ACIT, LUCKNOW V. SAHARA INDIA LTD., LUCKNOW

ITA 45/LKW/2006

AI Insights

The case involves a series of appeals by Sahara India Ltd. against the orders of the ACIT, Central Circle-I, Lucknow, concerning various assessment years. The primary legal contention revolved around the application of section 2(22)(e) of the Income Tax Act, which pertains to deemed dividends, and the treatment of certain financial entries as revenue receipts. The Tribunal examined each appeal based on the specific facts and legal arguments presented, including the interpretation of shareholding and the applicability of previous judicial decisions. The Tribunal's decisions were influenced by the principles of judicial consistency and the monetary threshold for tax effect as stipulated by the CBDT.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 836568 (ITAT-DELHI)
• Duration Of Justice: 20 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 1997-1998
• Appeal Filed On: 18-01-2006
• Other Referred Cases: ACIT v. Bhaumik Colour (P.) Ltd. [2009] 118 ITD 1 (Mum.)(SB), CIT Vs Raj Kumar Singh & Co. (2007) 295 ITR 5 (Ald)
• Laws Referred To: Section 143(3) of the Act, Section 2(22)(e) of the Act, Section 37 of the Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA SINGH
• Assessee Lawyers: PERCY PARDIWALA
• Keywords: Business income; Retrospective amendment; Deemed dividend; Tax effect
• Section: 143(3); 37; 2(22)(e)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: “F” NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.898/Lkw/2005 Assessment Year: 1996-97 With ITA No.1243/Del/2009 Assessment Year: 2003-04 Sahara India Limited, I - Kapoorthala Complex, Aliganj, Lucknow Vs. ACIT, Central Circle-I, Lucknow PAN: AADCS4402J (Appellant) (Respondent) With ITA No.45/Lkw/2006 along with C.O. No.36/Lkw/2006 Assessment Year: 1997-98 With ITA No.46/Lkw/2006 along with C.O. No.37/Lkw/2006 Assessment Year: 1998-99 With ITA No.78/Lkw/2006 along with C.O. No.39/Lkw/2006 Assessment Year: 2000-01 With ITA No.127/Lkw/2006 along with C.O. No.40/Lkw/2006 Assessment Year: 2001-02 ACIT, Central Circle-I, Lucknow Vs. Sahara India Limited, I-Kapoorthala Complex, Aliganj, Lucknow PAN: AADCS4402J (Appellant) (Respondent/cross-objector) Assessee by Sh. Percy Pardiwala, Sr. Advocate Sh. Devashish A Mehrotra, CA Sh. Sarvesh Srivastava, Advocate Department by Ms. Monika Singh, CIT(DR) Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 2 | P a g e ORDER PER BENCH: The instant batch of ten cases involves the single assessee ‘Sahara India Ltd’. All other remaining details are hereby tabulated as under: Sl. No. Appeal No. Appellant Respondent Order Appealed against 1. ITA No. 898/Lkw/2005 for AY: 1996-97 Sahara India Ltd. ACIT, Central Circle-1, Lucknow CIT(A)-1, Kanpur’s order dated 27.10.2005 in case no. CIT(A)-I/11/CC- I/Lko/99-20/216 involving proceedings under Section 143(3) of the Act. 2-3 ITA No. 45/Lkw/2006 WITH C.O. No. 36/Lkw/2006 for AY: 1997-98 ACIT, Central Circle-1, Lucknow Sahara India Ltd. CIT(A)-1, Kanpur’s order dated 07.11.2005 in case no. CIT(A)-I/28/CC- I/Lko/2000-01/217, involving proceedings under Section 143(3) of the Act. 4-5 ITA No. 46/Lkw/2006 WITH C.O. No. 37/Lkw/2006 for AY: 1998-99 ACIT, Central Circle-1, Lucknow Sahara India Ltd. CIT(A)-1, Kanpur’s order dated 10.11.2005 in case no. CIT(A)-I/35/CC- I/Lko/2001-02/226, involving proceedings under Section 143(3) of the Act. 6-7 ITA No. 78/Lkw/2006 WITH C.O. No. 39/Lkw/2006 for AY: 2000-01 ACIT, Central Circle-1, Lucknow Sahara India Ltd. CIT(A)-1, Kanpur’s order dated 24.11.2005 in case no. CIT(A)-I/20/CC- I/Lko/2003-04/254, involving proceedings under Section 143(3) of the Act. 8-9 ITA No. 127/Lkw/2006 WITH C.O. No. 40/Lkw/2006 for AY: 2001-02 ACIT, Central Circle-1, Lucknow Sahara India Ltd. CIT(A)-1, Kanpur’s order dated 02.12.2005 in case no. CIT(A)-I/180/CC- I/Lko/2004-05/270, involving proceedings under Section 143(3) of the Act. 10. ITA No. 1243/Del/2009 for AY: 2003-04 Sahara India Ltd. ACIT, Central Circle-6, Lucknow CIT(A)-III, Delhi’s order dated 14.01.2009 in case no. 127/08-09, involving proceedings under Section 143(3) of the Act. Date of hearing 10.02.2026 Date of pronouncement 10.02.2026 Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 3 | P a g e 2. Heard both the parties at length. Case files perused. We proceed assessment year-wise for the sake of convenience and brevity. ITA No.898/Lkw/2005 (Assessee’s appeal) AY: 1996-97 3. Learned senior counsel submits at the outset that the assessee/appellant raises its sole substantive ground herein seeking to reverse both the lower authorities’ action invoking section 2(22)(e) deemed dividend addition of Rs.5 crores; in assessment order dated 19.03.1999 as concurred in the lower appellate discussion. 4. That being the case, we hereby notice with the able assistance coming from both the parties that the learned assessing authority had made it clear that the assessee/appellant is not the shareholder in M/s. Sahara India Financial Corporation since Sh. Subarata Roy held 24.97% and 84.82% stock, respectively. This being the clinching factual position, we are of the considered view that the impugned statutory provision section 2(22)(e) could not have been invoked in the assessee’s case in both the lower proceedings in absence of it being the common shareholder to the specified extent in light of ACIT v. Bhaumik Colour (P.) Ltd. [2009] Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 4 | P a g e 118 ITD 1 (Mum.)(SB) and CIT Vs Raj Kumar Singh & Co. (2007) 295 ITR 5 (Ald). We thus delete the impugned section 2(22)(e) deemed dividend addition of Rs. 5 crores in the assessee’s hands for the precise reason to allow its main appeal ITA No.898/Lkw/2005 in very terms. ITA No.45/Lkw/2006 (Revenue’s appeal) C.O. No.36/Lkw/2006 (Assessee’s cross objection) AY: 1997-98 5. Learned CIT(DR) vehemently argues during the course of hearing that the CIT(A) herein has erred in law and on facts in reversing the assessment findings disallowing/adding the assessee’s administrative processing charges etc. of Rs. 71,80,694/- (wrongly incorporated as Rs.13,14,236/-) as well as section 2(22)(e) deemed dividend addition of Rs. 1 crore made in the assessment order framed on 30th March, 2000. We note in this factual backdrop that the CIT(A)’s impugned lower appellate discussion on the above former issue reads as under: “5. The grounds of appeal Nos. 2 to 4 are related to tax an amount of Rs.13,14,236/- on account of administrative and process charges credited in the profit & loss account. It has been mentioned in this respect that the credit to profit & loss account of Rs. 13,14,236/- is a part of collection of each year which have already been taxed as revenue receipt in the year of receipt. 6. The facts is issue are that the assessee himself treated this amount as revenue receipt in profit & loss account under the head administrative and process charges and subsequently claimed that Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 5 | P a g e its nature is not revenue receipt. The AO was of the view that part of the deposit received by the assessee because of long duration of scheme is liable to be treated as revenue receipt and accordingly he treated the same amount as revenue receipt in the hands of the appellant. 7. This issue has been decided by the Hon'ble ITAT Allahabad Bench, Allahabad vide their order dated 16.10.96. Para Nos. 89 to 99 are relevant on this issue. By following the same decision similar additions have been deleted by me in the case of the appellant in assessment year 1993-94 in Appeal No.CIT(A)-1/8/CC-III/Lko/96- 97/94 dated 12.8.2005, in assessment year 1994-95 in Appeal No.CIT(A)-1/9/CC-III/Lko/97-98/144 dated 9.9.2005 and in assessment year 1995-96 in Appeal No.CIT(A)-1/10/CC-I/L.ko/98- 99/162 dated 22.9.2005. Since there is no change in the set of facts, by following the decision of Hon'ble ITAT Allahabad Bench, Allahabad and my own orders in earlier years, the addition of Rs. 13,14,236/- made by the AO is deleted.” 6. Suffice to say, it has already come on record that this tribunal’s earlier learned coordinate bench’s order dated 16.10.1996 in the preceding assessment years has already settled the issue against the department. We thus adopt judicial consistency to uphold the learned CIT(A)’s lower appellate discussion under challenge. Rejected accordingly. 7. The outcome of the Revenue’s latter substantive ground raising the issue of section 2(22)(e) deemed dividend would hardly be any different since the assessee/respondent has admittedly not found as the common share holder herein as well. We thus uphold the learned CIT(A)’s lower appellate findings on both these counts Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 6 | P a g e in preceding terms. This Revenue’s appeal ITA No. 45/Lkw/2006 stands declined therefore. 8. Learned senior counsel clarifies that the assessee’s cross objection herein C.O. No. 36/Lkw/2006 is only supportive of the CIT(A)’s impugned lower appellate discussion. Dismissed as rendered infructuous. ITA No. 46/Lkw/2006 (Revenue’s appeal) C.O. No. 37/Lkw/2006 (Assessee’s cross objection) AY : 1998-99 And ITA No. 78/Lkw/2006 (Revenue’s appeal) C.O. No. 39/Lkw/2006 (Assessee’s cross objection) AY: 2000-01 And ITA No. 127/Lkw/2006 (Revenue’s appeal) C.O. No. 40/Lkw/2006 (Assessee’s cross objection) AY : 2001-02 9. We are informed at the outset during the course of hearing that the Revenue’s three substantive grounds raised herein, inter alia, seeks to reverse the CIT(A)’s detailed discussion deleting the impugned administrative and processing charges disallowing of Rs.70,61,004/- and expenditure of Rs.80,86,048/- (held as business income than income from “other sources”) thereby declining the corresponding expenditure and section 2(22)(e) Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 7 | P a g e deemed dividend addition of Rs. 17 lakhs; respectively, made in assessment order dated 23.03.2001. 10. That being the case, the Revenue could hardly dispute that the total tax effect involved in this appeal file is less than the minimum tax effect prescribed of Rs.60 lakhs in the CBDT’s latest Circular No. 9/2024, dated 17.09.2024 with retrospective effect. Learned CIT (DR) is indeed very fair in not disputing the fact that the CBDT’s foregoing tax effect circular has been made applicable on all pending appeals as well. We thus dismiss the Revenue’s three instant appeals ITA Nos.46, 78 & 127/Lkw/2006 for this precise reason subject to all just exceptions. The assessee’s as many cross objections C.O. Nos. 37, 39 & 40/Lkw/2006 have become infructuous. Dismissed accordingly. ITA No. 1243/Del/2009 (Assessee’s appeal) For AY: 2003-04 11. We are now left with the assessee’s appeal ITA No. 1243/Del/2009 raising its sole substantive ground that both the learned lower authorities have erred in law and in fact in disallowing its advertisement and publicity expenses of Rs.78,542/- in assessment order as upheld in the lower appellate discussion. Printed from counselvise.com ITA No.898/Lkw/2005, ITA Nos.45, 46, 78 & 127/Lkw/2006 &1243/Del/2009 C.O. Nos.36, 37, 39 & 40/Lkw/2006 8 | P a g e 12. That being the case, learned senior counsel could hardly rebut both the learned lower authorities’ respective assessment and lower appellate findings that the assessee could not plead and prove the impugned expenditure as incurred “wholly” and “exclusively” for the purpose of his business as contemplated under section 37 of the Act. We thus see no reason to interfere with the impugned disallowance, which is hereby upheld in very terms. This assessee’s appeal ITA No. 1243/Del/2009 fails therefore. 13. To sum up, the assessee’s appeal ITA No.898/Lkw/2005 is allowed; and Revenue’s appeals ITA Nos. 45, 46, 78 & 127/Lkw/2006 and the assessee’s cross objections C.O. Nos. 36, 37, 39 & 40/Lkw/2006 & appeal ITA No. 1243/Del/2009 are dismissed. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 10th February, 2026 Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12th February, 2026. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "