SUNIL MANTRIL GRIHA NIRMAN P.LTD, MUMBAI V. ASST CIT CEN CIR 29, MUMBAI

CO 135/MUM/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9110 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Keywords: Cost of acquisition; Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER SR ITA NO. A.Y. APPELLANT ADDRESS RESPONDENT PAN 1& 2 ITA NO. 5402/M/2011 & ITA NO. 5407/M/2011 2008-09 2009-10 SHRI SUNIL P. MANTRI SHRI PRAKASH JHUNJHUNWALA, C.A. 5, JOLLY BHAWAN NO. 2 GR. FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI-20 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. ABNPM 4825 D 3& 4 ITA NO. 5702/M/2011 & 5703/M/2011 2008-09 2009-10 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. G-1, COURT CHAMBERS, GROUND FLOOR, V. THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI SHRI SUNIL P. MANTRI ABNPM 4825 D 5 ITA NO. 5689/M/2011 2008-09 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. G-1, COURT CHAMBERS, GROUND FLOOR, V. THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI M/S. SUNIL MANTRI BUILDTECH PVT. LTD AAFCM 0504 P 6 ITA NO. 5682/M/2011 2008-09 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. G-1, COURT CHAMBERS, GROUND FLOOR, V. THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI SUNIL MANTRI TRINITY PROJECTS P. LTD. AAFCM 0168 F 7 ITA NO. 5704/M/2011 2009-10 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. G-1, COURT CHAMBERS, GROUND FLOOR, V. THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI MANTRI POWER LTD. AAFCM 0508 B 8 ITA NO. 5681/M/2011 2009-10 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. G-1, COURT CHAMBERS, GROUND FLOOR, V. THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI SUNIL MANTRI GRIHA NIRMAN P. LTD. AAFCM 2227 B ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 2 9 C.O. 132/M/2012 (ARISING OUT OF ITA NO. 5704/M/11) 2009-10 MANTRI POWER LIMITED SHRI PRAKASH JHUNJHUNWALA, C.A. 5, JOLLY BHAWAN NO. 2 GR. FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI-20 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. ABNPM 4825 D 10 C.O. 134/M/2012 (ARISING OUT OF ITA NO. 5682/M/11) 2008-09 SUNIL MANTRI TRINITY PROJECTS LTD. SHRI PRAKASH JHUNJHUNWALA, C.A. 5, JOLLY BHAWAN NO. 2 GR. FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI-20 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. AAFCM 0168 F 11 C.O. 135/M/2012 (ARISING OUT OF ITA NO. 5681/M/11) 2009-10 SUNIL MANTRI GRIHA NIRMAN P. LTD. SHRI PRAKASH JHUNJHUNWALA, C.A. 5, JOLLY BHAWAN NO. 2 GR. FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI-20 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. AAFCM 2227 B 12 C.O. 136/M/2012 (ARISING OUT OF ITA NO. 5689/M/11) 2008-09 M/S. SUNIL MANTRI BUILDTECH PVT. LTD SHRI PRAKASH JHUNJHUNWALA, C.A. 5, JOLLY BHAWAN NO. 2 GR. FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI-20 ASST. CIT CENTRAL CIRCLE (29) MUMBAI. AAFCM 0504 P ASSESSEE BY : SHRI PRAKASH JHUNJHUNWALA REVENUE BY : SHRI GIRIJA DAYAL DATE OF HEARING : 22.08.2013 DATE OF PRONOUNCEMENT : 14.11.2013 O R D E R PER BENCH: THESE BUNCH OF 12 APPEALS, CROSS APPEALS AND CROSS OBJECTIONS FILED BY THE ASSESSEES AND THE REVENUE AS AFOREMENTIONED IN THE CAUSE LIST ARE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-40, MUMBAI ALL DATED 31.05.2 011 FOR THE ASSESSMENT YEARS 2008- 09 & 2009-10. SINCE THE ISSUES INVOLVED IN ALL THES E APPEALS, CROSS APPEALS AND CROSS OBJECTIONS ARE COMMON AND IDENTICAL, THE SAME ARE D ISPOSED OFF BY THIS COMMON ORDER. ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 3 2. THE FIRST COMMON ISSUE IN ALL THE APPEALS, CROSS APPEALS AND THE CROSS OBJECTIONS RELATES TO THE DECISION OF THE LD.CIT(A) ON THE ADD ITION OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME TAX ACT MADE IN THE ASSESSMENT. THE R ELEVANT FACTS ARE THAT ONE SHRI SUNIL P. MANTRI, AN INDIVIDUAL WAS A SHAREHOLDER HOLDING SHARES OF 85.50% IN M/S SUNIL MANTRI REALITY LTD, WHICH MADE ADVANCES/LOANS TO VARIOUS C ONCERNS IN WHICH SHRI SUNIL P. MANTRI WAS HOLDING SHARES. THE DETAILS OF THE SHARE HOLDIN G PATTERN OF SHRI SUNIL P. MANTRI IN VARIOUS CONCERNS TO WHICH M/S SUNIL MANTRI REALITY LTD MADE THE ADVANCES/LOANS DURING THE YEARS UNDER CONSIDERATION AND THE RESPECTIVE AM OUNTS ARE AS BELOW:- SL NO. CONCERNS TO WHICH LOANS/ADVANCES MADE SHAREHOLDING PATTERN OF SUNIL P. MANTRI A.Y. 2008-09 A.Y. 2009-10 1 M/S. MANTRI POWER LTD. 49.95% RS. 60,22,308/- RS. 1,28,07,500/- 2 M/S. SUNIL MANTRI BUILDTECH P. LTD. 50% RS. 3,87,38,299/- - 3 M/S. SUNIL MANTRI TRINITY PROJECTS P. LTD. 50% RS. 21,15,00,000/- - 4 M/S. MANTRI LIFESTYLE DEVELOPERS P. LTD. 50% RS.1,35,609/- - 5 M/S. MANTRI PROPERTIES P. LTD. 50% - RS.37,31,757/- 6 M/S. SUNIL MANTRI GRIHA NIRMAN P. LTD 50% - RS.58,68,903/- TOTAL RS.25,63,96,216/- RS.2,19,08,160/- IN THE ASSESSMENT FRAMED U/S 143(3) READ WITH SECTI ON 153A, THE AO AFTER OBSERVING THE AFOREMENTIONED SHAREHOLDING PATTERN, INVOKED SECTIO N 2(22)(E) OF THE ACT AND THEREBY TREATED THE SAID AMOUNTS AS DEEMED DIVIDEND IN THE HANDS OF COMMON SHARE HOLDER, SUNIL P. MANTRI AS HE WAS HOLDING SUBSTANTIAL CONTROL OVE R THE LENDER CONCERN, M/S SUNIL MANTRI REALITY LTD. THE SAID ADDITIONS OF THE TOTAL AMOUNT S ADVANCED TO VARIOUS CONCERNS HAVE BEEN MADE IN THE HANDS OF SUNIL P. MANTRI ON SUBSTA NTIVE BASIS. THE AMOUNTS RECEIVED BY THE RESPECTIVE CONCERNS WERE ADDED ON PROTECTIVE BA SIS IN THE HANDS OF THE SAID CONCERNS RESPECTIVELY. ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 4 3. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ADDITIONS MADE IN THE HANDS OF SUNIL P.MANTRI ON ACCOUNT OF THE LOANS/ADVANCES MADE TO V ARIOUS CONCERNS. HOWEVER, FOR THE A.Y 2008-09, THE LD.CIT(A) DELETED THE ADDITION MAD E ON THE AMOUNT RECEIVED BY M/S.SUNIL MANTRI TRINITY PROJECTS PVT. LTD SINCE SU NIL P.MANTRI WAS NOT A COMMON SHAREHOLDER HAVING SUBSTANTIAL INTEREST AT THE TIME OF ADVANCING THE AMOUNT BY SUNIL MANTRI REALITY P. LTD TO SUNIL MANTRI TRINITY PROJE CTS P. LTD. FOR A.Y. 2009-10, THE LD.CIT(A) DIRECTED THE AO TO RESTRICT THE ADDITION AFTER DELETING THE AMOUNTS EARLIER REPAID BY THE SAID THREE GROUP OF CONCERNS TO M/S. SUNIL M ANTRI REALITY LTD. IN THE PROCESS, THE LD.CIT(A) HAS ALSO RESTRICTED THE ADDITION MADE IN THE HANDS OF SUNIL P.MANTRI TO THE EXTENT OF ACCUMULATED PROFITS OF THE LENDER CONCERN AND THEREBY DETERMINED THE ADDITION AT RS.3,75,54,438/- AND RS.1,13,89,110/- FOR THE A. YS 2008-09 AND 2009-10 RESPECTIVELY. ON CONFIRMING THE ADDITIONS MADE IN THE HANDS OF TH E COMMON SHARE HOLDER, SUNIL P. MANTRI, THE LD.CIT(A) DELETED THE ADDITIONS MADE ON THE PROTECTIVE BASIS IN THE HANDS OF THE RECIPIENT CONCERNS. 4. THE ASSESSEE, SUNIL P. MANTRI IN ITA NO. 5402/M UM/2011 AND ITA NO. 5407/MUM/2011 RESPECTIVELY FOR THE A.YS. 2008-09 AN D 2009-10 HAS AGITATED THE ACTION OF THE LD. CIT(A) CONFIRMING THE ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) THAT HAVE BEEN MADE IN HIS CASE ON SUBSTANTIVE BASIS IN RESPECT OF THE LOANS/ADVANCES RECEIVED BY THE GROUP OF CONCERNS FROM SUNIL MANTRI REALITY LTD. 4.1 THE REVENUE, IN THE CROSS APPEALS IN ITA NO. 57 02/MUM/2011 AND 5703/MUM/2011 HAS AGITATED THE ACTION OF THE LD. CIT(A) IN TAKING THE VALUE OF ACCUMULATED PROFIT OF THE LENDER CONCERN FOR THE PURPOSE OF RESTRICTING THE A DDITIONS MADE U/S 2(22)(E). IN ADDITION, THE REVENUE HAS ALSO AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO IN RESPECT OF LOAN/ADVANCE RECEIVED BY SU NIL MANTRI TRINITY PROJECTS P. LTD FOR THE A.Y 2008-09 AND THE SUMS REPAID BY THE RECIPIEN T CONCERNS TO THE LENDER COMPANY FOR THE A.Y 2009-10. 4.2 IN OTHER FOUR APPEALS FILED BY THE REVENUE, THE DEPARTMENT HAS CHALLENGED THE ACTION OF THE LD.CIT(A) DELETING THE ADDITION MADE ON PROTECTIVE BASIS IN THE HANDS OF THE RECIPIENT CONCERNS. THE FOUR CROSS OBJECTIONS FILED BY THE ASSESSES/RECIPIENT CONCERNS ARISING OUT OF THE SAID FOUR APPEALS OF THE REVENUE RELATE TO THE CLAIM OF THE ASSESSEES THAT THE CONCERNS HAVE RECEIVED DEPOSITS FROM SUNIL MANTRI REALITY LTD. IN THE NORMAL ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 5 COURSE OF BUSINESS AND A FURTHER CLAIM THAT REFUND OF LOAN EARLIER PAID BY THE ASSESSEES DOES NOT PERTAIN TO THE LOANS RECEIVED DURING THE Y EAR. THE ADJUDICATION OF THE ISSUES RAISED IN THE 12 BUNCHES OF APPEALS, CROSS APPEALS AND THE CROSS OBJECTIONS ARE DISCUSSED IN THE SUCCEEDING PARAGRAPHS. 5. FIRSTLY, AS REGARDS THE ADDITION MADE ON SUBSTANTIVE BASIS IN THE HANDS OF SHRI SUNIL P. MANTRI, IT IS THE CONTENTION OF THE ASSESS EE THAT SUNIL MANTRI REALITY LTD., HAS MADE PAYMENTS DIRECTLY TO THE FOUR GROUP CONCERNS A ND SINCE NO PAYMENT EITHER DIRECTLY OR INDIRECTLY MADE TO THE ASSESSEE, THERE IS NO IND IVIDUAL BENEFIT RECEIVED BY THE ASSESSEE. FURTHER, SUNIL MANTRI REALITY LTD. HAS MADE PAYMENT S TO THE SAID CONCERNS IN THE NORMAL COURSE OF BUSINESS WHEREIN PROVISIONS OF SECTION 2( 22)(E) SHALL NOT APPLY. IT IS ALSO THE CONTENTION OF THE ASSESSEE THAT THE MOU DATED 15 TH MAY, 2007 EVIDENCES PAYMENTS OF ADVANCES TOWARDS AWARDING OF PREFERENTIAL CONTRACT TO LENDER CONCERN OF ANY NEW PROJECT THAT MAY ARISE IN FUTURE BY THE RECIPIENT CONCERNS. ALTERNATIVELY, THE LD.AR HAS ARGUED THAT IN CASE IF THE BENCH ARRIVES AT A DECISION THA T SUNIL P.MANTRIS CASE FALLS WITHIN THE PROVISIONS OF SECTION 2(22)(E), IN SUCH AN EVENT, T HE ADDITION IS TO BE RESTRICTED ONLY TO THE EXTENT OF THE ACCUMULATED PROFITS OF THE LENDER CON CERN UP TO MARCH 31 ST OF THE PREVIOUS YEARS RELEVANT TO THE ASSESSMENT YEARS UNDER CONSID ERATION DURING WHICH THE LOANS/ADVANCES HAVE BEEN MADE TO VARIOUS CONCERNS. PER CONTRA, IT IS THE CASE OF THE REVENUE THAT SUNIL P. MANTRI IS THE REGISTERED AND BENEFICIAL OWNER OF SHARES IN SUNIL MANTRI REALITY LTD. HAVING MORE THAN 10% VOTING POW ER AND ALSO HAS SUBSTANTIAL INTEREST IN THE CONCERNS TO WHICH THE LOANS AND ADVANCES HAV E BEEN MADE WHICH CLEARLY ATTRACTS THE PROVISION OF SECTION 2(22)(E). 5.1 HAVING HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD, IT IS PERTINENT TO NOTE THAT THE CASE OF THE ASSESSEE, SHRI SUNIL P. M ANTRI CLEARLY FALLS WITHIN THE PURVIEW OF SECTION 2(22)(E), WHICH IS EVIDENCED BY THE SHARE H OLDING PATTERN OF SHRI SUNIL P. MANTRI IN THE LENDING AND RECEIVING CONCERNS IN WHICH THE ASSESSEE RESPECTIVELY HAS SUBSTANTIAL CONTROL AND SUBSTANTIAL INTEREST. SINCE, SHRI SUNIL P.MANTRI IS A COMMON SHAREHOLDER OF M/S. SUNIL MANTRI REALTY LTD. AND ITS 3 GROUP CONCE RNS, NAMELY, M/S MANTRI POWER LTD, M/S SUNIL MANTRI BUILTECH PVT LTD AND M/S MANTRI LIFEST YLE DEVELOPERS PVT LTD, IT IS DIFFICULT TO ACCEPT THE ARGUMENT OF THE LD ARS THAT THERE IS NO BENEFIT ACCRUING TO THE ACCOUNT OF THE ASSESSEE FOR THE REASON THAT HE IS A COMMON SHAREHO LDER HAVING ADEQUATE CONTROL OVER ALL ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 6 3 GROUP CONCERNS AND HE IS ENTITLED TO RECEIVE ALL BENEFITS THAT SHALL ACCRUE, DIRECTLY OR INDIRECTLY, TO THE SAID 3 GROUP CONCERNS. THUS, MER ELY BECAUSE THE ASSESSEE, SUNIL P. MANTRI HAS NOT RECEIVED ANY SUM DIRECTLY FROM THE L ENDER CONCERN M/S SUNIL MANTRI REALTY LTD. OR THROUGH ABOVE SAID 3 GROUP CONCERNS, IT CAN NOT BE SAID THAT ASSESSEE HAS NOT RECEIVED ANY BENEFITS FROM THE TRANSACTIONS. THE AR GUMENT OF THE ASSESSEE THAT THE LOANS/ADVANCES HAVE BEEN MADE IN THE NORMAL COURSE OF BUSINESS IS ALSO NOT ACCEPTABLE AS THE ASSESSEE HAS NOT BROUGHT ON RECORD TO PROVE THE SAME. IT IS ALSO NOT DISPUTED THAT THE LENDER CONCERN, M/S SUNIL MANTRI REALITY LTD IS NOT ENGAGED IN THE BUSINESS OF MONEY LENDING. THE CONTENTION OF THE ASSESSEE THAT THE MO U DATED 15 TH MAY, 2007 EVIDENCES PAYMENTS OF ADVANCES TOWARDS AWARDING OF PREFERENTI AL CONTRACT TO LENDER CONCERN OF ANY NEW PROJECT THAT MAY ARISE IN FUTURE BY THE RECIPIE NT CONCERNS, IN OUR VIEW, IS HYPOTHETICAL IN NATURE WHICH LACKS ANY EVIDENTIARY VALUE AS THE MOU PERTAINS TO FUTURE PROJECTS, IF ANY WHICH DOES NOT QUANTIFY ANY AMOUNTS OF CONSIDERATIO N. ALSO, IT HAS NOT BEEN PROVED THAT THE MOU HAS RESULTED IN ANY SUCH PROJECT OR THE PAR TIES HAVE ACTED IN FURTHERANCE OF THE MOU. IN VIEW OF THE AFOREMENTIONED DISCUSSIONS, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT(A) HAS RIGHTLY DECIDED THAT THE CASE OF SUNIL P.MANTRI CLEARLY FALLS U/S 2(22)(E) OF THE ACT. HOWEVER, WE ARE INCLINED TO ACCEPT THE ALTERNATE ARGUMENTS OF THE LD.AR THAT THE ADDITIONS ARE TO BE RESTRICTED ONLY TO THE EXTE NT OF THE ACCUMULATED PROFITS OF THE LENDER CONCERN UP TO MARCH 31 ST OF THE PREVIOUS YEARS RELEVANT TO THE ASSESSMENT Y EARS UNDER CONSIDERATION DURING WHICH THE LOANS/ADVANCES HAVE BEEN MADE TO VARIOUS CONCERNS. THEREFORE, AS REGARDS THE ADDITIONS MADE IN THE HANDS OF SUNIL P.MANTRI FOR ASSESSMENT YEARS 2008-09 AND 2009-10, WE DIRECT THE AO TO RESTRICT THE ADDITIONS BASED ON THE ACCUMULATED PROFITS OF M/S SUNIL MANTRI REAL TY LTD AS ON 31.03.2007 AND 31.03.2008 RESPECTIVELY, CORRESPONDING TO THE LOANS /ADVANCES MADE FOR THE RELEVANT ASSESSMENT YEARS I.E., 2008-09 AND 2009-10. 5.1.1 SECONDLY , AS REGARDS THE ISSUE RAISED IN THE APPEAL OF THE REVENUE IN THE CASE OF SUNIL MANTRI, FOR THE ASSESSMENT YEAR 2008-09, AGIT ATING THE DECISION OF THE LD. CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF THE LOANS/ ADVANCE RECEIVED BY SUNIL MANTRI TRINITY PROJECTS P. LTD, WE ARE OF THE CONSIDERED O PINION THAT THE LD. CIT(A) HAS CORRECTLY DONE SO SINCE FOR THE PERIOD DURING WHICH THE LOANS /ADVANCES HAVE BEEN MADE BY SUNIL MANTRI REALITY LTD DOES NOT FALL DURING THE PERIOD IN WHICH SUNIL P. MANTRI HAS BEEN A ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 7 SHARE-HOLDER OF THE RECIPIENT CONCERN AS STATED IN PARA 7.12.2 OF THE ORDER OF THE LD.CIT(A). 5.1.2 THIRDLY, ON THE DECISION OF THE LD.CIT(A) IN DELETING THE A DDITIONS MADE BY THE AO IN RESPECT THE SUMS REPAID BY THE RECIPIENT CONCERN S TO THE LENDER COMPANY FOR THE A.Y 2009-10, WE DO NOT FIND ANY INFIRMITY IN THE SAID D ECISION OF THE LD.CIT(A) AS THE SAME IS IN LINE WITH THE RATIO OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF P.K.BADDIANI REPORTED IN 76 ITR 369 WHICH HAS BEEN RIGHTLY RELIE D BY THE LD.CIT(A). 5.1.3 FOURTHLY, REGARDING THE DECISION OF THE LD. CIT(A) IN RESTRI CTING THE ADDITION TO THE EXTENT OF ACCUMULATED PROFIT OF SUNIL MANTRI REALIT Y LTD., IT IS PERTINENT TO NOTE THAT IT IS AN ACCEPTED PRINCIPLE OF LAW THAT THE ADDITION OF DEEM ED DIVIDEND U/S 2(22)(E) CAN BE MADE ONLY TO THE EXTENT OF WHICH THE LENDER CONCERN POSS ESSES ACCUMULATED PROFITS. THIS PROPOSITION IS SUPPORTED BY A NUMBER OF JUDICIAL DE CISIONS INCLUDING THE ONE IN THE CASE OF NCK SONS EXPORTS P. LTD. VS. ITO REPORTED IN 102 IT D 311 (MUM). THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD.CIT(A) ON THIS COUNT. 5.1.4 FIFTHLY, ANOTHER COMMON ISSUE RAISED IN THE APPEALS OF THE ASSESSEE, SUNIL P. MANTRI AND THE RESPECTIVE CROSS APPEALS OF THE REVE NUE RELATES TO THE DISALLOWANCE/ADDITION ON ACCOUNT OF NOTIONAL INTERE ST IN RESPECT OF THE PROPERTY LOCATED AT AMBEY VALLEY, LONAWALA AND THE ALLOWABILITY OF INTE REST EXPENSES RESPECTIVELY. IT IS OBSERVED THAT THE AO ESTIMATED THE GROSS ANNUAL VAL UE @ 7% OF THE COST OF ACQUISITION AND AFTER ALLOWING 30% STANDARD DEDUCTION U/S 24(A) , THE AO DETERMINED THE INCOME FROM HOUSE PROPERTY. THE SAME HAS BEEN CONFIRMED BY THE LD.CIT(A). HAVING HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD ON THI S ISSUE, IT IS PERTINENT TO NOTE THAT WHEN THE ASSESSEE CLAIMS FOR A LOWER ALV, THE ASSES SEE IS DUTY BOUND TO FILE MUNICIPAL VALUATION TO SUBSTANTIATE HIS CLAIM OF LOWER VALUE, WHICH HE HAS NOT DISCHARGED DURING THE ASSESSMENT/APPELLATE PROCEEDINGS. ACCORDINGLY, WE D O NOT FIND ANY MERIT IN THE CONTENTION OF THE LD.AR THAT THE ESTIMATION OF GROS S ANNUAL VALUE OUGHT TO HAVE BEEN MADE AS PER THE RENT FIXED BY THE MUNICIPAL AUTHORI TY. IN VIEW OF THAT MATTER, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE D ECISION OF THE LD.CIT(A) THAT THE GROSS RENT ESTIMATED BY AO @ 7% OF COST OF THE PROPERTY I S REASONABLE. THE FACT THAT THE ASSESSEE HAS PAID INTEREST ON BORROWED CAPITAL IS A LSO NOT DISPUTED. THEREFORE, WE DO NOT ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 8 FIND ANY INFIRMITY IN THE DECISION OF THE LD.CIT(A) THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION IN RESPECT OF INTEREST PAID. 5.1.5 RESULTANTLY, (I) THE ADDITIONS CONFIRMED BY T HE LD.CIT(A) U/S 2(22)(E) IN THE HANDS OF SUNIL P. MANTRI ON THE SUBSTANTIVE BASIS FOR THE ASSESSMENT YEARS 2008-09 & 2009-10, SUBJECT TO OUR DIRECTION THAT THE ADDITIONS MADE FO R THE SAID ASSESSMENT YEARS IS TO BE RESTRICTED TO THE EXTENT OF THE ACCUMULATED PROFITS OF M/S SUNIL MANTRI REALTY LTD AS ON 31.03.2007 AND 31.03.2008 RESPECTIVELY, CORRESPONDI NG TO THE LOANS/ADVANCES MADE FOR THE RELEVANT ASSESSMENT YEARS I.E., 2008-09 AND 200 9-10 (II) THE DECISION OF THE LD.CIT(A) DELETING THE ADDITION MADE BY THE AO IN THE HANDS O F SUNIL P. MANTRI ON ACCOUNT OF THE LOANS AND ADVANCES RECEIVED BY SUNIL MANTRI TRINITY PROJECTS P. LTD. FOR THE ASSESSMENT YEAR 2008-09 (III) DECISION OF THE LD.CIT(A) IN DEL ETING THE ADDITIONS MADE BY THE AO IN RESPECT THE SUMS REPAID BY THE RECIPIENT CONCERNS T O THE LENDER COMPANY FOR THE A.Y 2009-10, (IV) THE DECISION OF THE LD.CIT(A) RESTRIC TING THE ADDITIONS TO THE EXTENT OF THE ACCUMULATED PROFITS OF THE LENDER CONCERN (V) THE D ECISION OF THE LD.CIT(A) THAT THE GROSS RENT ESTIMATED BY AO @ 7% OF COST OF THE PROPERTY I NTEREST IN RESPECT OF THE PROPERTY LOCATED AT AMBEY VALLEY, LONAWALA IS REASONABLE AND (VI) THE DECISION OF THE LD.CIT(A) THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTIO N IN RESPECT OF INTEREST PAID ARE UPHELD. 6. AS REGARDS THE OTHER FOUR APPEALS FILED BY THE R EVENUE AGAINST THE DECISION OF THE LD.CIT(A) RESULTING IN THE DELETION OF THE ADDITION S MADE IN THE HANDS OF THE RECIPIENT CONCERNS ON PROTECTIVE BASIS, WE ARE OF THE CONSIDE RED VIEW THAT THE LD.CIT(A) HAS CORRECTLY RELIED ON THE DECISIONS OF SPECIAL BENCH IN THE CASE OF ACIT VS. BHAUMIK COLOUR P. LTD. REPORTED IN 27 SOT 270 (MUM) WHEREIN IT HAS BEEN HELD THAT THE INTENTION BEHIND THE PROVISION OF SECTION 2(22)(E) IS TO TAX DIVIDEN D IN THE HANDS OF SHARE-HOLDER. THE DEEMING PROVISIONS AS IT APPLIES TO THE CASE OF LOA NS OR ADVANCES BY A CONCERN TO CONCERN IN WHICH ITS SHARE-HOLDER HAS SUBSTANTIAL INTEREST, IS BASED ON THE PRESUMPTION THAT THE LOANS OR ADVANCE WOULD ULTIMATELY BE MADE AVAILABLE TO THE SHARE-HOLDER OF THE CONCERN GIVING THE LOANS OR ADVANCES. THE INTENTION OF THE LEGISLATURE IS THEREFORE TO TAX DIVIDEND ONLY IN THE HANDS OF THE SHARE-HOLDER AND NOT IN TH E HANDS THE CONCERN. THE SAID PROPOSITION IS SUPPORTED BY THE DECISION OF THE BOM BAY HIGH COURT IN THE CASE OF CIT VS. UNIVERSAL MEDICARE P. LTD. REPORTED IN 324 (ITR) 26 3 (BOM). ACCORDINGLY, THE DECISION OF ITA NOS. 5402, 5407, 5689, 5682, 5702, 5703, 5704 & 5681/MUM/2011 C.O. NOS .132, 134, 135 & 136/M/2012 M/S. SUNIL P. MANTRI & OTHERS ASSESSMENT YEAR : 2008-09 & 2009-10 9 THE LD. CIT(A) IN DELETING THE ADDITIONS MADE BY TH E AO ON PROTECTIVE BASIS IN THE HANDS OF THE RECIPIENT CONCERNS ARE UPHELD. 7. REGARDING THE FOUR CROSS OBJECTIONS FILED BY THE RECIPIENT CONCERNS ARISING OUT OF THE FOUR APPEALS OF THE REVENUE, THE SAME BECOME IN FRUCTUOUS AS THE DECISION OF THE LD.CIT(A) IN DELETING THE ADDITION MADE ON PROTECTI VE BASIS IN THE HANDS OF THE FOUR CONCERNS ARE UPHELD. 8. IN THE RESULT, (I) THE APPEALS FILED BY THE ASSESSEE, SUNIL P.MANT RI (ITA NO. 5402/M/2011 & ITA NO. 5407/M/2011) ARE PARTLY ALLOWED . (II) THE CROSS APPEALS FILED BY THE REVENUE IN THE CASES OF SUNIL P MANTRI LTD (ITA NO. 5702/M/2011 & 5703/M/2011) ARE DISMISSED. (III) THE OTHER FOUR APPEALS FILED BY THE REVENUE ( ITA NO. 5689/M/2011, ITA NO. 5682/M/2011, ITA NO. 5704/M/2011 AND ITA NO. 5681/M/2011) IN RESPECT OF THE RECIPIENTS CONCERNS ARE DISMISSED. (IV) THE CROSS OBJECTIONS FILED BY THE ASSESSEES, T HE RECIPIENT CONCERNS (C.O.132/M/2012, C.O. 134/M/2012, C.O.135/M/2012 AN D C.O. 136/M/2012) BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF NOVEMBER, 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.11.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.