Provision of section 2(22)(e) would not be applicable
 56 taxman.Com 458 (Delhi)-HIGH COURT OF DELHI-CIT (TDS)-I v. C.J. International Hotels (P.) Ltd
Section 2(22) of the Income-tax Act, 1961 – Deemed dividend -Loans or advances to shareholders
One ‘H’ was a shareholder of ‘P’ Ltd. which held shares in Assessee Company. ‘H’ had borrowed amounts from the assessee company.
The Assessing Officer sought to bring assessee company to tax under section 2(22)(e) holding that ‘H’ had more than 10 per cent stake in the assessee company and conditions spelt out in section 2(22)(e) were satisfied.
The assessee contended that said ‘H’ could not be considered as a shareholder in the assessee company. The other contention was that said ‘H’ could not be considered even as a beneficial shareholder of the assessee company.
On appeal, the Commissioner (Appeals) as well as the Tribunal held that section 2(22)(e) would not be applicable.
On appeal it was held that:
The individual ‘H’ was not a shareholder of the present assessee but rather the shareholder of another concern which held shares in Assessee Company.
With respect to section 2(22)(e), the mandatory need to fulfil both pre-conditions which are conjunctive and not dis-conjunctive i.e. the shareholder must be (a) Registered shareholder; and (b) A Beneficial shareholder.
In the absence of any finding that ‘H’ owned the shares or was beneficial owner in terms of such provision – on both counts – the findings being adverse to the revenue, no question of law arises.
Section 201 of the Income-tax Act, 1961 – Deduction of tax at source – Consequence of failure to deduct or pay – Period of limitation
Initiation of proceedings under section 201 against assessee after 9 years from end of relevant financial year was time barred
The Assessing Officer initiated proceedings under section 201 against the assessee after 9 years from the end of relevant financial year, treating the assessee as an assessee in default.
The assessee contended in the appeal that the initiation of proceedings under section 201 was time barred.
It was argued by the revenue that there was no limitation was prescribed under section 201.
On appeal: it was held that
The submission of the revenue is unacceptable, had the Parliament indeed intended to overrule or set aside the reasoning in CIT v. NHK Japan Broadcasting Corpn.  305 ITR 137/172 Taxman 230 (Delhi), it would have, like other instances and more specifically in the case of section 201 (1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring section 201(3) in the first instance in 2010 and later in 2014 fortifies the reasoning of the court. Accordingly, the issue is answered against the revenue
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