ACIT, Jaipur V. MEWAR FOOD PVT. LTD., Jaipur

ITA 1003/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99320 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Keywords: Deemed dividend

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 1003/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 . THE ACIT (TDS) JAIPUR. CUKE VS. MEWAR FOODS PVT. LTD., G-1/118, HEERAWALA INDUSTRIAL AREA, KANOTA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACCM 8137 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT ) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16.09.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 24/09/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A)-III, JAIPUR DATED 17.10.2013 FOR THE A.YS. 2008-09. THE GROUND RAISED IN THE APPEAL IS AS UNDER :- WHETHER ON FACTS AND IN LAW THE LD. CIT (A) HAS JUS TIFIED IN HOLDING THAT NO TAX IS LIABLE TO BE DEDUCTED AT SOURCE UNDE R SECTION 194 OF THE INCOME TAX ACT ON DEEMED DIVIDEND U/S 2(22)(E) B Y ASSESSEE COMPANY TO THE CONCERNS IN WHICH ITS SHARE HOLDERS H AD SUBSTANTIAL INTEREST. 2 ITA 1003/JP/2013 A.Y. 2008-09. ACIT (TDS) VS. MEWAR FOODS PVT. LTD., JAIPUR. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT. A TDS VERIFICATION WAS CARRI ED OUT ON THE PREMISES OF THE ASSESSEE ON 09.02.2009. DURING THE COURSE OF VE RIFICATION IT WAS FOUND THAT DURING THE PERIOD IN QUESTION THE ASSESSEE ADVANCED RS. 5,00,000/- TO M/S. LIFESTYLE REALMART PVT. LTD., RS. 5,00,000/- TO M/S . KRISHAN KANAI RETAILERS PVT. LTD. AND RS. 14,71,000/- AND RS. 10,000/- TO M/S. A CCLAIM REAL ESTATE PVT. LTD. AND M/S. ACCLAIM HOTEL PVT. LTD. RESPECTIVELY. ON F URTHER VERIFICATION BY THE AO, IT WAS FOUND THAT THE ASSESSEE WAS HAVING 3 DIRECTORS, N AMELY, S/SHRI PARAKRAM SINGH RATHORE, SMT. CHAND KANWAR RATHORE AND SHRI RA GHUVIR SINGH HAVING RESPECTIVE SHARE HOLDING OF 50,000/-, 20,000/- AND 30,000/-. THE AO FURTHER FOUND THAT THE COMPANIES NAMELY M/S. LIFESTYLE REAL MART PVT. LTD., M/S. KRISHAN KANAI RETAILERS PVT. LTD., M/S. ACCLAIM REAL ESTATE PVT. LTD. AND M/S. ACCLAIM HOTEL PVT. LTD. TO WHOM THE LOANS WERE ADVANCED, TWO O F THE THREE DIRECTORS OF THE ASSESSEE ARE HAVING EQUAL SHAREHOLDINGS IN THES E THREE COMPANIES. BASED ON THESE FINDINGS, A LETTER IN THE FORM OF SHOW CAUS E NOTICE DATED 10 TH MARCH, 2010 WAS ISSUED ASKING IT TO EXPLAIN WHY THESE AMOUNT S ADVANCED TO THESE COMPANIES IN WHICH DIRECTORS ALSO HAVE SUBSTANTIAL INTEREST, BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE IT ACT , 1961 AND ACCORDINGLY THE PROVISIONS OF SEC. 194 OF THE IT ACT BE APPLIED TO T HESE AMOUNTS ADVANCED AS LOANS AMOUNTING TO RS. 24,81,000/-. THE ASSESSEE FI LED ITS REPLY AND RELIED UPON 3 ITA 1003/JP/2013 A.Y. 2008-09. ACIT (TDS) VS. MEWAR FOODS PVT. LTD., JAIPUR. THE JUDGMENT IN THE MATTER OF M/S. ANZ REALITY PVT. LTD. VS. ITO IN ITA NO. 1328/JP/2008 DATED 17.10.2008. HOWEVER, THE AO HAS N OT ACCEPTED THE JUDGMENT OF THE TRIBUNAL ON THE PRETEXT THAT THE JUD GMENT HAS BEEN CHALLENGED BEFORE THE HONBLE HIGH COURT. ON THE BASIS OF THI S, THE AO HAS HELD THAT THE PAYMENTS MADE BY THE ASSESSEE ARE COVERED BY THE PR OVISIONS OF SECTION 2(22)(E) OF THE IT ACT HENCE THE PROVISIONS OF SECTI ON 194 OF THE IT ACT, 1961 WERE APPLIED. 3. FEELING AGGRIEVED BY THE ORDER OF THE AO, THE AS SESSEE HAS FILED APPEAL BEFORE LD. CIT (A). HOWEVER, THE LD. CIT (A) AFTER CO NSIDERING THE JUDGMENT PASSED BY THE TRIBUNAL IN THE MATTER OF M/S. ANZ REA LITY PVT. LTD. (SUPRA) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS U NDER :- 4.3. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO, SUBMISSION OF THE APPELLANT AND OTHER RELEVANT FACTS RELATED O F THIS APPEAL. IT MAY BE NOTED THAT THE APPELLANT COMPANY HAS ADVANCE D LOANS AMOUNTING TO RS. 2481000/- TO THE FOUR COMPANIES AS MENTIONED ON PAGE NO. 2 OF THIS ORDER. THERE IS ALSO NO DISPUTE O N THE FACT THAT SUCH FOUR COMPANIES TO WHOM LOANS HAVE BEEN ADVANCED ARE NOT THE SHAREHOLDERS OF THE APPELLANT COMPANY. IN THIS BACKGROUND IT IS TO BE SEEN AS TO WHETHER LOAN ADVANCED TO SUCH FOUR COMPANIES ARE TO BE TREATED AS DEEMED DIVIDEND IN TERMS OF SECTIO N 2(22)(E) OF IT ACT AND WHETHER TDS WAS DEDUCTIBLE ON SUCH AMOUNT. I N THIS CONNECTION IT MAY BE NOTED THAT SIMILAR ISSUE WAS DE CIDED BY HONBLE JURISDICTIONAL ITAT IN THE CASE OF M/S. ANZ REALITY PVT. LTD. 4 ITA 1003/JP/2013 A.Y. 2008-09. ACIT (TDS) VS. MEWAR FOODS PVT. LTD., JAIPUR. VS. ITO IN ITA NO. 1328/JP/2008 DATED 17.10.2008 FOR THE A.Y. 2005-06 AND IT IS CLEARLY HELD THAT THE LAW DOES NOT EXPECT THE PAYER COMPANY TO DEDUCT TDS WHEN PAYMENT IS MADE TO NON SHA REHOLDER. THE HONBLE ITAT ALSO HELD THAT SECTION 194 DOES NOT REQUIRE TDS WHEN PAYMENT WAS MADE TO A NON SHAREHOLDER. THE RELEVA NT PART OF THE ORDER OF THE HONBLE ITAT IS CONTAINED IN THE WRI TTEN SUBMISSION OF THE APPELLANT AS REPRODUCED ON PAGE NO. 6 OF THI S ORDER. AS REGARDS THE CASE LAWS REFERRED BY THE AO IT MAY BE N OTED THAT ALL SUCH CASE LAWS ARE IN RESPECT OF ISSUE OF DEEMED DI VIDEND AND NOT ON THE ISSUE OF DEDUCTION OF TDS MORE PARTICULARLY WH EN THE PERSONS TO WHOM SUCH PAYMENT HAVE BEEN MADE ARE NOT THE SHAR EHOLDERS. ON THE OTHER HAND THE DECISION OF THE JURISDICTIONA L HONBLE ITAT IS OF BINDING NATURE. RELIANCE IS PLACED ON THE FOLLOWI NG CASE LAWS :- AGARWAL WAREHOUSE AND LEADING PVT. LTD. VS. CIT 257 ITR 235 (MP) BANK OF BARODA VS. HC SRIVASTAVA & ANOTHER 256 ITR 385 (BOMBAY) VOEST ALPINE IND. GBBH VS. ITO 246 ITR 745 (CALCUTTA) THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT, THE DEMAND RAISED BY THE AO AMOUNTING TO RS. 6 ,93,390/- U/S 201(1)/201(1A) ON ACCOUNT OF NON DEDUCTION OF TAX O N PAYMENT OF RS. 24,81,000/- IS DELETED. 5 ITA 1003/JP/2013 A.Y. 2008-09. ACIT (TDS) VS. MEWAR FOODS PVT. LTD., JAIPUR. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. D /R FOR THE REVENUE HAS CONTENDED THAT THE ORDER OF THE TRIBUNAL IN THE MATT ER OF M/S. ANZ REALITY PVT. LTD. HAS NOT ATTAINED FINALITY. THEREFORE, THE PRIN CIPLE LAID DOWN BY THE TRIBUNAL IN THE SAID JUDGMENT IS NOT BINDING ON THE AO. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE THOUGH T HE NOTICE WAS SERVED ON THE ASSESSEE THROUGH REGISTERED POST. 6. WE HAVE HEARD THE LD. D/R AND GONE THROUGH THE M ATERIAL AVAILABLE ON RECORD. IN OUR VIEW THE CASE IS SQUARELY COVERED BY THE JUDGMENT OF THE TRIBUNAL IN THE MATTER OF M/S. ANZ REALITY PVT. LTD. WE, THE REFORE, DO NOT WISH TO DEVIATE FROM THE VIEW TAKEN BY THE COORDINATE BENCH OF THE TR IBUNAL IN THE SAID MATTER. WITH A VIEW TO CONSISTENCY AND COHERENCY THEREOF, TH E APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/09/2015. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/09/2015 DAS/ 6 ITA 1003/JP/2013 A.Y. 2008-09. ACIT (TDS) VS. MEWAR FOODS PVT. LTD., JAIPUR. VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT (TDS), JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- MEWAR FOODS PVT. LTD., JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1003/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 7 ITA 1003/JP/2013 A.Y. 2008-09. ACIT (TDS) VS. MEWAR FOODS PVT. LTD., JAIPUR. SL. NO. DATE INITIAL 1 DATE OF DICTATION 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER OTHER MEMBER 3 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DISPATCH OF THE ORDER