- (1.) Instant appeal has been filed by the revenue against the order of ITAT dt. 19-3-2010 which is primarily based on the judgment of this Court in CIT v. Hotel Hilltop, 2009 313 ITR 116 decided on 17-3-2008. It has been alleged by the revenue that the assessee derives income from trading of shares and during the course of assessment proceedings it was revealed that the assessee has received a sum of Rs. 23.00 lacs from M/s. Japanwala Jewellers (P.) Ltd., Jaipur on the ground that it was towards share application money. The assessing authority after taking note of Sec. 2(22)(e) and available records observed that the share application money of Rs. 23.00 lacs received by the assessee company is in the nature of unsecured loan and further held to be the deemed dividend in the hands of assessee company as per provisions of Sec. 2(22)(e) of IT Act, 1961 and such deemed dividend was considered as income in the hands of the assessee. However, against the order of assessing authority, appeal came to be preferred before the Commissioner of Income-tax Appeals (I), Jaipur and the question was as to whether holding share application money of Rs. 23.00 lacs received from M/s. Japanwala Jewelers (P) Ltd. can be considered as unsecured loan and thereby considered as deemed dividend u/S. 2(22)(e) of the Act. However, the appellate authority taking note of the judgment of this Court in Hotel Hilltop case observed that deemed income cannot be taxed in the hands of non-shareholders namely the concern. As the concern can never receive dividend from the company, as dividend is paid only to the shareholders, benefit of set off as per section 2(22)(e)(iii) cannot be allowed to the concern and further observed that substance of the requirements of provisions of the Act is that the payment should be made on behalf of or for any individual benefit of any such shareholders and further observed that the proceedings which have been initiated against the person/shareholder for whose individual benefit the amount was paid by the company and deemed income is taxable under the head 'income from other sources' and accordingly it should be taxed in the case of the individual and the assessee being not a shareholder is not one of the persons and Shri Ramsaran Gupta is beneficiary shareholder having requisite interest in the assessee company as well as other concern and accordingly such deemed dividend should have been considered in the hands of the individual Ramsaran Gupta and not in the hands of the assessee company.
(2.) Against the order of Commissioner of Appeals, the revenue preferred appeal before the ITAT and placing reliance on the judgment referred tothe Tribunal was also of the view that liability of tax as deemed dividend would be attracted in the hands of the individuals being shareholders and not in the hands of the firm and this was not the case of the Revenue that assessee company was a registered shareholder of M/s. Japanwala Jewelers (P.) Ltd. and taking note thereof, dismissed the appeal of the Revenue.
(3.) We have heard the appellant at length and in our considered view from the submission made in our opinion, no substantial question of law emerges for consideration in the instant appeal which may require interference by this Court. Consequently, the appeal being devoid of merit is hereby dismissed.;