Varun Motores Pvt Ltd., Visakhapatnam V. THE ACIT, Visakhapatnam

CO 5/VIZ/2015

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3307 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: GOVINDA RAJAN
• Section: 143(3)

Judgement Text

ITA NOS.583&584/VIZAG/2014 & C.O. NOS.5&6/VIZAG/201 5 M/S. VARUN MOTORS PVT. LTD., VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.583&584/VIZAG/2014 ( / ASSESSMENT YEARS: 2006-07&2007-08) ACIT, CIRCLE - 4(1), VISAKHAPATNAM VS. M/S. VARUN MOTORS PVT. LTD. VISAKHAPATNAM [PAN: AABCV2471Q ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NOS.5&6/VIZAG/2015 (ARISING OUT OF I.T.A.NOS.583&584/VIZAG/2014) ( / ASSESSMENT YEARS: 2006-07&2007-08) M/S. VARUN MOTORS PVT. LTD. VISAKHAPATNAM VS. ACIT, CIRCLE - 4(1), VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI GOVINDA RAJ AN, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 05.05.2016 / DATE OF PRONOUNCEMENT : 06.05.2016 ITA NOS.583&584/VIZAG/2014 & C.O. NOS.5&6/VIZAG/201 5 M/S. VARUN MOTORS PVT. LTD., VISAKHAPATNAM 2 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE APPEALS FILED BY THE REVENUE AND CROSS OBJEC TIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF CIT(A), VISAKHAPATNAM DATED 27.8.2014 FOR THE ASSESSMENT YE AR 2006-07 & 2007-08. SINCE THE FACTS ARE IDENTICAL, THEY ARE C LUBBED, HEARD TOGETHER AND DISPOSED OFF, BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. WHEN THESE APPEALS WERE TAKEN UP FOR HEARING, THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THESE APPEALS ARE FILED AGA INST THE ORDER OF THE A.O. PASSED U/S 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') . THE HONBLE IT AT, VISAKHAPATNAM BENCH IN ITA NOS.199 & 200/VIZAG/2013 DATED 6.3.201 4 HAS SET ASIDE THE ORDER PASSED BY THE COMMISSIONER U/S 263 OF THE ACT AND RESTORED THE ASSESSMENT ORDER. THEREFORE, THESE APPEALS ARE NOT MAINTAINABLE. THE LD. D.R. DID NOT RAISE ANY OBJECTION. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THESE APPEALS ARE FILED AGAINS T THE ORDER PASSED BY THE A.O. U/S 143(3) R.W.S. 263 OF THE ACT. THE ITA T IN ITA NOS.199 & 200/VIZAG/2013 HAS SET ASIDE THE ORDER PASSED BY TH E COMMISSIONER U/S ITA NOS.583&584/VIZAG/2014 & C.O. NOS.5&6/VIZAG/201 5 M/S. VARUN MOTORS PVT. LTD., VISAKHAPATNAM 3 263 OF THE ACT AND RESTORED THE ASSESSMENT ORDER. THE RELEVANT PORTION IS EXTRACTED AS UNDER: WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND P ERUSED THE MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY EXAMIN ED THE DECISIONS RELIED UPON BY THE LD. A.R. IT IS EVIDENT FROM THE ORDER O F THE CIT THAT HE HAS CONSIDERED THE ASSESSMENT ORDERS TO BE ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE AND SET IT ASIDE ON THE REASON THAT THE ASSESSING OFFICER HAS NOT INVOKED THE PROVISIONS OF SECTION 2 (22)(E) OF THE ACT IN RESPECT OF LOANS AND ADVANCES GIVEN TO THE ASSESSEE BY THE TWO COMPANIES NAMELY VARSHA BUILDERS PVT. LTD. AND CORP ORATE CARS PVT. LTD. THE SOLE REASON FOR THE CIT IN INVOKING THE PROVISI ONS OF SECTION 2(22)(E) OF THE ACT IS ALL THE COMPANIES ARE HAVING COMMON D IRECTOR. HOWEVER, CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF T HE PROVISION CONTAINED U/S 2(22)(E) OF THE ACT, WE ARE OF THE VIEW THAT THE CI T HAS COMPLETELY MISDIRECTED HIMSELF IN COMING TO CONCLUSION THAT PR OVISIONS OF SECTION 2(22)(E) OF THE ACT IS APPLICABLE TO THE ASSESSEE. ADMITTEDLY, ASSESSEE IS NOT A SHARE HOLDER OF THE LENDER COMPANIES. THEREF ORE, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS NOT ATTRACTED TO THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN CASE OF ANKITECH PRIVATE LTD. 7 ANR., 340 ITR 14 IN VERY CLEAR TERMS HAS HELD THAT THE PROVISIONS OF SE CTION 2(22)(E) OF THE ACT WILL BE APPLICABLE ONLY TO A SHARE HOLDER AND NOT T O ANY OTHER PERSON. CONSIDERING IDENTICAL FACTS WHERE THE COMPANY IS NO T A SHAREHOLDER BUT THE DIRECTORS ARE, THE HONBLE DELHI HIGH COURT HEL D THAT IF AT ALL THE ASSESSING OFFICER HAS TO APPLY SECTION 2(22)(E) OF THE ACT THEN IT IS AGAINST THE INDIVIDUAL DIRECTORS BUT NOT THE COMPANY. SAME IS THE CASE WITH THE ASSESSEE. IT IS VERY MUCH CLEAR THAT THE ASSESSEE I S NOT A SHAREHOLDER OF THE AFORESAID COMPANY. THEREFORE, UNDER THE GIVEN FACTS AND CIRCUMSTANCES, THE PROVISIONS OF SECTION 2(22)(E) O F THE ACT IS NOT APPLICABLE TO THE ASSESSEE. THE OTHER DECISION REL IED UPON BY THE LD. A.R. ALSO EXPRESS SIMILAR VIEW. FURTHER SO FAR AS CORPO RATE CARS PVT. LTD. IS CONCERNED, THE FACT THAT IT DOES NOT HAVE ACCUMULAT ED PROFIT HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT. THEREFORE, THE CON DITION PRECEDENT FOR APPLYING THE SECTION 2(22)(E) OF THE ACT IS NOT SAT ISFIED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VI EW THAT THE CIT WAS NOT JUSTIFIED IN REVISING THE ASSESSMENT ORDER U/S 263 OF THE ACT. ACCORDINGLY, WE QUASH THE ORDER OF THE CIT DATED AN D RESTORE THE RESPECTIVE ORDERS OF ASSESSMENT FOR THE ASSESSMENT YEARS UNDER DISPUTE. 4. IN VIEW OF THE FACT THAT ITAT HAS SET ASIDE THE CIT ORDER U/S 263 OF THE ACT, IN OUR VIEW ANY CONSEQUENTIAL ORDER PAS SED U/S 143(3) R.W.S. 263 OF THE ACT IS NOT MAINTAINABLE. THEREFORE, WE ARE OF THE OPINION ITA NOS.583&584/VIZAG/2014 & C.O. NOS.5&6/VIZAG/201 5 M/S. VARUN MOTORS PVT. LTD., VISAKHAPATNAM 4 THAT THESE APPEALS FILED BY THE REVENUE ARE NOT MAI NTAINABLE. HENCE, THE SAME ARE DISMISSED. 5. THE CROSS OBJECTION FILED BY THE ASSESSEE ARE IN SUPPORT OF THE ORDER OF THE CIT(A). THEREFORE, FOR THE REASONS RE CORDED IN THE PRECEDING PARAGRAPH, WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NOS.583&584/VIZAG/2014 AND CROSS OBJECTIONS FILED B Y THE ASSESSEE IN C.O. NOS.5&6/VIZAG/2015 ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH MAY16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 6.5.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-4(1), VISAKHAPA TNAM 2. / THE RESPONDENT M/S. VARUN MOTORS PVT. LTD., D. NO.7-8- 1/1, SIRIPURAM, VISAKHAPATNAM 3. + / THE CIT-2, VISAKHAPATNAM ITA NOS.583&584/VIZAG/2014 & C.O. NOS.5&6/VIZAG/201 5 M/S. VARUN MOTORS PVT. LTD., VISAKHAPATNAM 5 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM