ACIT,R-1, Pune, V. M/s. Star Flexipack Industries, Ichalkaranji

ITA 1244/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49757 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 27-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C SHIVGANDE
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI G.S. PANNU, AM. I.T.A. NO. 1244 & 1245/PN/2009 A.Y. 2001-02 & 2006-07 ASSTT. CIT RANGE 1, PUNE .. APPELLANT VS. STAR FLEXIPACK INDUSTRIES 379/2 A/P KONDIGRE TAL. SHIROL, DIST. KOLHAPUR PAN AAKFS 9335 C .. RESPONDENT APPELLANT BY: SHRI S.C. SHIVGANDE RESPONDENT BY: NONE ORDER PER SHAILNDRA KUMAR YADAV, JM BOTH THESE APPEALS RAISE COMMON ISSUES. THEREFORE, THEY WERE TAKEN UP FOR HEARING TOGETHER AND ARE BEI NG DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. BOTH THESE APPEALS ARE DIRECTED AGAINS T THE CONSOLIDATED ORDER OF THE CIT(A) KOLHAPUR DATED 16- 6- 2009 FOR A.Y. 2001-02 AND 2006-07 ON THE POINT OF ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF MANUFACTURING OF PRINTED FILM, P.P. POU CHES, INK ETC. AND GENERATION OF ELECTRICITY. THE RETURN OF INCOME HAS BEEN FILED BY THE ASSESSEE ON 30-10-2001 ITA NO. 1244 AND 1245/PN/2009 STAR FLEXIPACK INDUSTRIES A.Y. 2001-02 & 2006-07 2 DISCLOSING TOTAL INCOME OF RS. 69,71,288/- WHICH WA S PROCESSED U/S 143(3) OF THE ACT. AFTER CLAIMING A SET OFF OF CARRIED FORWARD LOSS OF RS. 1,41,742/- THE NET I NCOME FOR THE YEAR UNDER CONSIDERATION CAME TO RS. 38,29,546/-. THE ASSESSING OFFICER MADE AN ADDITIO N U/S 2(22)(E) OF THE ACT FOLLOWING HIS OWN ORDER IN THE CASE OF THE ASSESSEE FOR A.Y. 2004-05. ON APPEAL, T HE CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2004-05 IN ITA NO. 767/PN/2007 DATED 30-1-2009 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE YEARS UNDER CONSIDERATION. THE SAME HAS BEEN CHALLENGED BY THE REVENUE BEFORE US. 3. WE FIND THAT SIMILAR ISSUE HAS COME UP FOR CONSIDERATION BEFORE CO-ORDINATE BENCH OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 AND THE TRIBUNAL VIDE ITS CONSOLIDATED ORDER DATED 31-1-200 9 IN ITA NO. 731/PN/2007 AND 767/PN/2007 HELD AS UNDER: 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE VERY FOUNDATION OF THIS TAXABILITY OF DEEMED DIVIDEND, I.E. THE ASSESSEE HAVING TREATED AS A SHAREHOLDER AS GHODAWAT INDUSTRIES PVT.LTD., RESTS ON A LEGALLY UNSUSTAINABLE FOUNDATION. A THREE MEMBER BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. BHAUMIK COLOUR PVT.LTD., (ITA NO. 5030/MUM/2004) HAS HELD AS UNDER: ITA NO. 1244 AND 1245/PN/2009 STAR FLEXIPACK INDUSTRIES A.Y. 2001-02 & 2006-07 3 THE EXPRESSION SHAREHOLDER REFERRED TO IN SEC. 2(22)(E) REFERS TO BOTH A REGISTERED SHAREHOLDER AND BENEFICIAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT THE BENEFICIAL SHAREHOLDER THAN THE PROVISIONS OF SEC. 2(22)(E) WILL NOT APPLY. SIMILARLY IF A PERSON IS A BENEFICIAL SHAREHOLDER BUT NOT A REGISTERED SHAREHOLDER THEN ALSO THE PROVISIONS OF SECTION 2(22)(E) WILL NOT APPLY. IN VIEW OF THE AFOREMENTIONED FINDING JUDICIAL PRECEDENT, WHICH IS DEEMED TO BE ATTACHED TO AND FORMING PART OF THIS ORDER, AND HAVING REGARD TO TH E UNDISPUTED FACT THAT THE ASSESSEE BEFORE US IS NOT A REGISTERED SHAREHOLDER IN GIPL, WE HAVE TO HOLD THA T VERY TAXABILITY OF DEEMED DIVIDEND U/S 2(22)(E) IN THE HANDS OF THE ASSESSEE FAILS. THE ASSESSEE SUCCEEDS ON THIS FUNDAMENTAL ISSUE. IN THIS VIEW OF THE MATTER, ALL OTHER ISSUES RAISED IN THE CROSS APPEALS, WHICH DEAL WITH THE MERITS AND QUANTUM OF ADDITION, HAVE BEEN RENDERED INFRUCTUOUS. THESE GRIEVANCES ARE DISMISSED AS SUCH. 4. FACTS BEING SIMILAR, SO FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL IN ITA NO. 731/PN/2007 AND 767/PN/2007 DATED 30-1-2009, THE APPEALS FILED BY T HE REVENUE ARE DISMISSED BECAUSE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS MADE ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. WE UPHOLD THE SAM E. . 5. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF MAY 2011. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE: DATED: 11 TH MAY, 2011 ANKAM ITA NO. 1244 AND 1245/PN/2009 STAR FLEXIPACK INDUSTRIES A.Y. 2001-02 & 2006-07 4 COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) KOLHAPUR 4. THE CIT, - KOLHAPUR 5. THE D.R, B BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE