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Judgment
Hemant Gupta, J.—Revenue has sought the following two substantial questions of law having arisen out of the order passed by learned Income Tax Appellate Tribunal, Chandigarh (for short the ''Tribunal'') on 18.8.2010: - 1. Whether on the facts and in law, the Hon''ble ITAT was legally justified in dismissing the appeal of the department and upholding the order of CIT(Appeals) in deleting the addition of Rs. 99,10,000/- made u/s 2(22)(e) of the Act.
Whether on the facts and in law, the Hon''ble ITAT was legally justified in dismissing the appeal of the department and upholding the order of CIT(Appeals) in deleting the addition made u/s 2(22)(e) of the Act ignoring the fact that provisions of Section 2(22)(e) were squarely applicable to the case?
Learned counsel for the appellant contends that M/s Ankur Agro Pvt. Ltd has advanced unsecured loan to the assessee i.e. M/s Sharman Woolen Mills Ltd., a separate registered Company under the provisions of Companies Act, 1956. The Assessing Officer made an addition of Rs. 99,10,000/- in the income of the assessee as a dividend in terms of Section 2(22)(e) of the income tax Act, 1961 (for short the ''Act'') which order was set aside in appeal and maintained by Tribunal.
Learned Tribunal has found that in terms of Section 2(22)(e) of the Act, the dividend income is assessable only in the hands of shareholders of the lending company. It has been found that assessee is not a shareholder of M/s Ankur Agro Pvt. Ltd. Thus, the said amount cannot be assessed in the hands of the assessee in terms of Section 2(22)(e) of the Act.
Learned counsel for the appellant has vehemently argued that the shareholders of the lending company and that of the assessee are the same. Therefore, the unsecured loan advanced by the lending company to the assessee is in fact the loan to its shareholders.
We do not find any merit in the said argument.
Even if the shareholders are common of two companies but the fact remains that the assessee is a separate juristic entity. The assessee is assessed to income tax separately than its shareholders. The loan has been advanced to a company who is not a shareholder of M/s Ankur Agro Pvt. Ltd. Therefore, we do not find that any substantial question of law arises in the present appeal.
Dismissed.