DCIT, CHENNAI V. Shri N.Pramodh, CHENNAI

ITA 1104/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61013 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SRIDHAR
• Assessee Lawyers: K E B RENGARAJAN JR
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.1104/MDS/2010 ASSESSMENT YEAR : 2005-06 THE DY. CIT COMPANY CIRCLE V(1) CHENNAI VS SHRI N.PRAMODH 13, PARK VIEW APARTMENTS VELACHERY HIGH ROAD NAGENDRA NAGAR CHENNAI 32 [ PAN AGLPP9630L ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR,ADVOCATE RESPONDENT BY : SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 12.4.2012 DATE OF PRONOUNCEMENT : 20.4.2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER OF THE LD.CIT(A)-V, CHENNAI, DATED 27.4.2010. 2. THE SOLE ISSUE RAISED IN THIS APPEAL BY THE REVEN UE IS THAT THE LD.CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE ADDITION MADE ON DEEMED DIVIDEND TO ` 4,17,600/- AS AGAINST ` 11,00,000/- MADE BY THE ASSESSING OFFICER. I.T.A.NO.1104/10 :- 2 -: 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A WHOLE TIME WORKING DIRECTOR IN M/S ORDIAN HEALTHCARE PVT. LTD. DRAWING MONTHLY REMUNERATION FOR SERVICES RENDERED. DURING THE YEA R UNDER CONSIDERATION THE ASSESSEE TOOK SALARY ADVANCE OF ` 11 LAKHS WHICH WAS ADJUSTED AGAINST INCENTIVE PAID TO THE ASSESS EE AFTER DEDUCTING TAX AT SOURCE FROM THE AMOUNT PAID. THE ASSESSING OFFICER TREATED THE ADVANCE AMOUNT AS DEEMED DIVIDEND. 4. ON APPEAL, THE LD.CIT(A) RESTRICTED THE ADDITIO N TO ` 4,17,600/- U/S 2(22)(E) OF THE ACT. WHILE DOING SO, HE HAS OB SERVED AS UNDER: 7. DURING THE FINANCIAL YEAR, THE APPELLANT HAS RECEIVED ` 11,00,000/- AS SALARY ADVANCE FROM THE COMPANY AND THE ASSESSING OFFICER HAS TREATED I T A S DEEMED D I V I DEND. THE LEARNED AUTHORIZED REPRESENTATIVE OF THE APPE L LA N T H AS EXPLA I NED TO ME T HAT THE SALARY ADVANCE WAS ADJUSTED BY THE COMPANY IN THE FOLLOW I NG MANNER: M/S. ORDAIN HEALTH CARE PRIVATE LIMITED ACCOUNT STATEMENT FOR THE PERIOD FROM 2004 TO 2005 N PRAMODH CURRENT ACCOUNT VOUCHER REFERENCE ACCOUNT PARTICULARS CHEQUE DEBIT CREDIT REFERENCE BP 041603 I SALARY ADVANCE 28526/ 1 , 100 , 000.00 16.04.04 / ICICI BANK 16.04.04 JR 073103 ADVANC E ADJUSTED 232 , 4 00 . 00 3 1 . 07.04 AGA I NST INCENTIVE JR 0 3 3115 ADVANCE ADJUSTED 450 , 000.00 I.T.A.NO.1104/10 :- 3 -: 31 . 0 3 .05 AGAINST INCENTIVE BR 033102 CHEQUE RECE I VED 708211 / 4 17 , 600 . 00 31 . 03.05 / UCO B ANK 31 . 03.2005 --------- - ------ -- - - - -- - -- - ---- 400,000.00 400,000 . 00 0.00 7.1 THUS, IT IS SEEN THAT THE SALARY ADVANCE OF ` 11.00,000/- WAS LATER ON AD J USTED AGAINST INCENTIVE DUE TO THE APPELLANT DURING THE FINANCIAL YEAR ITSELF AND THE SAME WERE ALSO INCLUDED AS SAL ARY INCOME OF THE APPELLANT AND TDS HAS ALSO BEEN EFFECTED. 7.2 UNDER THE CIRCUMSTANCES, IT IS NOT FAIR TO TRE AT THE WHOLE AMOUNT OF ` 11,00,000/- AS DEEMED DIVIDEND UNDER SECTION 2(22) (E). FURTHER, AN AMOUNT OF ` 4,17,600/- WAS RETURNED THROUGH CHEQUE ON 31.03.20 05 BY THE APPELLANT AND THIS ALONE CAN BE TREATED AS D EEMED DIVIDEND. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO U PHOLD THE ADDITION TO THE EXTENT OF ` 4,17,600/-. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUS ING THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE LD. DR RELIED ON THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THIS APPEAL. HE COULD NOT POINT OUT ANY SPECIFIC E RROR IN THE ORDER OF THE LD.CIT(A). HE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE AMOUNT OF ` 6,82,400/- DELETED BY THE LD.CIT(A) WAS NOT THE PAYMENT BY THE ASSESSEE-COMPANY TO ITS DIRECTOR TOW ARDS SALARY AND INCENTIVES PAID DURING THE NORMAL COURSE OF THE BU SINESS. FINDING OF THE LD.CIT(A) THAT OUT OF THE PAYMENT OF ` 11 LAKHS, ONLY ` 4,17,600/- WAS REFUNDABLE ADVANCE AND BALANCE ` 6,82,400/- WAS TOWARDS SALARY AND INCENTIVES ON WHICH TAX WAS DULY DEDUCTED AT SO URCE, COULD NOT BE DISPUTED BY THE DEPARTMENT. WE, THEREFORE, DO NOT FIND ANY GOOD I.T.A.NO.1104/10 :- 4 -: REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A ) WHICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMIS SED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 .4.2012. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 20 TH APRIL, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR