ITO, WD-12(1), KOLKATA, Kolkata V. M/s Shining Consulting Pvt. Ltd., Kolkata

ITA 1270/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4661 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2015
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREEL
• Keywords: Deemed dividend

Judgement Text

I.T.A. NO. 1270/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1270 /KOL/ 2015 ASSESSMENT YEAR: 2011-2012 INCOME TAX OFFICER,................................ ..............................APPELLANT WARD-12(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. SHINING CONSULTING PVT. LIMITED,.............. ..................RESPONDENT C/O. SAMIRAN BHATTACHARYA, ADVOCATE, 167B, S.P. MUKHERJEE ROAD, KOLKATA-700 026 [PAN: AAOCS 4689 J] APPEARANCES BY: SHRI SOUMITRA CHOUDHURY, ADVOCATE, FOR THE ASSESSEE SHRI RAJAT KR. KUREEL, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 04, 2016 DATE OF PRONOUNCING THE ORDER : AUGUST 10, 2016 O R D E R THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 23.07.2015, WHEREBY HE DELETED THE ADDITION OF RS.46,38,509/- M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE LOAN OBTAINED BY THE ASSE SSEE FROM M/S. SHINING EMOTIONAL SURPLUS PVT. LIMITED BY TREATING THE SAME AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A TRADING AN D INVESTMENT COMPANY. THE RETURN OF INCOME FOR THE YEAR UNDER CO NSIDERATION WAS FILED BY IT ON 22.09.2011 DECLARING TOTAL INCOME AT NIL . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSES SING OFFICER THAT THE ASSESSEE-COMPANY HAS TAKEN A LOAN OF RS.46,38,509/- FROM ANOTHER COMPANY, NAMELY M/S. SHINING EMOTIONAL SURPLUS PVT. LIMITED. SINCE ONE I.T.A. NO. 1270/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 2 OF 4 OF THE MAJOR SHAREHOLDERS OF THE ASSESSEE-COMPANY, NAMELY MR. S.B. REENA JHOLA WAS HOLDING 95% OF THE SHARES OF M/S. S HINING EMOTIONAL SURPLUS PVT. LIMITED AND THE SAID COMPANY HAD ACCUM ULATED PROFITS OF RS.8.75 CRORES AT THE RELEVANT TIME, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LOAN AMOUNT RECEIVED BY THE ASSESSEE-COMPA NY FROM THE SAID COMPANY WAS LIABLE TO BE TREATED AS DEEMED DIVIDEND IN ITS HANDS AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. WHEN THIS MATTER WAS CONFRONTED BY HIM TO THE ASSESEE-COMPANY, IT WAS CO NTENDED BEFORE ASSESSING OFFICER THAT THE ASSESSEE-COMPANY NOT BEI NG A SHAREHOLDER OF THE LENDER COMPANY, THE AMOUNT IN QUESTION COULD NO T BE TREATED AS DEEMED DIVIDEND IN ITS HANDS AS PER THE PROVISIONS OF SECTION 2(22)(E). IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED BY THE ASSESSEE ON THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN TH E CASE OF AURA PERSONAL PRODUCTS PVT. LIMITED (ITA NO. 3533/MUM/20 11 FOR A.Y. 2008- 09). THIS CONTENTION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AND RELYING ON THE DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.-BHARATI OVERSEAS TRAD ING COMPANY [2012] 21 TAXMAN.COM 543(DELHI), HE ADDED THE AMOUNT OF LO AN IN QUESTION TO THE TOTAL INCOME OF THE ASSESSEE BY TREATING THE SA ME AS DEEMED DIVIDEND UNDER SECTION 2(22)(E). 3. THE ADDITION MADE BY THE ASSESSING OFFICER ON AC COUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) WAS CHALLENGED BY T HE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE REL EVANT MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED T HE SAID ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASS ESSEE-COMPANY NOT BEING A SHAREHOLDER IN THE LENDING COMPANY, THE AMO UNT OF LOAN IN QUESTION COULD NOT BE TREATED AS DEEMED DIVIDEND UN DER SECTION 2(22)(E). AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. I.T.A. NO. 1270/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 3 OF 4 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY S UBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF BHARATI OVERSEAS TRADING COMPANY (SUPRA ) RELIED UPON BY THE ASSESSING OFFICER TO TREAT THE AMOUNT IN QUESTION A S DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE-COMPANY UNDER SECTION 2(2 2)(E) IS DISTINGUISHABLE ON FACTS, INASMUCH AS THE SHARES IN THE LENDING COMPANY IN THE SAID CASE WERE HELD BY THE PARTNERS OF THE A SSESSEE-FIRM AND SINCE SUCH SHARES WERE HELD BY THE PARTNERS ON BEHALF OF THE ASSESEE-FIRM, IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT THE L OAN RECEIVED BY THE ASSESESE-FIRM FROM THE LENDING COMPANY WAS LIABLE T O BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) IN ITS HANDS , EVEN THOUGH IT WAS DIRECTLY NOT THE SHAREHOLDER OF THE LENDING COMPANY . IN THE PRESENT CASE, THE SHARES IN THE LENDING COMPANY, NAMELY M/S. SHIN ING EMOTIONAL SURPLUS PVT. LIMITED, WERE HELD BY SHRI S.B. REENA JHOLA, A MAJOR SHAREHOLDER OF THE ASSESSEE-COMPANY IN HIS INDIVIDU AL CAPACITY AND NOT ON BEHALF OF THE ASSESSEE-COMPANY. THE RATIO OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF BHARATI OVE RSEAS TRADING COMPANY THAT IS NOT APPLICABLE IN THE FACTS OF THE ASSESSEES CASE AND EVEN THE LD. D.R. HAS NOT BEEN ABLE TO RAISE ANY AR GUMENT TO DISPUTE THIS POSITION. ON THE OTHER HAND, THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF ACIT VS.- BRITTO AMUSEMENT PV T. LIMITED REPORTED IN 360 ITR 544 CITED BY THE LD. COUNSEL FOR THE ASSESE SE IS DIRECTLY APPLICABLE IN THE FACTS OF THE ASSESSEES CASE, WHEREIN THE LO AN AMOUNT WAS RECEIVED BY THE ASSESEE-COMPANY FROM A LENDING COMPANY, IN W HICH IT WAS NOT THE SHAREHOLDER. THE SHARES OF LENDING COMPANY WERE HEL D BY THE SHAREHOLDERS OF THE ASSESEE-COMPANY IN THEIR INDIVI DUAL CAPACITY. IN THESE FACTS AND CIRCUMSTANCES INVOLVED IN THE SAID CASE, WHICH ARE SIMILAR TO THE FACTS OF THE PRESENT CASE, IT WAS HELD BY THE HONB LE BOMBAY HIGH COURT THAT THE LOAN AMOUNT IN QUESTION COULD NOT BE TREAT ED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) IN THE HANDS OF THE ASSESSEE -COMPANY AS IT WAS NOT THE SHAREHOLDER OF THE LENDING COMPANY. RESPECTFULL Y FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF BRITTO I.T.A. NO. 1270/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 4 OF 4 AMUSEMENT PVT. LTD. (SUPRA), WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) A ND DISMISS THIS APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 10, 20 16. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 10 TH DAY OF AUGUST, 2016 COPIES TO : (1) INCOME TAX OFFICER, WARD-12(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. SHINING CONSULTING PVT. LIMITED, C/O. SAMIRAN BHATTACHARYA, ADVOCATE, 167B, S.P. MUKHERJEE ROAD, KOLKATA-700 026 (3) COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKAT A; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.