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Section 2(22) of the Income-tax Act, 1961 - Deemed dividend - Assessment year 2006-07 - Assessee, a private limited company, received a certain amount as unsecured loan from its sister concern by name MIPL - Assessing Officer having noticed that one A was holding more than 20 per cent shares in both MIPL and assessee-company invoked provisions of section 2(22)(e) and made addition of aforesaid amount to income of assessee - Whether in view of of Delhi High Court rendered in case of CIT v. Ankitech (P.) Ltd. [2011] 199 Taxman 341 / 11 taxmann.com 100, provisions of section 2(22)(e) were not attracted in instant case - Held, yes - Whether, therefore, impugned addition made by Assessing Officer under section 2(22)(e) was not justified - Held, yes [In favour of assessee] FACTS During the year, the assessee, a private limited company, received a certain amount as unsecured loan from its sister concern by name MIPL. The Assessing Officer having noticed that one A was holding more than 20 per cent shares in both MIPL and the assessee-company invoked the provisions of section 2(22)(e) and made addition of the aforesaid amount to the income of the assessee. On appeal, the Commissioner (Appeals) held that since the assessee-company did not hold any shares in MIPL, the provisions of section 2(22)(e) were not attracted. He, therefore, deleted the impugned addition made by the Assessing Officer. On second appeal, the Tribunal upheld the order of the Commissioner (Appeals). On appeal to High Court: HELD The matter is now concluded by the of the Delhi High Court rendered in the case of CIT v Ankitech (P.) Ltd. [2011] 199 Taxman 341/ 11 taxmann.com 100 (Delhi). After an elaborate discussion of the issue, and the case-law on the subject, the Division Bench has held that an assessee who was not a shareholder of the company from which he received a loan or an advance cannot be treated as covered by the definition of the word 'dividend' as contained in section 2(22)(e). [Para 5] In the instant case, it is an admitted fact that the assessee-company is not a shareholder in MIPL. Therefore, the of the Delhi High Court in the case of Ankitech (P.) Ltd. (supra) fully applies to the…

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