MANTRI POWER LTD, MUMBAI V. ASST CIT CEN CIR 29, MUMBAI

CO 131/MUM/2012

• Counselvise Citation: [2014] 123 COUNSELVISE.COM (IT) 0072 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 26-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed dividend

Judgement Text

B , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI !' , # $% & & & & , , $% ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : . : . : . : 5690 / // / / // / 2011, + 2008-09 ITA NO. : 5690/MUM/2011 , AY 2008-09 ACIT CENTRAL CIRCLE -29, 4 TH FLOOR, R. NO. 411, AAYAKAR BHAVAN, M K ROAD, MUMBAI -400 020 VS M/S MANTRI POWER LTD, G-1, COURT CHAMBERS, GROUND FLOOR, V THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI -400 020 ,- (APPELLANT) ./,- (RESPONDENT) CROSS OBJECTION CO NO.131/MUM/2012 , ARISING OUT OF . : . : . : . : 5690 / // / / // / 2011, + 2008-09 M/S MANTRI POWER LTD, MUMBAI -400 020 %, # .: PAN: AAFCM 0508 B VS ACIT CENTRAL CIRCLE -29, MUMBAI -400 020 ,- (CROSS OBJECTOR) ./,- (RESPONDENT) APPELLANT-ASSESSEE CROSS OBJECTOR BY : SHRI PRAKASH JHUNJHUNWALA RESPONDENT-REVENUE BY : SHRI SANTOSH KUMAR . : . : . : . : 5691 / // / / // / 2011, + 2009-10 ITA NO. : 5691/MUM/2011 , AY 2009-10 ACIT CENTRAL CIRCLE -29, MUMBAI -400 020 VS M/S MANTRI PROPERTIES PVT LTD, MUMBAI -400 020 %, # .: PAN: AAMCS 1207 Q ,- (APPELLANT) ./,- (RESPONDENT) CROSS OBJECTION CO NO.133/MUM/2012 , ARISING OUT OF . : . : . : . : 5691 / // / / // / 2011, + 2009-10 M/S MANTRI PROPERTIES PVT LTD, MUMBAI -400 020 %, # .: PAN: AAMCS 1207 Q VS ACIT CENTRAL CIRCLE -29, MUMBAI -400 020 ,- (CROSS OBJECTOR) ./,- (RESPONDENT) APPELLANT-ASSESSEE CROSS OBJECTOR BY : SHRI PRAKASH JHUNJHUNWALA RESPONDENT-REVENUE BY : SHRI LOVE KUMAR 012# /DATE OF HEARING : 14-10-2014 34+ 012#/ DATE OF PRONOUNCEMENT: 07-11-2014 $ 5 $ 5 $ 5 $ 5 O R D E R , . . . . . .. . PER VIVEK VARMA, J.M. : THE TWO APPEALS AND CROSS OBJECTIONS HAVE BEEN FILE D BY THE DEPARTMENT AND THE ASSESSEE(S) RESPECTIVELY AGAINST ORDER OF THE CIT(A) 40, MUMBAI, DATED 31.05.2011 IN BOTH THE ASSESSES. M/S MANTRI POWER LTD ITA 5690/M/2011 & CO 131/M/12 M/S MANTRI PROPERTIES PVT LTD ITA 5690/M/2011 & CO 133/M/12 2 2. SINCE THE ISSUES AS RAISED ARE IDENTICAL IN BOTH THE APPEALS, WE, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY ARE DISPOSING OFF THE APPEALS THROUGH COMMON & CONSOLIDATED ORDER. FOR TH E SAKE OF CONVENIENCE, WE ARE TAKING ITA NO. 5690/MUM/2011 AS THE LEAD CASE. ITA NO. 5690/MUM/2011 : ASST. YEAR 2008-09: DEPT APPEAL : 3. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE DE PARTMENT: 1 A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SEC 2(22)(E) OF IT ACT, 1961 IS NOT APPLICABLE IN THE CASE OF ASS ESSEE COMPANY WITHOUT APPRECIATING THE FACTS THAT THE DEE MED DIVIDEND HAS TO BE TAXED ON ADVANCE OR LOAN TO ANY CONCERN AS DEFINED IN EXPLANATION 3(A) TO SECTION 2(22)(E), IN WHICH COMMON SHAREHOLDER IS A MEMBER OR A PARTNER AND SUCH A SHA REHOLDER HAS A SUBSTANTIAL INTEREST AS DEFINED IN EXPLANATIO N 3(B) OF SECTION 2(22)(E)? B) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE U/S 2(22)(E) OF RS. 60,22,308/- BY RELYING UPON THE JUD GMENT IN THE CASE OF BHAUMIK COLOR PVT LTD 313 ITR 146 AND UNIVER SAL MEDICARE PVT LTD (2010) 324 ITR 264 (BOM), WHILE THE SE DECISION RELIED UPON ARE IN CONTRAVENTION TO THE AMENDMENT M ADE IN SECTION 2(22)(E) BY FINANCE ACT, 1987. 2. THE APPELLANT CRAVES TO LEAVE TO ADD, TO AMEND A ND/OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 3. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATED ABOVE, THE ORDER OF THE CIT(A)-40, MUMBAI MAY BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4. THE FACTS AS NOTED BY THE AO ARE THAT THE ASSESS EE RECEIVED RS. 60,22,308/- AS INCURRED LOAN FROM M/S SUNIL MANTRI REALTY LTD. (SMRL). THIS AMOUNT WAS TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 AND BROUGHT TO TAX. BEFORE THE AO, THE ASSESSEE, VEHEMENTLY OBJECTED TO THE ADDITION P ROPOSED TO BE MADE UNDER A DEEMING FICTION AND SUBMITTED THAT THE AMOU NT RECEIVED FROM SMRL WAS A NORMAL BUSINESS TRANSACTION. THE ASSESSE E ALSO SUBMITTED BEFORE THE AO THAT THE ASSESSEE WAS NOT A SHAREHOLDER IN THE COMPANY SMRL. 5. THE ABOVE FACTS WERE RUBBISHED BY THE AO AND ADD ED IT BACK TO THE INCOME OF THE ASSESSEE. M/S MANTRI POWER LTD ITA 5690/M/2011 & CO 131/M/12 M/S MANTRI PROPERTIES PVT LTD ITA 5690/M/2011 & CO 133/M/12 3 6. THE ASSESSEE APPROACHED THE CIT(A), WHO, AFTER GOING THROUGH THE FACTS OF SHAREHOLDING PATTERN CAME TO THE CONCL USION, IT IS AN UNDISPUTED FACT THAT APPELLANT M/S MANTRI POWER LTD. IS NOT A SHAREHOLDER OF THE LENDER COMPANY M/S SUNIL M ANTRI REALTY LTD. THE APPELLANT FILED A LIST OF SHAREHOLDERS OF M/S SUNIL MANTRI REALTY LTD., WHICH EVIDENCES THE FACT THAT THE APPELLANT/ASSESSEE COMPANY IS NOT HOLDING ANY SHARE S OF M/S SUNIL MANTRI REALTY LTD., SUCH FACT HAD ALSO BEEN A CCEPTED BY THE LD AO AT PAGE OF THE ASSESSMENT ORDER . 7. THE CIT(A), ON THE ABOVE FINDING OF FACT, DELETE D THE ADDITION AS MADE. 8. AGAINST THIS DECISION OF THE CIT(A), THE DEPARTM ENT IS NOW BEFORE THE ITAT. 9. BEFORE US, THE DR RELIED ON THE ORDER OF THE AO AND AR RELIED ON THE FACTS AS NOTED BY THE CIT(A) TO DELETE THE ADDI TION. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE ORDERS OF THE REVENUE AUTHORITIES. 11. THE BASIS OF THE DECISION ARRIVED AT BY THE CIT (A) IS THE UNDISPUTED FACT, THAT THE ASSESSEE IS NOT A SHAREHO LDER OF SMRL. IN SUCH A CASE IMPORT OF PROVISIONS OF SECTION 2(22)(E ) DOES NOT HOLD GROUND. FOR THIS, WE MAY GAINFULLY PLACE RELIANCE O N THE DECISION OF ACIT VS BHAUMIC COLOUR PVT. LTD. REPORTED IN 118 IT D 1 (MUM SB). THOUGH THE ASSESSEE HAS PLACED RELIANCE OF A NUMBER DECISIONS OF VARIOUS FORA, WE, ON THE BASIS OF THE FACTS, ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A), WHICH WE S USTAIN. CONSEQUENTIALLY, THE GROUND AS RAISED IN THE INSTAN T APPEAL, AS FILED BY THE DEPARTMENT IS REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. M/S MANTRI POWER LTD ITA 5690/M/2011 & CO 131/M/12 M/S MANTRI PROPERTIES PVT LTD ITA 5690/M/2011 & CO 133/M/12 4 CO NO. 131/MUM/2012 : ASST. YEAR 2008-09 : 13. AT THE TIME OF HEARING, THE AR SUBMITTED THAT T HE ASSESSEE DOES NOT WISH TO PRES THE CO. 14. SINCE THE CO IS NOT PRESSED, IT IS DISMISSED AS NOT PRESSED. 15. IN THE RESULT, ITA NO. 5690/MUM/2011 FILED BY THE DEPARTMENT IS DI SMISSED. CO NO. 131/MUM/2012 FILED BY THE ASSESSEE IS DISMIS SED. ITA NO. 5691/MUM/2011 : ASST. YEAR 2009-10: DEPT APPEAL : 16. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE D EPARTMENT: 1 A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SEC 2(22)(E) OF IT ACT, 1961 IS NOT APPLICABLE IN THE CASE OF ASS ESSEE COMPANY WITHOUT APPRECIATING THE FACTS THAT THE DEE MED DIVIDEND HAS TO BE TAXED ON ADVANCE OR LOAN TO ANY CONCERN AS DEFINED IN EXPLANATION 3(A) TO SECTION 2(22)(E), IN WHICH COMMON SHAREHOLDER IS A MEMBER OR A PARTNER AND SUCH A SHA REHOLDER HAS A SUBSTANTIAL INTEREST AS DEFINED IN EXPLANATIO N 3(B) OF SECTION 2(22)(E)? B) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE U/S 2(22)(E) OF RS. 37,31,757/- BY RELYING UPON THE JUDG MENT IN THE CASE OF BHAUMIK COLOR PVT LTD 313 ITR 146 AND UNIVER SAL MEDICARE PVT LTD (2010) 324 ITR 264 (BOM), WHILE THE SE DECISION RELIED UPON ARE IN CONTRAVENTION TO THE AMENDMENT M ADE IN SECTION 2(22)(E) BY FINANCE ACT, 1987. 2. THE APPELLANT CRAVES TO LEAVE TO ADD, TO AMEND A ND/OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 3. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATED ABOVE, THE ORDER OF THE CIT(A)-40, MUMBAI MAY BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 17. THE FACTS AS NOTED BY THE AO ARE THAT THE ASSES SEE RECEIVED RS. 37,31,757/- AS INCURRED LOAN FROM M/S SUNIL MAN TRI REALTY LTD. (SMRL). THIS AMOUNT WAS TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 AND BROUGHT TO TAX. BEFORE THE AO, THE ASSESSEE, VEHEMENTLY OBJECTED TO THE ADDITION P ROPOSED TO BE MADE UNDER A DEEMING FICTION AND SUBMITTED THAT THE AMOU NT RECEIVED FROM SMRL WAS A NORMAL BUSINESS TRANSACTION. THE ASSESSE E ALSO M/S MANTRI POWER LTD ITA 5690/M/2011 & CO 131/M/12 M/S MANTRI PROPERTIES PVT LTD ITA 5690/M/2011 & CO 133/M/12 5 SUBMITTED BEFORE THE AO THAT THE ASSESSEE WAS NOT A SHAREHOLDER IN THE COMPANY SMRL. 18. THE ABOVE FACTS WERE RUBBISHED BY THE AO AND AD DED IT BACK TO THE INCOME OF THE ASSESSEE. 19. THE ASSESSEE APPROACHED THE CIT(A), WHO, AFTER GOING THROUGH THE FACTS OF SHAREHOLDING PATTERN CAME TO THE CONCL USION, IT IS AN UNDISPUTED FACT THAT APPELLANT M/S MANTRI POWER LTD. IS NOT A SHAREHOLDER OF THE LENDER COMPANY M/S SUNIL M ANTRI REALTY LTD. THE APPELLANT FILED A LIST OF SHAREHOLDERS OF M/S SUNIL MANTRI REALTY LTD., WHICH EVIDENCES THE FACT THAT THE APPELLANT/ASSESSEE COMPANY IS NOT HOLDING ANY SHARE S OF M/S SUNIL MANTARI REALTY LTD., SUCH FACT HAD ALSO BEEN ACCEPTED BY THE LD AO AT PAGE OF THE ASSESSMENT ORDER . 20. THE CIT(A), ON THE ABOVE FINDING OF FACT, DELET ED THE ADDITION AS MADE. 21. AGAINST THIS DECISION OF THE CIT(A), THE DEPART MENT IS NOW BEFORE THE ITAT. 22. BEFORE US, THE DR RELIED ON THE ORDER OF THE AO AND AR RELIED ON THE FACTS AS NOTED BY THE CIT(A) TO DELETE THE ADDI TION. 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE ORDERS OF THE REVENUE AUTHORITIES. 24. THE BASIS OF THE DECISION ARRIVED AT BY THE CIT (A) IS THE UNDISPUTED FACT, ACKNOWLEDGED BY THE AO THAT THE AS SESSEE IS NOT A SHAREHOLDER OF SMRL. IN SUCH A CASE IMPORT OF PROVI SIONS OF SECTION 2(22)(E) DOES NOT HOLD GROUND. FOR THIS, WE MAY GAI NFULLY PLACE RELIANCE ON THE DECISION OF ACIT VS BHAUMIC COLOUR PVT. LTD. REPORTED IN 118 ITD 1 (MUM SB). THOUGH THE ASSESSEE HAS PLACED RELI ANCE OF A NUMBER DECISIONS OF VARIOUS FORA, WE, ON THE BASIS OF THE FACTS, ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT( A), WHICH WE SUSTAIN. M/S MANTRI POWER LTD ITA 5690/M/2011 & CO 131/M/12 M/S MANTRI PROPERTIES PVT LTD ITA 5690/M/2011 & CO 133/M/12 6 CONSEQUENTIALLY, THE GROUND AS RAISED IN THE INSTAN T APPEAL AS FILED BY THE DEPARTMENT IS REJECTED. 25. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. CO NO. 133/MUM/2012 : ASST. YEAR 2009-10 : 26. AT THE TIME OF HEARING, THE AR SUBMITTED THAT T HE ASSESSEE DOES NOT WISH TO PRES THE CO. 27. SINCE THE CO IS NOT PRESSED, IT IS DISMISSED AS NOT PRESSED. 28. IN THE RESULT, ITA NO. 5691/MUM/2011 FILED BY THE DEPARTMENT IS DI SMISSED. CO NO. 132/MUM/2012 FILED BY THE ASSESSEE IS DISMIS SED. TO SUM-UP: ITA NO. 5690/MUM/2011 FILED BY THE DEPARTMENT IS DI SMISSED. CO NO. 131/MUM/2012 FILED BY THE ASSESSEE IS DISMIS SED. ITA NO. 5691/MUM/2011 FILED BY THE DEPARTMENT IS DI SMISSED. CO NO. 133/MUM/2012 FILED BY THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2014. SD/- SD/- ( !' ) ( ) # $% # $% # $% # $% $% $% $% $% (N K BILLAIYA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 7 TH NOVEMBER, 2014 .1/ COPY TO:- 1) ,-/ THE APPELLANT. 2) ./,-/ THE RESPONDENT. 3) THE CIT (A)-40, MUMBAI. 4) 8 CENTRAL -II , MUMBAI / THE CIT- CENTRAL -II , MUMBAI. M/S MANTRI POWER LTD ITA 5690/M/2011 & CO 131/M/12 M/S MANTRI PROPERTIES PVT LTD ITA 5690/M/2011 & CO 133/M/12 7 5) 9:.1 B , , THE D.R. B BENCH, MUMBAI. 6) :;< COPY TO GUARD FILE. $5 / BY ORDER / / TRUE COPY / / [ =/>? , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *AB> .. * CHAVAN, SR. PS