ITO, Ward-16(4), Hyd, Hyderabad V. My Time Pharmacy (India) Pvt.Ltd., Hyd, Hyderabad

ITA 1055/HYD/2015

• Counselvise Citation: 105522514 RSA 2015
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: A V RAGHURAM
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1055/HYD/2015 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, WARD 16(4), HYDERABAD. VS. MY TIME PHARMACY (INDIA) PVT. LTD., HYDERABAD PAN AAECM 9084H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI B. KURMI NAIDU ASSESSEE BY : SHRI A.V. RAGHURAM DATE OF HEARING : 29-10-2015 DATE OF PRONOUNCEMENT : -11-2015 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY REVENUE AGAINST THE OR DER OF CIT(A) -4 HYDERABAD, DATED 12.05.2015 FOR THE AY 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSEE I S ENGAGED IN THE BUSINESS OF SALE OF DRUGS THROUGH CHAIN STORES. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2008-09 ON 27/09/20 08, ADMITTED LOSS OF RS. 11,27,696/-.THE CASE WAS SELECTED FOR SCRUTI NY AND NOTICES WERE ISSUED U/S 143(2) AND 142(1). THE ASSESSEE HAD COMPLIED WITH THE ABOVE NOTICES AND ASSESSMENT WAS COMPLETED U/S 143(3) BY THE AO AFTER CONSIDERING THE DOCUMENTS AND EXPLANATION BY THE ASSESSEE ON 30/11/2010, DETERMINING THE ASSESSABLE INCOME AT RS.23,12,549/-. DURING ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSE SSEE RECEIVED A LOAN OF RS. 34,85,867/- FROM TIME PROJECTS (P) LI MITED. HE NOTICED THAT SHRI Y.KRISHNA MOHAN AND SMT Y.PADMAVATHI, TWO OF THE DIRECTORS/SHAREHOLDERS IN BOTH MY TIME PHARMACY (I NDIA) (P) LIMITED AND TIME PROJECTS (P) LIMITED ARE HOLDING 20% SHARE S IN BOTH 2 ITA NO. 1055/HYD/2015 MY TIME PHARMACY (INDIA) PVT. LTD. COMPANIES. BESIDES, TIME PROJECTS (P) LIMITED (LEND OR COMPANY) IS ALSO HOLDING 67% OF THE SHARES IN MY TIME PHARMACY (INDIA)(P) LIMITED. HE CONSIDERED THAT PROVISION OF SECTION 2( 22)(E) OF THE INCOME TAX ACT, 1961 (CALLED ACT) IS ATTRACTED AND TREATED THE LOAN AMOUNT OF RS. 34,85,867/- AS DEEMED DIVIDEND U/S 2( 22)(E) IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE CIT(A). THE CIT(A) ALLOWED THE APPEAL BY O BSERVING AS BELOW: 3. DURING THE APPELLATE PROCEEDINGS, IT WAS SU BMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE APPELLANT BY THE ORDER OF THE HONBLE ITAT IN APPELLANTS OWN CASE FOR THE AY 2007-08 (ITS NO 2 62/HYD/2013). COPY OF THE ORDER WAS PLACED ON RECORD. RESPECTFULLY, FOLLOWING THE ABOVE ORDER OF THE HONBLE ITAT, THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND IS DELETED 4. AGGRIEVED WITH CIT(A) ORDER, THE REVENUE IS APP EAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE ADDI TION MADE BY THE AO WHO HAD MADE THE ADDITION ON ACCOUNT OF LOAN BEING TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY BECA USE ONE OF THE DIRECTORS OF BOTH THE PAYEE AND PAYER COMPANIES HA VE SUBSTANTIAL INTEREST BY HOLDING MORE THAN 20% SHARES IN EACH COMPANY. 5. LD DR RELIED ON THE ORDER OF ASSESSING OFFICER AND ARGUED THAT AO RIGHTLY MADE THE ABOVE ADDITION AS THE DEEMED DI VIDEND PROVISION IS ATTRACTED IN THE PRESENT CASE. 6. LD AR RELIED ON THE ORDER OF THE CIT(A) AND BRO UGHT TO OUR NOTICE THAT THE CASE IS COVERED BY ASSESSEES OWN C ASE OF EARLIER AY 2007-08 OF ITAT ORDER ITA NO 262/HYD/2013 DATED 12/ 06/2013. 7. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH PARTIE S AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IN D ISPUTE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF ITAT, HYDERABAD 3 ITA NO. 1055/HYD/2015 MY TIME PHARMACY (INDIA) PVT. LTD. IN ASSESSEES OWN CASE IN THE EARLIER YEAR (SUPRA), WHEREIN THE BENCH HAS OBSERVED AS UNDER: 8. IN THE APPEAL BEFORE US ADMITTEDLY THE ASSES SEE IS NOT A SHAREHOLDER OF THE LENDER COMPANY. HENCE, CONSIDERED IN THE LI GHT OF THE RATIO LAID DOWN IN THE JUDICIAL PRECEDENTS REFERRED TO ABOVE THE LOAN ADVANCED TO THE ASSESSEE AMOUNTING TO RS. 16,32,800/- CANNOT BE TR EATED AS DEEMED DIVIDEND AT THE HANDS OF THE ASSESSEE. THEREFORE, THERE IS ABSOLUTELY NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE C IT(A) WHICH IS ACCORDINGLY UPHELD. 7.1 FOLLOWING THE SAID DECISION OF THE COORDINATE B ENCH, WE HOLD THAT SINCE THE ASSESSEE IS NOT A SHAREHOLDER OF TH E LENDER COMPANY. THE LOAN CANNOT BE TREATED AS DEEMED DIVIDEND IN TH E HANDS OF THE ASSESSEE. HENCE, WE UPHOLD ORDER OF LD. CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2015. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 4 TH NOVEMBER, 2015 KV COPY TO:- 1) ITO, WARD 16(4), ROOM NO. 10 A, BLOCK, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 5 00 004 2) M/S MY TIME PHARMACY (INDIA) PVT. LTD., 6-3- 883/11, GROUND FLOOR, POTHULA TOWERS ANNEXE, SOMAJIGUDA, H YDERABAD - 16. 3 CIT(A) 4, , HYDERABAD 4) CIT 4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD.