ITO, New Delhi V. Sh. Ashish Ahuja, New Delhi

ITA 1267/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7315 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS KUMAR
• Assessee Lawyers: M G ARORA
• Keywords: Deemed dividend

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI S. V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 1267 /DEL/ 2013 (ASSESSMENT YEAR: 2009 - 10 ) ITO CO, WARD - 1(2), ROOM NO.398 - B, C.R. BUILDING , I.P. ESTATE NEW DELHI VS. ASHISH AHUJA B - 381, SFS FLATS, SARITA VIHAR NEW DELHI PAN:AAEPA6261D (APPELLANT) (RESPONDENT) APPELLANT BY : SRINIVAS KUMAR, DR RESPONDENT BY : M.G. ARORA, ADV. O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A - IV, NEW DELHI DATED 28.01.2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. WHETHER THE LD CIT(A) HAS ERRED O N FACTS AND IN LAW IN DELETING THE ADDITION MADE BY THE AO U/S 2(22)(E)AMOUNTING TO RS.9,60,855/ - IGNORING THE FACT THAT ANY PAYMENT BY A COMPANY BY WAY OF ADVANCE OR A LOAN TO A SHAREHOLDER OR TO A CONCERN IN WHICH SUCH SHAREHOLDER IS THE MEMBER OF A PAR TNER, HAVING SUBSTANTIAL INTEREST, SHALL BE COVERED UNDER THE PROVISIONS OF SECTION 2(22)(E). 3. FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE APPELLANT COMPANY HAS TAKEN LOAN FROM M/S AHUJA EXIM PVT. LTD. THE AO WAS OF THE VIEW THAT THE PROVISION OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) WERE ATTRACTED FOR THE LOAN TAKEN BY HIM . HE OBSERVED THAT OPENING BALANCE OF L O AN TAKEN FROM M/S AHUJA EXIMIM PVT. LTD. AS ON 01.04.2008 STOOD AT RS.67,04,353/ - . THE ASSESSEE HAS F URTHER RECEIVED RS.1,17,40,000/ - FROM THE ABOVE COMPANY DURING THE YEAR. THE AO OBSERVED THAT AFTER ADJUSTING OPENING BALANCE OF RS.67,04,353, THERE REMAINED A BALANCE OF RS.50,35,646/ - . ACCORDING TO THE AO, THE ASSESSEE HAS RECEIVED FRESH LOAN OF RS.1,16, 28,222/ - DURING THE YEAR. THE AO FURTHER OBSERVED THAT M/S AHUJA PAGE NO. 2 EXIM PVT. LTD. HAS ACCUMULATED PROFITS AS ON 31.03.2009 OF RS.9,60,855/ - AND THEREFORE, HE RESTRICTED THE ADDITION OF DEEMED DIVIDEND TO RS.9,60,855/ - . 4. AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO WAS PLEASED TO DELETE THE ADDITION ON THE BASIS THAT OUT OF THE TOTAL RESERVES OF RS.9,60,855/ - SUM OF RS.9,20,980/ - WERE RES ERVES PRIOR TO THE INSTANT YEAR, W HEN THE COMPANY M/S. AHUJA EXIM PVT. LTD. HAD GIVEN A LOAN OF RS.67,04,534/ - TO THE ASSESSEE. THEREFORE, NO ADDITION COULD BE MADE IN THE INSTANT YEAR. 5. AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A) THE REVENUE IS BEFORE US. 6. THE LD DR CONTENDS THAT T HE MERE FACT THAT LOANS WERE GIVEN IN THE EARLIER YEAR AND RESERVES ALSO PERTAINS TO THE EARLIER YEARS, COULD NOT BE A BASIS TO JUST IFY THE DELETION OF ADDITION, THOUGH NO ADDITION WAS MADE IN THE EARLIER YEAR. HE SUBMITTED THAT SINCE LOANS RAISED DURING T HE YEAR EXCEEDED THE TOTAL RESERVE, THE ADDITION OF RS.9,60,855/ - WAS RIGHTLY MAD E BY THE AO. 7. ON THE OTHER HAND THE LD AR SUPPORTED THE ORDER OF THE LD CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY PERUSED THE RECORDS OF THE CASE. THE LD CIT(A) HAS DELETED THE ADDITION BY CONCLUDING AS UNDER: - I FIND THAT THE AO HIMSELF HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE OPENING BALANCE OF LOAN M/S AHUJA IMPEX PVT. LTD. AS ON 01.04.2008 STANDS AT RS.67,04,353/ - AND THE ASSESSEE HAS FURTHER REC EIVED RS.1,16,28,222/ - DURING THE YEAR FROM M/S. AHUJA EXIM PVT. LTD. AHUJA EXIM PVT. LTD HAS ACCUMULATED PROFIT AS ON 31.03.2009 OF RS.9,60,855/ - AND THEREFORE THE AO RESTRICTED THE ADDITION TO THIS AMOUNT. FROM THE PERUSAL OF THE WRITTEN SUBMISSIONS OF LD AR, I FIND THAT BALANCE OF ACCUMULATED PROFITS UP THE LAST YEAR ENDED 31.03.2009, WAS RS.9,60,855/ - . THE AO HAS RESTRICTED THE ADDITION TO THE EXTENT OF THIS AMOUNT OF RS.9,60,855/ - . SINCE THE APPELLANT HAD RECEIVED LOANS FOR MORE THAN THE AMOUNT OF ACC UMULATED PROFITS, PRIOR TO 31.03.2009, THE ADDITION OF DEEMED DIVIDEND COULD NOT BE MADE ONLY IN THE EARLIER YEARS AS RIGHTLY ARGUED BY AR. THEREFORE THE AO IS DIRECTED TO TAX THE DEEMED DIVIDEND, AS PER LAW IN THE RESPECTIVE YEAR IN WHICH ACCUMULATED PROF ITS WERE AVAILABLE AND LOANS WERE TAKEN BY THE APPELLANT. 9. LD DR HAS NOT BEEN ABLE TO DEMONSTRATE ANY INFIRMITY IN THE APPROACH OF THE LD CIT(A). THE MERE FACT THAT THE INCOME WAS NOT TAXED IN THE EARLIER YEARS CANNOT BE A GROUND TO INTERFERE IN THE IM PUGNED ORDER, PARTICULARLY WHEN, THE LD CIT(A) HAS DIRECTED THE AO, TO TAX, THE DEEMED DIVIDEND AS PER LAW. THE APEX COURT IN THE CASE OF C.H. ATCHIAH 218 ITR 239 (SC) HAS HELD THAT CORRECT INCOME HAS TO BE TAXED IN THE CORRECT H ANDS IN THE CORRECT RESPE CTIVE YEAR , HENCE WE DO NOT FIND ANY NECESSITY TO INTERFERE IN THE IMPUGNED ORDER AND SO WE CONFIRM THE SAME. PAGE NO. 3 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 . 09 . 2014. - S D / - - S D / - ( S. V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 6 / 09 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI