DCIT, Circle-1(1), Hyd, Hyderabad V. ACE Tyres Limited, R.R.Dist., R.R.Dist

ITA 1277/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6679 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-04-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMANJANEYULU

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1277/HYD/2015 ASSESSMENT YEAR 2012-2013 THE DCIT, CIRCLE - 1(1) HYDERABAD. VS. M/S. ACE TYRES LTD., 314 & 315, AMEENPURA ROAD, BACHUPALLY, R.R. DIST., PAN AADCA2210N (APPELLANT) (RESPONDENT) FOR REVENUE : MR. B. RAMANJANEYULU FOR ASSESSEE : - NONE - DATE OF HEARING : 05 .0 4 .2016 DATE OF PRONOUNCEMENT : 13 .04.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y. 2012- 2013. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY T HE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE INTER C ORPORATE DEPOSITS (ICDS) RECEIVED BY THE ASSESSEE-COMPANY FROM M/S. EXCEL RUBBER LTD. CANNOT BE CONSIDERED AS DEEM ED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT AS ASSES SEE IS NOT A SHARE HOLDER OF M/S. EXCEL RUBBER LTD.,, WITH OUT APPRECIATING THAT THE SHAREHOLDERS OF THE ASSESSEE COMPANY ARE HAVING SUBSTANTIAL INTEREST IN M/S. EXC EL RUBBER LTD., AND THEREFORE, THE PROVISIONS ARE CLEA RLY APPLICABLE. 2 ITA.NO.127/HYD/2015 M/S. ACE TYRES LTD., BACHUPALLY, R.R. DIST., 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF AUTOMOTIVE TYRES, FILED ITS RETURN OF INCOME ON 27.09.2012 DECLARING TOTAL INCOME OF RS.7,06,92,030 FOR THE A.Y. 2012-2013 UNDER NORMAL PROVISIONS AND RS.4,25,58,345 AS BOOK PROFIT. THERE AFTER, DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) OF THE ACT, THE A.O. OBSERVED THAT THE ASSESSEE HAS SHOWN THE AMOUNT OF RS.22,23,50,000 UNDER UNSECURED LOANS , OUT OF WHICH, A SUM OF RS.14,50,00,000 IS SHOWING T O BE ICDS RECEIVED FROM M/S. EXCEL RUBBER LTD., IN WHICH , AN AMOUNT OF RS.9,45,00,000 IS THE OPENING BALANCE WHI LE RS.5,05,00,000 WAS RECEIVED DURING THE YEAR. HE OBS ERVED THAT M/S. EXCEL RUBBER LTD., HAPPENS TO BE CLOSELY HELD COMPANY AND POSSESSED HUGE ACCUMULATED PROFIT. HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 2(22)( E) OF THE I.T. ACT. FURTHER, HE ALSO OBSERVED THAT IN THE ASS ESSEES OWN CASE FOR THE A.YS. 2006-07 AND 2010-2011, IT WA S HELD THAT THE ICDS RECEIVED FROM M/S. EXCEL RUBBER LTD., ARE COVERED BY THE PROVISIONS OF SECTION 2(22)(E) O F THE I.T. ACT AND ARE THEREFORE, TO BE TREATED AS DEEMED DIVI DEND TO THE EXTENT OF ACCUMULATED PROFITS OF M/S. EXCEL RUB BER LTD. THE ASSESSEE HAD SUBMITTED BEFORE THE A.O. THA T THE ASSESSEES APPEAL ON THE ABOVE ISSUE WAS ALLOWED BY THE CIT(A) FOR THE A.YS. 2006-07 AND 2010-2011 AND ALSO BY ITAT FOR THE A.Y. 2010-2011 AND REQUESTED HIM TO CONSIDER THE DIRECTIONS OF CIT(A) AND ITAT. BUT THE A.O. DID NOT CONSIDER THE SAME BY OBSERVING THAT THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE HONBLE H IGH 3 ITA.NO.127/HYD/2015 M/S. ACE TYRES LTD., BACHUPALLY, R.R. DIST., COURT. HE ACCORDINGLY, BROUGHT IT TO TAX IN THE HAN DS OF THE ASSESSEE UNDER SECTION 2(22)(E) OF THE I.T. ACT . 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE SAME BY FOLLOWING THE DECISION OF ITAT FOR THE A.Y. 2010-2011 AND ALSO FO R THE A.Y. 2006-2007. AGAINST THE ORDER OF THE CIT(A), TH E REVENUE IS IN APPEAL BEFORE US. 4. AFTER HEARING THE LD. D.R. AND ON GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT THE IS SUE HAS BEEN CONSIDERED BY THE CIT(A) AND BY FOLLOWING THE DIRECTIONS OF THE CIT(A) AS WELL AS ITAT FOR THE EA RLIER AND SUBSEQUENT ASSESSMENT YEARS HAS GRANTED RELIEF TO T HE ASSESSEE. THEREFORE, WE DO NOT SEE ANY REASON TO IN TERFERE WITH THE ORDER OF THE CIT(A). REVENUES APPEAL IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.04.2016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 13 TH APRIL, 2016 VBP/- 4 ITA.NO.127/HYD/2015 M/S. ACE TYRES LTD., BACHUPALLY, R.R. DIST., COPY TO : 1. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), 4 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. ACE TYRES LTD., 314 & 315, AMEENPURA ROAD, BACHUPALLY, R.R. DIST., 3. CIT(A) - I , HYDERABAD. 4. PR. CIT - I , HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE