DCIT, Circle - 10(2), Kolkata , Kolkata V. M/s. Svarna Infrastructure & Builders Pvt. Ltd., , Kolkata

ITA 1265/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0791 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-01-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 08-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: R P AGARWAL; NIRAV SHETH
• Keywords: Deemed dividend; Set aside
• Section: 143(3); 142(1); 2(22)(e); 143(2); 73; 72; 13; 22; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1265/KOL/2018 ( / ASSESSMENT YEAR: 2012-13) DCIT, CIRCLE-10(2), KOLKATA VS. M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. DLF FALLERIA UNIT, 306, 3 RD FLOOR, PREMISES NO. 02-0124, ACTION AREA, 1B, NEW TOWN, KOLKATA-700156. ./ ./PAN/GIR NO.: AAKCS 9050 M (APPELLANT) .. (RESPONDENT) C.O. NO. 86/KOL/2019 (ARISING OUT OF ./ITA NO.1265/KOL/2018) ( / ASSESSMENT YEAR: 2012-13) M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. DLF FALLERIA UNIT, 306, 3 RD FLOOR, PREMISES NO. 02-0124, ACTION AREA, 1B, NEW TOWN, KOLKATA- 700156. VS. DCIT, CIRCLE-10(2), KOLKATA ./ ./PAN/GIR NO.: AAKCS 9050 M (CROSS OBJECTOR) .. (RESPONDENT) APPELLANT BY : SMT. RANU BISWAS, ADDL. CIT RESPONDENT BY :SHRI R. P. AGARWAL, SR. ADVOCATE & S HRI NIRAV SHETH, FCA / DATE OF HEARING : 06/01/2020 /DATE OF PRONOUNCEMENT : 10/06/2020 M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE AND T HE CROSS OBJECTION FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2012 -13, ARE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APP EAL)-4, KOLKATA, IN APPEAL NO. 39/CIT(A)-4/2015-16/KOL, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S143(3) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) DATED 09/03/2015. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 2,88,30,842/-, BEING THE TRANSACTION WITH E-EDIT INFOTECH PVT. LTD , IGNORING THE FACT THAT THE ASSESSEE WAS HOLDING ALL THE SHARES OF THE ABOV E SAID COMPANY WHICH NEEDED TO BE CONSIDERED WHEREAS THE AMOUNT OF ADVAN CES WHICH WAS RECEIVED BY THE ASSESSEE FROM ITS SUBSIDIARIES WAS RIGHTLY TREATED BY THE ASSESSING OFFICER AS DEEMED DIVIDEND. 2. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF RS. 24,25,168/- BEING TRANSACTION WITH EDP SOFTWARE LTD. IGNORING THE F ACT THAT THE ASSESSEE IS HOLDING ALL THE SHARES OF THE ABOVE SAID COMPANY WH ICH NEEDED TO BE CONSIDERED, WHEREAS THE AMOUNT OF ADVANCE WHICH WAS RECEIVED BY THE ASSESSEE FROM ITS SUBSIDIARIES WAS RIGHTLY TREATED BY ASSESSING OFFICER AS DEEMED DIVIDEND. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE O R MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. GROUND NO. 1 RAISED BY THE REVENUE RELATES TO AD DITION OF RS. 2,88,30,842/- BEING THE TRANSACTION WITH E-EDIT INFOTECH PVT. LTD ; TREATED BY ASSESSING OFFICER AS DEEMED DIVIDEND U/S 2(22) (E) OF THE ACT. 4. FACTS OF THE CASE WHICH CAN BE STATED QUITE SHOR TLY ARE AS FOLLOWS:THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSME NT YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. 79,51,000/-. SUBSEQUE NTLY, ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED WHEREIN ASSESSING OFFI CER HAS TREATED RS. M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 3,14,40,519/- AS DEEMED DIVIDEND U/S 2(22)(E) OF TH E ACT. THE ASSESSING OFFICER HAD MADE ADDITIONS OF RS. 3,14,40,519/- IN TERMS OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT AS SHOWN BELOW: I) RS. 2,88,30,842/- WITH RESPECT TO ADVANCE RECEIVED FROM E. EDIT INFOTECH P LTD. II) RS. 1,84,509/- WITH RESPECT TO ADVANCE RECEIVED FRO M NATHVAR TRACON (P) LTD. III) RS. 24,25,168/- WITH RESPECT TO ADVANCE RECEIVED FR OM EDP SOFTWARE LTD. THE BASIC GROUNDS OF ADDITIONS BY THE ASSESSING OFF ICER WERE THAT FRESH ADVANCES HAVE BEEN GIVEN BY THE SUBSIDIARY COMPANIES TO THE ASSESSEE COMPANY AND SINCE SUCH ADVANCES WERE NOT IN THE NORMAL COURSE OF BUSI NESS, THEREFORE THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT SHALL GET ATTRACTED TO THE EXTENT OF ACCUMULATED PROFITS OF THE RESPECTIVE SUBSIDIARY COMPANIES. THE REFORE, THE AO MADE ADDITION OF RS. 2,88,30,842/- WITH RESPECT TO ADVANCE RECEIVED FROM E. EDIT INFOTECH P LTD. THE AO ALSO MADE ADDITION IN RESPECT OF ADVANCE RECEIVE D FROM NATHVAR TRACON (P) LTD AND FROM EDP SOFTWARE LTD. 5. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT FINDING OF THE LD. CIT(A) THAT E- EDIT INFOTECH PVT. LTD. IS A LENDING COMPANY IS PERVERSE VIDE PG NO. 15, PARA 3.2 OF THE ORDER OF LD. CIT(A). SINCE THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF THE E -EDIT INFOTECH PVT. LTD. DOES NOT CONTAIN LENDING BUSINESS ACTIVITY. THAT IS, THE SUBSTANTIAL PART OF BUSINESS OF E- EDIT INFOTECH PVT. LTD. WAS NOT GRANTING OF LOANS, AND THE SAID ASPECT HAS NOT BEEN EXAMINED BY LD CIT(A).APART FROM THIS, THE CASE OF THE ASSESSEE IS THAT E-EDIT INFOTECH PVT. LTD. ADVANCED THE MONEY TO THE ASSES SEE FOR THE PURPOSE OF PURCHASE OFLAND AND THE SAID ISSUE HAS ALSO NOT BEEN EXAMINE D BY THE LD. CIT(A). THIS IS EVIDENT FROM THE FINDING PORTION OF LD. CIT(A) WHIC H IS REPRODUCED BELOW: M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 SINCE ALL THE GROUNDS ARE INTERRELATED THEREFORE, I AM TAKING UP ALL THE GROUNDS TOGETHER. I HAVE PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS ON THIS SUBJECT. FOR TH E SAKE OF CLARITY, I AM DISCUSSING ADVANCES FROM THE THREE COMPANIES SEPARA TELY SINCE THE APPLICABILITY OF SECTION 2(22)(E) OF THE ACT IS DEPENDENT ON SEVE RAL FACTS WHICH ARENOT IDENTICAL IN ALL THE CASES.IN RESPECT OF ADDITION OF RS. 2,88 ,30,842./- WITH RESPECT TO AMOUNT RECEIVED FROM E- EDIT INFOTECH PVT. LTD., 1 FIND TH AT THE APPELLANT WAS MAINTAINING TWO LEDGERS FOR E-EDIT INFOTECH PVT. LTD., ONE WITH RESPECT TO SALE OF IMMOVABLE PROPERTY AND SECOND ONE, BEING IN THE NATURE OF CUR RENT ACCOUNT. THIS IS EVEN EVIDENT FROM THE ASSESSMENT ORDER WHEREIN AT PAGE 6 , THE LD. ASSESSING OFFICER HAS REPRODUCED LEDGER COPY OF FIRST NATURE OF TRANS ACTIONS AND AT PAGE 7 TO 9, WHEREIN HE HAS REPRODUCED LEDGER COPY OF SECOND NAT URE OF TRANSACTIONS. THE ASSESSING OFFICER HAS SEPARATELY CALCULATED PEAK CR EDIT FOR BOTH THE TYPES OF TRANSACTIONS AND APPLIED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. LD AR EMPHASIZED THAT THE MONEY ADVANCED TO THE ASS ESSEE CO. BY EIPL IS EITHER AN ADVANCE FOR PROPERTY AND CURRENT ACCOUNT TRANSAC TION OR A LOAN. IF IT IS AN ADVANCE FOR PROPERTY THEN IT IS A BUSINESS ADVANCE AND THEREFORE SECTION 2(22) (E) WOULD NOT APPLY. THE AR ARGUED THAT ALTERNATIVELY I F IT IS A LOAN THEN SINCE SUBSTANTIAL PART OF THE BUSINESS OF THE LENDING COM PANY IS GRANTING OF LOAN AND HENCE SECTION 2 (22) (E) WOULD NOT APPLY. LD AR ALS O POINTED OUT THAT THE ASSESSEE IS SUBSEQUENTLY PAYING INTEREST ON THIS LOAN/BUSINE SS ADVANCE AMOUNT (ASSESSMENT ORDER PAGE 3 PARA 3). I HAVE GONE THROUGH THE AUDITED ACCOUNTS OF E-EDIT INFOTECH PVT. LTD. FOR F.Y. 2011-12, WHEREFROM IT IS EVIDENT THAT THE SUBSTANTI AL PART OF BUSINESS OF E-EDIT INFOTECH PVT. LTD. WAS GRANTING OF LOANS. 7. WE NOTE THAT DURING THE APPELLATE PROCEEDINGS, T HE A.R. OF THE ASSESSEE EMPHASIZED THE MONEY ADVANCED TO THE ASSESSEE COMPA NY BY EIPL (E-EDIT INFOTECH PVT. LTD.) IS EITHER AN ADVANCE FOR PROPER TY OR CURRENT ACCOUNT TRANSACTION. THE LD. CIT(A) HAS ALSO GONE THROUGH THE AUDITED AC COUNT OF E-EDIT INFOTECH PVT. LTD. AND NOTICED THAT SUBSTANTIAL PART OF BUSINESS OF E-EDIT INFOTECH PVT. LTD. WAS GRANTING OF LOANS. THE LD DR SUBMITS BEFORE US THAT OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF E-EDIT INFOTECH PVT. LTD. DOES NO T SAY THAT THE COMPANY IS IN THE BUSINESS OF MONEY LENDING. IT IS ALSO NOT CLEAR THA T SAID ADVANCE BY E-EDIT INFOTECH PVT. LTD. IS FOR ADVANCE FOR PURCHASE OF PROPERTY / LAND. BOTH THESE ISSUES HAVE NOT BEEN EXAMINED BY LD. CIT(A). THEREFORE, WE THINK IT FIT AND APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF LD. CIT(A) FOR FRESH EXAMINATION. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THIS ISSUE BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE TO LAW. FOR STATIS TICAL PURPOSES, THE GROUND RAISED BY THE REVENUE IS ALLOWED. M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 8. GROUND NO. 2 RAISED BY THE REVENUE RELATES TO AD DITION OF RS. 24,25,168/- BEING TRANSACTION OF EDP SOFTWARE LTD, TREATED BY ASSESSI NG OFFICER AS DEEMED DIVIDEND, UNDER SECTION 2(22) (E) OF THE ACT. 9. AT THE OUTSET ITSELF THE LD. COUNSEL SUBMITTED B EFORE US THAT THE ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS. 24,25,1 68/- U/S 2(22)(E) BEING TRADE ADVANCE RECEIVED FROM EDP SOFTWARE LTD, SINCE SUCH ADVANCE WAS GIVEN BY EDP SOFTWARE LTD IN THE ORDINARY COURSE OF BUSINESS AND SUBSTANTIAL BUSINESS OF THE SAID COMPANY WERE TO DEAL IN LOAN AND ADVANCE, AS EVIDEN T FROM THE AUDITED ACCOUNTS. BESIDES, THERE IS NO ACCUMULATED PROFITS IN THE HAN DS OF THE EDP SOFTWARE LTD., HENCE ADDITION U/S 2(22)(E) SHOULD NOT BE MADE. WHE REAS THE LD. D.R. FOR THE REVENUE HAS REITERATED THE STAND TAKEN BY THE ASSES SING OFFICER. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD COUNSEL SUBMITTED BEFORE US THAT IN THE INST ANT CASE, THE LD. ASSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THERE WA S NO ACCUMULATED PROFIT IN THE BOOKS OF EDP SOFTWARE LTD AS ON 31.03.2011. AT THIS JUNCTURE IT IS RELEVANT TO MENTION HERE THE WRITTEN SUBMISSIONS FURNISHED BY T HE ASSESSEE BEFORE THE LD CIT(A) IN RESPECT OF ACCUMULATED PROFIT IN THE BOOK S OF EDP SOFTWARE LTD AS ON 31.03.2012: DEBIT BALANCE OF PROFIT & LOSS ACCOUNT OF EDP SOFT WARE LTD. WAS RS. 10,60,332/-. BREAK UP OF RESERVES & SURPLUS AS ON 31.03.2011 OF EDP SO FTWARE LTD. IS GIVEN BELOW: SL. NO. PARTICULARS AMOUNT (RS.) AMOUNT (RS. ) 1. SECURITIES PREMIUM ACCOUNT 34,85,000 2. DEBIT BALANCE IN PROFIT & LOSS ACCOUNT (33,55,749) 3. ADD: SURPLUS / (DEFICIT) DURING THE YEAR 2011-12 22,95,417 (10,60,332) TOTAL 24,25,168 IT IS FURTHER SUBMITTED THAT SECURITIES / SHARE PRE MIUM APPEARING UNDER THE HEAD RESERVES & SURPLUS CANNOT BE CONSTRUED AS ACCUMULATED PROFIT S OF THE COMPANY AS HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE MATTER OF CIT, K OL-III VS. SHREE BALAJI GLASS MANUFACTURING PVT. LTD. [2016] 386 ITR 128 (CALCUTT A) THAT WHERE MONEY WAS LENT OUT OF RESERVE AND SURPLUS REPRESENTING SHARE PREMIUM AND NOT FROM ACCUMULATED PROFITS, THERE M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 6 66 6 CANNOT BE DEEMED DIVIDEND IN HANDS OF RECIPIENT. HE NCE, PROVISIONS OF SECTION 2(22)(E) IS NOT APPLICABLE IN THE INSTANT CASE. AS SUCH, THE LD . ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS. 24,25,168/- U/S 2(22)(E) OF THE ACT . 11. WE NOTE THAT TAKING INTO ACCOUNT THE ABOVE WRIT TEN SUBMISSIONS OF THE ASSESSEE, LD. CIT(A) DELETED THE ADDITION OBSERVING THE FOLLO WINGS: IN RESPECT OF ADDITION OF RS. 24,25,168/- WITH RES PECT TO AMOUNT RECEIVED FROM EDP SOFTWARE LTD., I HAVE GONE THROUGH THE AUDITED ACCOUNTS FOR F.Y. 2011-12 AND I FIND THAT EDP SOFTWARE LTD. HAD NO ACCUMULA TED PROFIT AS ON 31.03.2011. I FIND FORCE IN THE ARGUMENT MADE BY THE A/R THAT SEC URITIES / SHARE PREMIUM APPEARING UNDER THE HEAD RESERVES & SURPLUS CANNOT BE CONSTRUED AS ACCUMULATED PROFITS OF THE COMPANY AS HELD IN BY TH E HONBLE CALCUTTA HIGH COURT IN THE MATTER OF CIT, KOL-III VS . SHREE BALA JI GLASS MANUFACTURING P LTD. [201] 386 ITR 128 (CALCUTTA). ACCORDINGLY, WHERE MO NEY WAS LENT OUT FROM ACCUMULATED PROFITS, THERE CANNOT BE DEEMED DIVIDEN D IN HANDS OF RECIPIENT. THUS, I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDIT ION OF RS. 24,25,168/- MADE U/S 2(22)(E) OF THE ACT WITH RESPECT TO ADVANCE RECEIVE D FROM EDP SOFTWARE LTD. WE NOTE THAT ASSESSEE HAD SUBMITTED THE FIGURES OF ACCUMULATED PROFIT OF M/SEDP SOFTWARE LTD AS ON 31 ST MARCH 2012 WHICH RELATES TO ASSESSMENT YEAR 2012-1 3, AND WE NOTICED THAT ACCUMULATED PROFIT IS IN NEGATIVE, THAT IS, LOSS TO THE TUNE OF RS.10,60,332/-. WE NOTE THATSECTION 2(22) (E ) OF THE ACT STATES TH AT ANY PAYMENT BY A COMPANY.FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SH AREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULA TED PROFITS. THAT IS, DEEMED DIVIDEND WOULD BE TO THE EXTENT OF ACCUMULATED PROF ITS OF THE COMPANY AND THAT ACCUMULATED PROFIT SHOULD BE AS ON 31 ST MARCH 2012 ( P.Y.2011-12), HOWEVER, IN ASSESSEE`S CASE UNDER CONSIDERATION THE ACCUMULATED PROFIT AS ON 31 ST MARCH 2012 IS IN NEGATIVE, THAT IS,LOSS TO THE TUNE OF RS.10, 60,332/- , THEREFORE, THE PROVISIONS OF SECTION 2(22) (E ) DOES NOT APPLY.THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T.(A) IN DELETING THE AFORESAID AD DITION. HIS ORDER ON THIS ADDITION IS THEREFORE, UPHELD AND THE GROUNDS OF APPEAL OF T HE REVENUE ARE DISMISSED. 12. NOW WE SHALL TAKE ASSESSEES CROSS OBJECTION IN C.O. NO. 86/KOL/2018 FOR A.Y. 2012-13 WHEREIN THE GROUNDS OF APPEAL RAISED B Y THE ASSESSEE ARE AS FOLLOWS: M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 7 77 7 G. NO. 1 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED ASSESSING OFFICER HAS ERRED IN TREATING THE ENTIRE ACCUMULATE D PROFIT AS ON 01.04.2011 FOR THE PURPOSE OF SECTION 2(22)(E) OF INCOME TAX A CT. THE LEARNED ASSESSING OFFICER SHOULD HAVE REDUCED THE OPENING B ALANCE OF ADVANCE RECEIVED WHILE MAKING ADDITION OF RS. 2,88,30,842/- UNDER SECTION 2(22)(E) OF THE ACT. THE LEARNED CIT (A) HAS ERRED IN NOT DI SCUSSING THIS ISSUE WHILE PASSING APPELLATE ORDER. G. NO. 2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED ASSESSING OFFICER HAS ERRED IN TREATING THE ENTIRE ACCUMULATE D PROFIT AS ON 01.04.2011 FOR THE PURPOSE OF SECTION 2(22)(E) OF INCOME TAX A CT. THE LEARNED ASSESSING OFFICER SHOULD HAVE REDUCED THE OPENING B ALANCE OF ADVANCE RECEIVED WHILE MAKING ADDITION OF RS. 24,25,168/- U NDER SECTION 2(22)(E) OF THE ACT. THE LEARNED CIT (A) HAS ERRED IN NOT DISCU SSING THIS ISSUE WHILE PASSING APPELLATE ORDER. G. NO. 3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS. 1,84,50 9/- UNDER SECTION 2(22)(E) OF THE ACT, ON ACCOUNT OF ADVANCES RECEIVE D FROM NATHVARTRACON (P) LTD, SINCE SUCH AMOUNT DOES NOT REPRESENT LOAN OR ADVANCES IN THE NATURE OF LOAN. THE LEARNED CIT (A) ERRED IN CONFIR MING THE ACTION OF LEARNED ASSESSING OFFICER. G. NO. 4 THAT THE APPELLANT HUMBLY CRAVES LEAVE TO ADD, ALTE R, WITHDRAW ALL OR ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. NOW, WE SHALL TAKE THESE CROSS OBJECTIONS ONE BY ON E 13. CROSS OBJECTION NO. 1 RAISED BY THE ASSESSEE RE LATES TO ADDITION OF RS. 2,88,30,842/- U/S 2(22)(E) OF THE ACT. WE NOTE THAT CROSS OBJECTION NO.1 AND GROUND NO. 1 RAISED BY THE REVENUE IN ITA NO. 1265/ KOL/2018 ARE IDENTICAL. WE HAVE SET ASIDE THE GROUND NO. 1 RAISED BY THE REVEN UE IN ITA NO.1265/KOL/2018 TO THE FILE OF LD. CIT(A) TO ADJUDICATE THE ISSUE AFRE SH THEREFORE CROSS OBJECTION NO. 1 RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. 14.THE CROSS OBJECTION NO. 2 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS. 24,25,168/- U/S 2(22)(E) OF THE ACT. WE NOTE THAT C ROSS OBJECTION NO.2 AND GROUND M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 8 88 8 NO. 2 RAISED BY THE REVENUE IN ITA NO. 1265/KOL/201 8 ARE IDENTICAL. THE CROSS OBJECTION NO. 2 RAISED BY THE ASSESSEE IS SUPPORTIV E TO THE ORDER OF LD CIT(A).SINCE, WE HAVE CONFIRMED THE ORDER PASSED BY LD CIT(A), THEREFORE CROSS OBJECTION NO. 2 RAISED BY THE ASSESSEE BECOMES INFR UCTUOUS. 15. THE CO NO. 3 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS. 1,84,509/- U/S 2(22)(E) OF THE ACT ON ACCOUNT OF ADVANCES RECEIVED FROM NATHVAR TRACON PVT. LTD. 16. THE MAIN GRIEVANCE OF THE ASSESSEE IN CO NO. 3 IS THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITION WITHOUT APPRECIATING THAT TH E ASSESSEE IS HAVING CURRENT ACCOUNT WITH M/S NATHVAR TRACON PVT. LTD. (I.E. THE COMPANY FROM WHOM THE ASSESSEE TOOK THE ADVANCE AND GIVEN ADVANCE WERE TH ROUGH CURRENT ACCOUNT). THE LD. COUNSEL TOOK US THROUGH THE PAGE NOS. 10 TO 12 OF ASSESSING OFFICERS ORDER WHEREIN THE ASSESSING OFFICER HAS MENTIONED THE LED GER ACCOUNT OF NATHVAR TRACON PVT. LTD. FOR THE PERIOD OF 01.04.2011 TO 31 .03.2012. WE HAVE EXAMINED THE LEDGER ACCOUNT WHICH IS REPRODUCED BY THE ASSES SING OFFICER ON PAGE NO. 10 TO 12 OF HIS ORDER AND WE NOTICED THAT THE OPENING BAL ANCE IN THE LEDGER ACCOUNT OF NATHVAR TRACON PVT. LTD. WAS DEBITED ON 01.04.2011 TO THE TUNE OF RS. 40,72,292/-. HOWEVER, THE CLOSING BALANCE AS ON 31.03.2012 WAS C REDITED TO THE TUNE OF RS. 1,65,97,383/-. THE ASSESSEE HAS TAKEN AMOUNT FROM N ATHVAR TRACON PVT. LTD. AND PAID THE AMOUNT DURING THE YEAR FOR THE PURPOSE OF BUSINESS THEREFORE IT IS A CURRENT ACCOUNT AND AS PER THE LD. COUNSEL THE ADDITION U/S 2(22)(E) SHOULD NOT BE MADE. AS PER THE LD. COUNSEL FOR THE ASSESSEE MERE PERUSA L OF THE LEDGER ACCOUNT PLACED ON PAGE NO. 10 TO 12 OF THE ASSESSMENT ORDER, IT I S CLEAR THAT THE SAID ACCOUNT WAS FOR THE PURPOSE OF DOING BUSINESS WHICH WAS IN THE NATURE OF CURRENT ACCOUNT WHEREIN ONE CAN FIND DEBIT ENTRY AND CREDIT ENTRY O N SEVERAL OCCASIONS WHICH NEEDS TO BE EXAMINED BY THE LD. CIT(A). THEREFORE, WE ARE OF THE VIEW THAT THIS MATTER SHOULD BE REMITTED BACK TO THE FILE OF LD. CIT(A) F OR FRESH EXAMINATION. WE ALSO MAKE IT CLEAR THAT IF THE LD. CIT(A) HAVING EXAMINE D THE LEDGER ACCOUNT FINDS THAT IT IS A CURRENT ACCOUNT, NO ADDITION IS WARRANTED A S HELD BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 1010/KOL/2016 FOR A.Y. 2012-13 IN THE CASE OF M/S SNEHAPUSPH BARTER PVT. LTD. WHEREIN IT WAS HELD AS UNDER: M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 9 99 9 2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. THE MAIN THRUST OF THE A RGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT WHILE EXERCISING THE REVISIONA L JURISDICTION U/S. 263 OF THE ACT, NOT ONLY THAT THE IMPUGNED ORDER OF THE AO SHOULD B E ERRONEOUS BUT IT HAS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDI NG TO THE LD. COUNSEL, FROM A PERUSAL OF THE SHOW CAUSE NOTICE (COPY AVAILABLE AT PAGE 63 OF THE PAPER BOOK) WOULD REVEAL THAT THE PR. CIT FOUND FAULT WITH THE ACTION OF THE AO IN NOT ENQUIRING AS TO THE LOAN/ADVANCE TO HAVE BEEN GIVEN BY THREE COMPANIES, IN WHICH COMPANIES, ACCORDING TO LD. PR. CIT, THE ASSESSEE H AD MORE THAN 10% SHAREHOLDING. THE LD. COUNSEL DREW OUR ATTENTION TO THE ORDER PASSED BY THE AO GIVING EFFECT TO THE IMPUGNED ORDER OF PR. CIT PASS ED U/S. 263 OF THE ACT WHICH IS PLACED AT PAGES 71 TO 73 OF THE PAPER BOOK. THE LD. COUNSEL DREW OUR ATTENTION TO PAGE NO. 72 OF THE PAPER BOOK WHEREIN THE AO HAS ST ATED THAT WHILE DURING THE ASSESSMENT PROCEEDINGS GIVING EFFECT TO 263 ORDER, DESPITE HIM GIVING NOTICE TO THE ASSESSEE, THE LD. AR OF THE ASSESSEE DID NOT TURN U P BEFORE HIM, SO HE WAS CONSTRAINED TO PASS THE ORDER WITHOUT HEARING THE L D. AR. FROM A PERUSAL OF THE ORDER WE UNDERSTAND THAT OTHER THAN THE WRITTEN SUB MISSION OF THE LD. AR SHRI RAVI TULSIYAN, NO OTHER AVERMENTS WERE TAKEN INTO C ONSIDERATION WHILE PASSING THE ORDER WHILE GIVING EFFECT TO THE ORDER PASSED U /S. 263 OF THE ACT. NEVERTHELESS, THE AO IN THE SAID ORDER CLEARLY UPHELD THE CONTENT ION OF THE ASSESSEE IN RESPECT TO TWO COMPANIES I.E. IN RESPECT OF M/S. SKG FLOUR MIL LS AND M/S. JAGADHATRI TRACON PVT. LTD. AND MADE NO ADDITION U/S. 2(22)(E) OF THE ACT. ONLY IN RESPECT OF THE TRANSACTION OF THE ASSESSEE WITH M/S. SUBHCHINT AK VANCOM PVT. LTD, THE AO HAS MADE THE ADDITION WHILE GIVING EFFECT TO THE OR DER OF PR. CIT U/S. 263 OF THE ACT. IN RESPECT OF M/S. SUBHCHINTAK VANCOM PVT. LTD . THE MAIN CRUX OF THE ARGUMENT OF THE ASSESSEE IS THAT THE ASSESSEE IS HA VING A CURRENT ACCOUNT WITH THAT OF M/S. SUBHCHINTAK VANCOMPVT. LTD. AND THE TRANSAC TIONS CANNOT BE CHARACTERIZED AS LOAN/ADVANCES. IN ORDER TO BUTTRES S THIS POINT, THE LD. AR DREW OUT ATTENTION TO PAGE NO. 62 WHICH IS THE LEDGER OF M/S. SUBHCHINTAKVANCOMPVT. LTD. IN THE BOOKS OF THE ASSESSEE. FROM A PERUSAL O F THE SAME, WE NOTE THAT THE ASSESSEE ON 05.06.2011 OWED TO M/S. SUBHCHINTAK VAN COMPVT. LTD. RS.1.35 CR. ON 03.09.2011 THE ASSESSEE OWED RS.85,000/- TO M/S. SU BHCHINTAK VANCOMPVT. LTD.. WHEREAS ON 14.10.2011, THE ASSESSEE GAVE RS.1.09 CR . TO M/S. SUBHCHINTAK VANCOMPVT. LTD.; AND ON 25.12.2011 GAVE M/S. SUBHCH INTAK VANCOMPVT. LTD. RS.5 LACS; AND RS. 70 LACS; AND ON 15.03.2012 THE A SSESSEE HAD GIVEN RS. 60 LACS TO M/S. SUBHCHINTAK VANCOMPVT. LTD. IN THE ASSESSME NT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD GIVEN TO M/S. SUBHCHINTAK VANCOM P VT. LTD. RS.2,44,25,000/- WHEREAS IT OWED TO M/S. SUBHCHINTAK VANCOM PVT. LT D. RS.1,35,85,000/-. FROM THE LEDGER, THE ASSESSEE HAD ONLY DEBITED RS.1,35,8 5,000/- WHEREAS M/S. SUBHCHINTAK VANCOMPVT. LTD. HAS DRAWN RS.1,08,40,00 0/- IN EXCESS FROM THE ASSESSEE. FROM THE AFORESAID FACTS STATED ABOVE, AC CORDING TO LD COUNSEL IT IS A CLEAR CASE WHEREIN THERE IS A SHIFTING OF BALANCE I S APPARENT. ON SUCH FACTUAL MATRIX THE ASSESSEE'S ARGUMENT IS THAT SUCH KIND OF TRANSACTION CANNOT BE TERMED AS LOAN/ADVANCE TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE HON'BLE SUPREME COURT IN THE CASE OF KESARI CHAND J AISUKH LAL VS. SHILLONG BANKING CORPORATION LTD. 1965 AIR 1711 HAS HELD AS UNDER: 'TO BE MUTUAL THERE MUST BE TRANSACTIONS ON EACH S IDE CREATING INDEPENDENT OBLIGATIONS ON THE OTHER AND NOT MERELY TRANSACTION S WHICH CREATE OBLIGATIONS ON THE ONE SIDE, THOSE ON THE OTHER BEING MERELY COMPL ETE OR PARTIAL DISCHARGES OF SUCH OBLIGATIONS.' M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 THE HON'BLE SUPREME COURT IN THIS CONTEXT HAS FURTH ER HELD AS UNDER: 'THE LOANS BY THE RESPONDENT CREATED OBLIGATIONS ON THE APPELL ANT TO REPAY THEM. THE RESPONDENT WAS UNDER INDEPENDENT OBLIGATIONS TO REP AY THE AMOUNT OF THE CASH DEPOSITS AND TO ACCOUNT FOR THE CHEQUES, HUNDIS AND DRAFTS DEPOSITED FOR COLLECTION. THERE WERE THUS TRANSACTIONS ON EACH SI DE CREATING INDEPENDENT OBLIGATIONS ON THE OTHER, AND BOTH SETS OF TRANSACT IONS WERE ENTERED IN THE SAME ACCOUNT. THE DEPOSITS MADE BY THE APPELLANT WERE NO T MERELY COMPLETE OR PARTIAL DISCHARGES OF ITS OBLIGATIONS TO THE RESPONDENT. TH ERE WERE SHIFTING BALANCES; ON MANY OCCASIONS THE BALANCE WAS IN FAVOUR OF THE APP ELLANT AND ON MANY OTHER OCCASIONS, THE BALANCE WAS IN FAVOUR OF THE RESPOND ENT. THERE WERE RECIPROCAL DEMANDS BETWEEN THE PARTIES, AND THE ACCOUNT WAS MU TUAL.' 3. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF P RADIP KUMAR MALHOTRA VS. CIT 338 ITR 538 (CAL) WHEREIN THE HON'BLE HIGH COUR T HAS HELD AS UNDER: 'THE PHRASE 'BY WAY OF ADVANCE OR LOAN' APPEARING I N SUB-CLAUSE (E) OF SECTION 2(22) OF THE INCOME-TAX ACT, 1961, MUST BE CONSTRUED TO MEAN THOSE ADVANCES OR LOANS WHICH A SHAREHOLDER ENJOYS SIMPLY ON ACCOUNT OF BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITL ED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN P ROFITS) HOLDING NOT LESS THAN TEN PER CENT. OF THE VOTING POWER; BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDE RATION WHICH IS BENEFICIAL TO THE COMPANY RECEIVED FROM SUCH A SHARE-HOLDER, IN S UCH CASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO BE DEEMED DIVIDEND WITHIN TH E MEANING OF THE ACT. THUS, GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO TH OSE CLASSES OF SHAREHOLDERS WOULD COME WITHIN THE PURVIEW OF SECTION 2(22) BUT NOT CASES WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRE D UPON THE COMPANY BY SUCH SHAREHOLDER.' 4. THE COORDINATE BENCH OF THIS TRIBUNAL IN ITO VS. SMT. GAYATRI CHAKRABORTY IN ITA NO. 151/KOL/2013 HAS HELD AS UNDER: '14. WE ARE OF THE VIEW THAT IN THE PRESENT CASE AL SO THE TRANSACTIONS IN QUESTION DOES NOT BENEFIT THE SHAREHOLDER I.E. THE ASSESSEE ALONE AND THE RESULTS IN NO BENEFIT TO THE COMPANY BAPL. THE LOAN ACCOUNT IS DI FFERENT FROM A CURRENT ACCOUNT WITH A SHAREHOLDER AND THE TRANSACTIONS BET WEEN THE ASSESSEE AND BAPL ARE IN THE NATURE OF CURRENT ACCOUNT AND PROVISIONS OF SEC.2(22)(E) OF THE ACT WILL NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE. WE, THEREFORE, CONCUR WITH THE DECISION OF THE CIT(A) AND DISMISS THE APPEAL OF TH E REVENUE.' 5. SIMILARLY, THE COORDINATE BENCH OF THIS TRIBUNAL IN MR. PURUSHOTTAM DAS VS. DCIT AND VICE VERSA IN IT(SS)A NOS. 60 TO 62 & 73-7 6/KOL/2011 DATED 17.10.2014 HAS HELD AS UNDER: '5. ........ IT IS PERTINENT TO NOTE HERE THAT WHEN DIVIDENDS ARE DECLARED BY A COMPANY, IT IS SOLELY THE SHAREHOLDERS WHO BENEFIT FROM THE TRANSACTION. NO BENEFITS ACCRUE TO THE COMPANY BY WAY OF DIVIDEND D ISTRIBUTION. THUS, SECTION 2(22)(E) OF THE ACT COVERS ONLY SUCH SITUATIONS, WHERE THE SHAREHOLDER ALONE BENEFITS FROM THE LOAN TRANSACTION, BECAUSE IF THE COMPANY ALSO BENEFITS FROM THE SAID TRANSACTION, IT WILL TAKE THE CHARACTER OF A C OMMERCIAL TRANSACTION AND HENCE WILL NOT QUALIFY TO BE DIVIDEND. IN THE CASE OF THE ASSESSEE, BY GIVING AND TAKING M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 FINANCIAL ASSISTANCE FROM EACH OTHER. BOTH THE ASSE SSEE AND THE COMPANY WERE BENEFITED AND SUCH TRANSACTIONS BETWEEN THEM WERE N OTHING BUT COMMERCIAL TRANSACTIONS AND DIVIDEND ATTRIBUTABLE TO THE SHARE HOLDER IS NOTHING TO DO WITH SUCH BUSINESS TRANSACTION. FROM THE ABOVE DISCUSSIO NS IT CAN BE SAID THAT SEC.2(22)(E) OF THE ACT COVERS ONLY THOSE TRANSACTI ONS WHICH BENEFIT THE SHAREHOLDER ALONE AND RESULTS IN NO BENEFIT TO THE COMPANY. ON THE OTHER HAND, IF THE TRANSACTION IS MUTUAL BY WHICH BOTH SIDES ARE B ENEFITED, IT IS UNDOUBTEDLY OUTSIDE THE PURVIEW OF PROVISIONS OF SEC. 2(22)(E) OF THE ACT. FROM THE ABOVE, IT IS CLEAR THAT THE LOAN ACCOUNT DIFFERS FROM CURRENT AC COUNT AND THE PROVISIONS OF SECTION 2 (22}(E} OF THE ACT, BEING A DEEMING SECTION, CANNOT BE APPLIED TO CURRENT ACCOUNT. IN SUCH CIRCUMSTANCES, WE DELETE T HE ADDITION AND THIS COMMON ISSUE OF ASSESSEE'S APPEALS IS ALLOWED.' 6. FURTHER, WE NOTE THAT THERE IS NO INTEREST ELEME NT HAS BEEN CHARGED ON THE AMOUNTS OWED BY THE ASSESSEE TO M/S. SUBHCHINTAK VA NCOMPVT. LTD., SO IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE B Y GIVING AND TAKING FINANCIAL ASSISTANCE FROM EACH OTHER, I.E. BETWEEN THE ASSESS EE AND M/S. SUBHCHINTAK VANCOMPVT. LTD. WHEREIN BOTH THE PARTIES WERE BENEF ITED AND SUCH TRANSACTION BETWEEN THEM WERE NOTHING BUT COMMERCIAL TRANSACTIO NS AND, THEREFORE, CANNOT BE TERMED AS DIVIDEND ATTRIBUTABLE TO THE SHAREHOLDER. FROM THE ABOVE DISCUSSION IT CAN BE SAID THAT SEC. 2(22)(E) OF THE ACT COVERS ON LY THOSE TRANSACTIONS WHICH BENEFITED THE SHAREHOLDER ALONE AND RESULTANTLY NO BENEFIT TO THE COMPANY M/S. SUBHCHINTAK VANCOMPVT. LTD. ON THE OTHER HAND, IF T HE TRANSACTION IS MUTUAL WHEREIN BOTH THE SIDES ARE BENEFITTED, IT IS UNDOUB TEDLY OUTSIDE THE PURVIEW OF SEC. 2(22)(E) OF THE ACT. WE NOTE THAT THERE IS NO LOAN/ ADVANCE BETWEEN M/S. SUBHCHINTAK VANCOMPVT. LTD. AND IT CANNOT BE CALLED AS A LOAN ACCOUNT. WE FIND THAT THERE IS MUTUALITY AND THERE WERE SHIFTING OF BALANCES, SO IT IS EVIDENT THAT THERE WERE RECIPROCAL DEMANDS BETWEEN PARTIES AND T HUS MUTUAL IN CHARACTERISTIC. THE ACCOUNT MAINTAINED BY THE ASSESSEE WITH M/S. SU BHCHINTAK VANCOMPVT. LTD. IS AN ACCOUNT SO MAINTAINED IN RESPECT OF MUTUAL TRANS FER OF AMOUNT BY WAY OF GIVING AND TAKING FINANCIAL ASSISTANCE. THEREFORE, IT HAS THE CHARACTER OF A CURRENT ACCOUNT AND THIS CURRENT ACCOUNT IS DIFFERENT FROM A LOAN ACCOUNT FOR THE SOLE REASON THAT THE FEATURE OF MUTUALITY IS NOT PRESENT IN A LOAN TRANSACTION. FROM THE FACTS NARRATED ABOVE, IT IS CLEAR THAT BOTH THE PAR TIES ARE BENEFICIARY OF THE TRANSACTION BEING CURRENT ACCOUNT TRANSACTION I.E. SHIFTING OF BALANCES, THEREFORE, AS HELD BY THE HON'BLE SUPREME COURT IN KESHRI CHAN D JAISUKH LAL, SUPRA AND HON'BLE CALCUTTA HIGH COURT IN PRADIP KUMAR MALHOTR A, SUPRA, WE NOTE THAT SEC. 2(22)(E) OF THE ACT IS NOT ATTRACTED IN THE TRANSAC TION WITH M/S. SUBHCHINTAK VANCOMPVT. LTD. IT SHOULD BE REMEMBERED THAT FOR EX ERCISING REVISIONAL JURISDICTIONAL THE PR. CIT SHOULD FIND THAT THE ORD ER OF THE AO IS NOT ONLY ERRONEOUS BUT ALSO IT SHOULD BE PREJUDICIAL TO THE INTEREST OF REVENUE. IT SHOULD BE KEPT IN MIND THAT THE ASSESSEE CANNOT DICTATE THE AO HOW TO PASS THE ORDER OR TO ASK HOW TO INVESTIGATE OR WHAT QUESTION TO ASK OR W HAT SHOULD BE ENQUIRED INTO. WE ALSO NOTE THAT A SEARCH WARRANT WAS EXECUTED IN THE CASE OF THE ASSESSEE ON 15.06.2011 AND SEARCH HAPPENED IN THE ASSESSMENT YE AR UNDER CONSIDERATION AND, THEREFORE, SCRUTINY U/S. 143(3) OF THE ACT WAS FRAM ED. ALL THE RECORDS INCLUDING ALL THE BOOKS OF ACCOUNT WERE BEFORE THE AO. APPRAISAL REPORT PREPARED BY THE INVESTIGATION WING WAS ALSO BEFORE THE AO. IN THE O RIGINAL ASSESSMENT ORDER ITSELF IN PARA 4 THE AO NOTES THAT ASSESSEE HAS BEEN SERVE D NOTICE U/S. 143(2) AND 142(1) OF THE ACT ALONG WITH THE QUESTIONNAIRE DATE D 31.12.2012. THE AO NOTES THAT THE ASSESSEE'S AR APPEARED FROM TIME TO TIME A ND SUBMITTED DETAILS. FURTHER, M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 WE NOTE THAT THE ORIGINAL ORDER OF THE AO WAS PASSE D WITH THE PRIOR APPROVAL OF JCIT, RANGE-4, CENTRAL KOLKATA U/S. 153D OF THE ACT . IN SUCH A SCENARIO, THE PR. CIT WHILE EXERCISING HIS JURISDICTION HAS TO CLEARL Y SPELL OUT NOT ONLY THAT THE ORDER OF THE AO IS ERRONEOUS IN SO FAR AS IT IS PRE JUDICIAL TO THE INTEREST OF THE REVENUE. IN CASE, WHERE THE AO HAS TAKEN A PLAUSIBL E VIEW ON A POINT OF LAW OR FACT THE LD. PR. CIT CANNOT EXERCISE THE JURISDICTI ON U/S. 263 OF THE ACT. IN THIS CASE, WE NOTE THAT PR. CIT FOUND FAULT WITH THE ASS ESSEE ON THREE COUNTS. FIRSTLY, THE PR. CIT FOUND FAULT WITH THE TRANSACTIONS BETWE EN M/S. SKG FLOUR MILLS PVT. LTD. AND SECONDLY, FOUND FAULT WITH M/S. JAGADHATRI TRACON (P) LTD., WHICH WAS APPARENTLY ON A WRONG ASSUMPTION OF FACTS WHICH FAC T WAS EVIDENT FROM THE ORDER OF AO PASSED WHILE GIVING EFFECT TO THE IMPUGNED OR DER OF PR. CIT AND, THEREFORE, THE ORIGINAL ORDER OF THE AO CANNOT BE TERMED AS ER RONEOUS. THIRD FAULT AS PER THE PR. CIT WAS IN RESPECT TO THE TRANSACTION BETWEEN A SSESSEE M/S. SUBHCHINTAK VANCOMPVT. LTD., WE NOTE THAT THE ENTIRE RECORDS WE RE BEFORE THE AO AND THE AO HAS TAKEN A PLAUSIBLE VIEW AS PER THE LAW LAID BY T HE HON'BLE SUPREME COURT'S AND HIGH COURT'S ORDER IN KESARI CHAND JAISUKH LAL VS. SHILLONG BANKING CORPORATION LTD. 1965 AIR 1711 AND PRADIP KUMAR MAL HOTRA, (SUPRA) RESPECTIVELY. THUS, THE VIEW OF THE AO IN RESPECT T O THE TRANSACTION CANNOT BE HELD TO BE UNSUSTAINABLE IN LAW. AND, THE PHRASE 'PREJUD ICIAL TO THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH 'AN ERRONEOUS ORDER' PASSE D BY THE AO TO EXERCISE REVISIONAL JURISDICTION. IN THIS CONTEXT, WE SAY TH AT ERRONEOUS MEANS IF ON THE FACE OF THE RECORD THE ISSUE IN QUESTION HAS NOT BEEN EN QUIRED AT ALL BY THE AO. IT SHOULD BE REMEMBERED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. WHEN THE AO ADOPTED ONE OF THE COURSE PERMISSIBLE IN LAW AND IT HAS RESULTED IN A LOSS TO THE REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND AO HAS TAKEN ONE VIEW WITH WHICH PR. CIT DOES NOT AGREE, IT CANNOT BE STATED AN ERRO NEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE ORDER OF AO IS UNSUS TAINABLE IN LAW AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC). IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS NARRATED ABOVE, ORIGINAL ASSESSMENT ORDER PASSED WITH THE APPROVAL OF JCIT U/S. 153D OF THE ACT CANNOT BE VIEWED AS UNSUSTAINABLE IN LAW. FURTHER, WHEN ALL THE FACTS AND THE LAWS GOVERNING THE ISSUES WERE BROUGHT TO THE NOTIC E OF THE PR. CIT FOR WHICH SHOW CAUSE NOTICE WAS ISSUED BY THE PR. CIT, WHILE CONVEYING HIS INTENTION TO INVOKE REVISIONAL JURISDICTION U/S. 263 OF THE ACT, WE NOTE THAT HE HAS NOT DISCUSSED AS TO WHETHER SEC. 2(22)(E) OF THE ACT IS ATTRACTED AND THE TRANSACTION CAN BE CHARACTERIZED OR BE TERMED AS A LOAN/ADVANCE . WE NOTE THAT THE LD. PR. CIT DID NOT EVEN CARE TO DISCUSS AND PASS A SPEAKIN G ORDER, HAS SIMPLY SET ASIDE THE ORIGINAL ASSESSMENT ORDER, WHICH ACTION OF PR. CIT CANNOT BE COUNTENANCED. THEREFORE, WE ARE INCLINED TO ALLOW THE APPEAL OF T HE ASSESSEE AND QUASH THE IMPUGNED ORDER OF THE LD. PR. CIT. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THIS ISSUE BACK TO THE FILE OF LD. CIT(A) FOR FRESH EXAMINATION AND ADJUDICATE THE ISSUE IN ACCORDANCE TO LAW. HENCE, WE ALLOW THE CO NO. 3 RAISED BY THE ASSESSEE FOR STATISTICAL PURPOSES. M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 17.BEFORE PARTING, IT IS NOTED THAT THE ORDER IS BE ING PRONOUNCED AFTER 90 DAYS OF HEARING. HOWEVER, TAKING NOTE OF THE EXTRAORDINARY SITUATION IN THE LIGHT OF THE COVID-19 PANDEMIC AND LOCKDOWN, THE PERIOD OF LOCKD OWN DAYS NEED TO BE EXCLUDED. FOR COMING TO SUCH A CONCLUSION, WE RELY UPON THE DECISION OF THE CO- ORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE O F DCIT VS. JCB LIMITED IN ITA NO. 6264/MUM/2018 AND ITA NO. 6103/MUM/2018 FOR A.Y. 2013-14 ORDER DATED 14.05.2020. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO PARTLY ALLOWED FOR STATISTICAL PURPOSES TO THE EXTENT INDICATED ABOVE. ORDER PRONOUNCED IN THE COURT ON 10.06.2020 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 10/06/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-10(2), KOLKATA 2. M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES M/S SVARNA INFRASTRUCTURE & BUILDERS PVT. LTD. ITA NO.1265/KOL/2018 &C. O. NO. 86/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4