DCIT, CHENNAI V. Rapid Care Transcription Pvt. Ltd., CHENNAI

ITA 1158/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96026 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1158/MDS/2014 / ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE V(3) CHENNAI VS. M/S RAPID CARE TRANSCRIPTION PVT. LTD. 2 ND FLOOR, VLV COMPLEX OLD NO.21, NEW NO.41 MOUNT ROAD, LITTLE MOUNT SAIDAPET, CHENNAI 600 015 [PAN AABCR 3254 M] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI A.B.KOLI, JCIT /RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 11 - 08 - 2015 ! / DATE OF PRONOUNCEMENT : 11 - 09 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, CHENNA I, DATED 12.12.2013 AND PERTAINS TO ASSESSMENT YEAR 2009-10 . 2. SHRI A.B.KOLI, LD. DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT ON PERUSAL OF THE CASH FLOW STATEMENT OF THE ASSES SEE, THE ASSESSING ITA NO. 1158/14 :- 2 -: OFFICER FOUND THAT A SUM OF ` 1,24,03,076/- WAS REFLECTED AS INFLOW FROM M/S GKK EXPORTS PVT. LTD. ACCORDING TO THE LD . DR, THE ASSESSING OFFICER FOUND THAT THE SHAREHOLDERS IN THE ASSESSEE -COMPANY HAD SUBSTANTIAL INTEREST IN M/S GKK EXPORTS PVT. LTD. REFERRING TO THE ASSESSMENT ORDER, THE LD. DR POINTED OUT THAT ONE S HRI M.S.G. BHUVAN KUMAR HAD 23% OF THE SHARES AND ANOTHER SHRI V.L.VENKATASUBRAMANIAM HAD 26.26% OF THE SHARES AND SMT. G. MALIKA HAD 19.97% OF THE SHARES. SINCE THE SHAREHO LDERS IN THE ASSESSEE-COMPANY AS WELL AS M/S GKK EXPORTS PVT. LT D ARE ONE AND THE SAME, ACCORDING TO THE LD. DR, THE ASSESSING OF FICER TREATED THE ADVANCE OF ` 1,24,03,076/- AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. ACCORDING TO THE LD. DR, ADVANCE WAS MADE FOR THE BENEFIT OF THE SHAREHOLDERS IN A COMPANY WHERE THEY ARE HOLDING SU BSTANTIAL INTEREST. THEREFORE, IT HAS TO BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE U/S 2(22)(E) OF THE ACT. 3. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT DEEMED DIVIDEND CAN BE ASSE SSED ONLY IN THE HANDS OF THE PERSON WHO IS A SHAREHOLDER OF THE LEN DER COMPANY. ACCORDING TO THE LD. COUNSEL, IT CANNOT BE ASSESSED AS DEEMED DIVIDEND IN THE HANDS OF A PERSON WHO IS NOT A SHAR EHOLDER. IN THIS CASE, THE ADVANCE WAS RECEIVED BY THE ASSESSEE-COMP ANY. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER IN M/S ITA NO. 1158/14 :- 3 -: GKK EXPORTS PVT. LTD. SINCE THE ASSESSEE-COMPANY I S NOT A SHAREHOLDER, ACCORDING TO THE LD. COUNSEL, THE CIT( A) HAS RIGHTLY DELETED THE ADDITION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT. DEEMED DIVIDEND HAS TO BE ASSESSED IN THE HANDS OF THE SHAREHOLDER IF THE PAYMENT WAS MADE EITHER TO THE SHAREHOLDER OR TO THE BENEFICIAR Y OF THE SHAREHOLDER. IN THIS CASE, THE ASSESSEE-COMPANY RE CEIVED THE PAYMENT FROM M/S GKK EXPORTS PVT. LTD. ADMITTEDLY, THE ASSESSEE- COMPANY IS NOT A SHAREHOLDER. EVEN ASSUMING FOR AR GUMENT SAKE THAT THE PAYMENTS WERE MADE FOR THE BENEFIT OF THE SHARE HOLDERS, THEN IT HAS TO BE ASSESSED AS DEEMED DIVIDEND ONLY IN THE H ANDS OF THE SHAREHOLDERS AND NOT IN THE HANDS OF OTHER PERSONS. THE ASSESSEE- COMPANY, ADMITTEDLY, IS NOT A SHAREHOLDER OF M/S GKK EXPORTS PVT. LTD. AT THE BEST, THE ASSESSMENT COULD BE MADE IN RESPECT OF COMMON SHAREHOLDERS FOR WHOSE BENEFIT THE AMOUNT WAS ADVAN CED TO THE ASSESSEE-COMPANY. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ITA NO. 1158/14 :- 4 -: ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OF SEPTEMBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 11 TH SEPTEMBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF