NEHA MITESH MANGAL, Nagpur V. ACIT-CIRCLE-2, Nagpur

ITA 102/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1594 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Opportunity of being heard; Deemed dividend

Judgement Text

1 ITA NO. 102/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 102/NAG/2014 ASSESSMENT YEAR : 2009 - 10. NEHA MITESH MANGAL, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CIRCLE - 2, NAGPUR. PAN AFMPB9735L APPELLANT. RESPON DENT. APPELLANT BY : SHRI MUKESH AGRAWAL. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 0 5 - 11 - 2015. DATE OF PRONOUNCEMENT : 18 TH NOV., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 22 - 11 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. GROUND OF APPEAL READS AS UNDER : THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(APPEALS) HAS ERRE D IN TREATING THE PROFIT AT RS.13,37,700/ - EARNED DURING THE RELEVANT PREVIOUS YEAR AS ACCUMULATED PROFIT FOR THE PURPOSE OF S. 2(22)(E) OF I.T. ACT. THE LD. CIT(APPEALS) SHOULD HAVE TAKEN THE ACCUMULATED PROFIT AT RS.9,10,526/ - AT THE BEGINNING OF THE PR EVIOUS YEAR IN PLACE OF RS.22,48,226/ - AT THE END OF PREVIOUS YEAR. FURTHER MORE, IN THIS CASE THE ASSESSEE HAS SOUGHT TO ADMIT THE FOLLOWING ADDITIONAL GROUND : WHILE COMPUTING ACCUMULATED PROFITS FOR THE PURPOSE OF SEC. 2(22)(E) THE LEARNED CIT(A) AND LEARNED A.O. OUGHT TO HAVE SEEN THAT THE ASSESSEE 2 ITA NO. 102/NAG/2014 HAD TAKEN LOAN OF 41 LACS DURING THE EARLIER PREVIOUS YEAR 2007 - 08 RELEVANT TO A.Y. 2008 - 09, AND THE LENDER COMPANY HAD ACCUMULATED PROFIT OF RS.9,10,526/ - AS ON 21,03,2008/ - , THEREFORE, DEEMED DIVIDEND U/S 2(22)(E) TO THE EXTENT OF RS.9,10,526/ - SHOULD HAVE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE IN A.Y. 2008 - AND THIS AMOUNT SHOULD HAVE BEEN REDUCED FROM THE ACCUMULATED PROFIT FOR THE PURPOSE OF CALCULATION OF DEEMED DIVIDEND IN A.Y. 2009 - 10. 2. IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT THOUGH THIS GROUND WAS NOT RAISED BEFORE THE AUTHORITIES BELOW BUT THE GROUND RAISED IS A LEGAL ISSUE EMERGING FROM THE FACTS OF THE CASE AND IT IS A VITAL ISSUE FOR ADJUDICATION OF THE APPEAL. 3. UPON CAREFUL CONSI DERATION AND HEARING BOTH THE PARTIES, WE ADMIT THE ADDITIONAL GROUND ON THE ANVIL OF HONBLE APEX COURT DECISION IN THE CASE OF NTPC 229 ITR 383. 4. THE ISSUE IN THE APPEAL PERTAINS TO TREATMENT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T. ACT. LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS ADMITTED THE FACT THAT THE DEEMED DIVIDEND U/S 2(22)(E) IS PRINCIPALLY LEVIABLE. HOWEVER, THE ASSESSEE IS AGGRIEVED THAT THE ACCUMULATED PROFIT SHOULD BE TAKEN AS THE PROFIT AS ON THE CLOSE OF P REVIOUS FINANCIAL YEAR. IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE UPON SEVERAL CASE LAWS. FURTHER MORE, VIDE ADDITIONAL GROUND THE ASSESSEE HAS RAISED A PROPOSITION THAT THOUGH IN THE PRECEDING PREVIOUS YEAR DEEMED DIVIDEND WAS NOT COMPUTED BY THE R EVENUE AUTHORITIES BUT ACTUALLY THE ASSESSEE HAS TAKEN LOAN FROM THE COMPANY AND TECHNICALLY DEEMED DIVIDEND WAS LEVIABLE. IN THIS REGARD, ASSESSEES COUNSEL IS PLACING RELIANCE UPON SEVERAL CASE LAWS THAT THE DEEMED DIVIDEND SO COMPUTED FOR THE PREVIOUS YEAR HAS TO BE REDUCED FROM THE ACCUMULATED PROFIT AS AT THE END OF THE PREVIOUS FINANCIAL YEAR. ASSESSEES CLAIM IS THAT IT IS THE RESULTANT FIGURE I.E. THE ACCUMULATED PROFIT AS ON THE CLOSE OF THE PREVIOUS YEAR DULY REDUCED BY THE DEEMED DIVIDEND FOR TH AT YEAR (THOUGH NOT SO COMPUTED BY 3 ITA NO. 102/NAG/2014 REVENUE) HAS TO BE TAKEN AS ACCUMULATED PROFIT FOR THE PURPOSE OF COMPUTING DEEMED DIVIDEND IN THE PRESENT ASSESSMENT YEAR. IN THIS REGARD ASSESSEES COUNSEL HAS PLACED RELIANCE UPON FOLLOWING CASE LAWS : I) M.B. STOCK HOLDING VS. ACIT 84 ITD 542 (AHD). II)P. SATYA PRASAD VS. ITO 141 ITD 403 (VIZAG) III) CIT VS. V. DAMODARAN 121 ITR 527 (SC). IV) ITO VS. GORDHANDAS KHIMJI 11 ITD 158 (COCHIN). V) A.R. CHADHA & CO. V. DCIT 133 TTJ 490 (DEL.) . 5. ON CAREFUL CONSIDERATION, WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE NOW HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW. WE, THEREFORE, NOTE THAT HOW MUCH WAS THE FICTIONAL DEEMED DIVIDEND FOR THE PRECEDING ASSESSMENT YEAR NEEDS REFERENCE T O THE FACTUAL ASPECTS OF THAT YEAR. HENCE IN THE INTEREST OF JUSTICE WE DEEM IT FIT TO REMIT THE ISSUE RAISED IN THIS APPEAL TO THE FILE OF THE AO. THE AO SHALL CONSIDER THE ENTIRE ISSUE AFRESH TAKING INTO ACCOUNT THE PROPOSITION OF CASE LAWS NOW BE ING REFERRED BY THE ASSESSEE. ACCORDINGLY, THE ISSUE STANDS REMITTED TO THE FILE OF THE AO. NEEDLESS TO ADD THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF NOV., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 18 TH NOV., 2015. 4 ITA NO. 102/NAG/2014 COPY FORWARDED TO : 1. NEHA MITESH MANGAL, B - 402, UTKARSH ALANKAR APT., RNT ROAD, CIVIL LINES, NAGPUR. 2. ACIT, CIRCLE - 2 , NAGPUR. 3. C.I.T., CONCERNED 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR