribunal, we find that after placing reliance on a judgment of the Supreme Court in the case of Rameshwarlal Sanwarmal Vs. CIT122 ITR 1 it has been held by the learned Tribunal that Section 2(22)(e) reference to both the registered share holder and a beneficiary share holder, it has been held based on the judgment of Supreme Court that if a person is only a registered share holder but not a beneficiary share holder then the provisions of Section 2(22)(e) will not apply. Vice-versa if a person is only a beneficiary share holder but not a registered share holder then also the provision will not apply. It is held after placing reliance on the judgment of Rameshwarlal Sanwarmal that to attract the provisions of Section 2(22)(e) the assessee should be both the beneficiary share holder so also registered share holder. It has been found that in this case both these conditions are not satisfied as the assessee is not a registered share holder nor a beneficiary share holder in the sister concerned but it is a Director of the Company who is holding the share in the sister concern. It is held that the company cannot be treated to be beneficiary share holder or a registered share holder when the Director is the only a share holder.


ITA-74-2012 ( COMMISSIONER Vs M/S MAKSON NUTRITION FOOD INDIA PVT LTD) 23-04-2015 Shri Sanjay Lal, learned counsel for appellant. He is heard on I.A. No.4227/2015 application filed for condoning delay of 151 days in filing of this appeal. delay is condoned. He is also heard on question of admission. In this appeal under Section 260-A of Income Tax Act, 1961 challenge is made to order passed by Income Tax Appellate Tribunal, Indore Bench on 21.11.2011 in matter of deleting addition of Rs.1,25,02,687/- from total income of assessee in view of interpretation given to Section 2(22)(e) of Income Tax Act. Facts in brief goes to show that assessee company is engaged in business of manufacturing Modified Sugar Boiled Candy and Modified Toffee. For assessment year 2006-2007 return was filed by assessee showing total loss of Rs.1,92,07,679. case was taken up for scrutiny and after notice under Section 143(2) assessment was completed on 31.12.2008 under Section 143(3) and it was found that company has taken unsecured loan from its sister concerns to tune of Rs.1,25,02,687/-. Assessing Officer treated aforesaid amount as deemed dividend in hands of assessee Company and thereby added it to total income of assessee under Section 2(22)(e) of Act. Agrieved thereof, assessee filed appeal before Commissioner. appeal was allowed in part and when further appeal was filed before Tribunal after interpreting provisions of Section 2(22)(e), Tribunal deleted entire addition of Rs.1,25,02,687/- and therefore, this appeal. Even though various submissions were made by Shri S. Lal in support of contentions to say that additions made treating dividend to be income of Company, revenue has not committed any error but on going through findings and reasons given by Tribunal, we find that after placing reliance on judgment of Supreme Court in case of Rameshwarlal Sanwarmal Vs. CIT (1980)122 ITR 1 (SC) it has been held by learned Tribunal that Section 2(22)(e) reference to both registered share holder and beneficiary share holder, it has been held based on judgment of Supreme Court that if person is only registered share holder but not beneficiary share holder then provisions of Section 2(22)(e) will not apply. Vice-versa if person is only beneficiary share holder but not registered share holder then also provision will not apply. It is held after placing reliance on judgment of Rameshwarlal Sanwarmal (supra) that to attract provisions of Section 2(22)(e) assessee should be both beneficiary share holder so also registered share holder. It has been found that in this case both these conditions are not satisfied as assessee is not registered share holder nor beneficiary share holder in sister concerned but it is Director of Company who is holding share in sister concern. That being so, it is held that company cannot be treated to be beneficiary share holder or registered share holder when Director is only share holder. As learned Tribunal has decided matter on sound considerations based on judgment of Supreme Court which has been followed by Delhi High Court in case of C. P. Sarathy Mudaliar (1972) 83 ITR 170, we see no substantial question of law involved warranting reconsideration as appeal has been decided based on settled principles of law and nothing is brought to our notice to say that legal principles adopted and applied by Tribunal is incorrect. Accordingly, finding no merit, appeal is dismissed. (RAJENDRA MENON) (MOOL CHAND GARG) JUDGE JUDGE Commissioner v. M/S Makson Nutrition Food India Pvt Ltd
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