CIT Vs. ANKITECH (P) LTD.

JUDGEMENT

(1.) IN all these appeals, same questions of law touching the interpretation that is to be accorded to the provisions of Section 2(22)(e) of the amount received by the Income Tax Act (hereinafter referred to as the Act), arise for consideration. Our purpose would be served by taking note of the questions of law framed in ITA No. 462 of 2009, as concededly answer thereto shall cover the outcome of all these appeals. The substantial questions of law on which this appeal was admitted are as under:

(2.) THOUGH as many as four questions are framed, it is with singular focus, viz., whether the Assessee who was not the shareholders of M/s. Jackson Generators (P) Ltd. (JGPL) could be treated as covered by the definition of dividend as contained in Section 2(22)(e) of the Income Tax Act (hereinafter referred to as the Act). This issue has arisen under the following circumstances.

(3.) THE AO was of the view that as the two Guptas were the members holding substantial interests in JGPL which had provided loans and advances to the Assessee company and these very Guptas had substantial interest even in the Assessee company, for the purpose of Section 2(22)(e) of the Act the amount received by the Assessee from JGPL which constituted advances and loans would be treated as deemed dividend within the meaning of Section 2(22)(e) of the Act and added the aforesaid amount to the income of the Assessee. The Assessee had specifically pleaded that the provisions of Section 2(22)(e) of the Act would not be attracted as the Assessee was not a shareholder in JGPL. According to the Assessee, for the purposes of application of Section 2(22)(e) of the Act, one of the essential conditions was that the concern receiving the said money has to be that income is to be assessed at the hands of shareholder. The AO rejected this contention.