International Management Technologies, New Delhi V. DCIT, Circle- 12(2), New Delhi

ITA 1298/DEL/2019

AI Insights

The case involves M/s. International Management Technologies Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-22, New Delhi, concerning an assessment order passed by the Deputy Commissioner of Income Tax, Circle-11(1), New Delhi. The primary contention was the addition of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961, due to a loan taken from M/s. Shaka Properties Pvt. Ltd., in which the assessee held a significant share. The First Appellate Authority had sustained this addition, rejecting the assessee's argument that the loan was interest-bearing and thus not covered under the provision. The Tribunal, however, noted that the legal merits of the assessee's claim were not adequately considered by the CIT(A) and restored the matter to the AO for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113757 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 22-03-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 17-02-2019
• Other Referred Cases: Pradip Kumar Malthotra Vs. CIT (2011) 338 ITR 538 (Cal)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3); 2(22)(e); 14A; 2(22)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘C’ : NEW DELHI) BEFORE SH. N.K.BILLAIYA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA,JUDICIAL MEMBER ITA No. 1298/Del/2019, A.Y. 2015-16 M/s. International Management Technologies Pvt. Ltd. 1 st Floor, Vijaya Building, 17, Barakhamba Road, Connaught Place, New Delhi PAN : AAACI8587M Vs. Dy. Commissioner of Income Tax, Circle-12(2), New Delhi Assessee by Shri M.R.Sahu, CA Revenue by Shri Anuj Garg, Sr. DR Date of hearing: 23.03.2023 Date of Pronouncement: 23.03.2023 ORDER Per Anubhav Sharma, JM : The appeal has been filed by the Assessee against order dated 31.12.2018 Appeal no. 204/18-19/CIT(A)-22, New Delhi ,assessment year 2010-11, passed by the Commissioner of Income Tax (Appeals)-22, New Delhi (hereinafter referred to as the First Appellate Authority or in short „Ld. F.A.A.‟) in regard to the appeal before it arising out of assessment order dated 26.12.2017 u/s 143(3) of I.T. Act, 1961 (hereinafter referred to as „the Act‟) passed by DCIT, Circle-11(1), New Delhi (hereinafter referred as Ld. Assessing officer or in short Ld. AO). 2. Heard and perused the record. ITA No. 1298.Del.2019 M/s. International management Technologies 2 3. The return of the assessee was selected for scrutiny and the Ld. AO had made a disallowance u/s. 14A and made additions of deemed dividend u/s 2(22)(e) of the Act. Ld. CIT(A) had deleted the addition u/s 14A, however, sustained the addition u/s 2(22)(e) of the Act with following relevant findings :- “6.3 I have examined the finding of the AO and submission of the Ld. AR. I have also perused the case law relied upon by Ld. AR. These case laws are on different facts and not applicable in the case of Appellant. In this case, the appellant has taken loan from sister concern i.e., M/s. Shaka Properties Pvt. Ltd. in which the appellant is a share holder of 50.01% M/s. Shaka Properties Pvt. Ltd. has accumulated profit of Rs. 25,42,48,848/- as on 31.03.2015. In the case of the appellant provision of Section 2(22)(e) is clearly attracted. This fact has also not been disputed by appellant before AO. The only argument of the Ld. AR that the loan taken was an interest bearing loan. This argument of the Ld. AR does not have any basis as the provisions of Section 2(22)(e) does not have any exception for interest bearing loans & advances. It is also evident from the assessment order and the submission of the appellant before the AO that the appellant submitted before AO that deemed dividend U/s 2(22)(e) on account of loan availed from M/s. Shaka Properties Pvt. Ltd. was happened due to lack knowledge and without any malafide intention. The appellant has agreed before AO that non consideration of Rs. 1,50,00,000 as deemed dividend due to lack of knowledge and inadvertently without any malafide intention. It is also submitted before AO that as soon as the fact was detected Assessee deposited the tax due on that amount. After admitting the mistake, the appellant is now contesting on this issue in appeal. In this circumstances, I am of the view that it is only the appellant who knows about the true state of affairs of his business. He is the one who knows the truthfulness of his claim and the appellant could not have made the offer to the Assessing Officer without the knowledge. Therefore to my mind once an amount has been surrendered before Assessing Officer it closes the chapter on that issue. The Assessing Officer then shifts his focus from the issue and concentrate on other issues. After agreeing for disallowance before Assessing Officer and then raising the same ground in appeal is to my mind is very unfair. Therefore, in the light of unambiguous offer before Assessing Officer and in view of express provision of Section ITA No. 1298.Del.2019 M/s. International management Technologies 3 2(22)(e) of the Act, to my mind the appellant has precluded any scope for relief before appellate authority. Therefore, the .disallowance of Rs. 1,50,00,000/- made by the Assessing Officer on a/c of deemed dividend u/s 2(22)(e) is confirmed.” 4. At the time of arguments, it was submitted on behalf of the assessee that under mistaken belief on 22.12.2017 the Ld. AR of assessee had agreed for addition but on 26.12.2017, the assessee had moved an application available at page No. 11-12 of the paper book, in which it was explained that the assessee contests this proposed addition relying on the decision of the Hon‟ble Calcutta High Court in the case of Pradip Kumar Malthotra Vs. CIT (2011) 338 ITR 538 (Cal) wherein, it was held that non gratuitous loan cannot be covered u/s 2(22)(e) of the Act to treat the loan as deemed dividend. However, the ld AO did not take the submission date 26.12.2017 on record and passed the impugned assessment order on the same date. In this context certain other judicial pronouncements were relied before the Bench for proposition of law that only gratuitous loan or advance given by a company to those beneficial owners of it‟s shares, only come under purview of Section 2(22) of the Act. 5. The ld DR could not dispute the proposition of law relied on behalf of the assessee. The ld DR further defended the act of the Ld. AO submitting that AO has made an endorsement on the submission dated 26.12.2017 that it was received on 26.12.2017 after completion of proceeding u/s 143(3) and passing order 6. On facts what appears is that loan of Rs. 15 lac was availed by assessee from M/s. Shaka Properties Pvt. Ltd where the assessee company is substantial share holder. Loan carries interest @10% PA. The total interest against loan was Rs. 8,31,699/-. After deducting TDS of Rs. 81,370/- the net interest amounting to Rs. 7,32,329/- was paid to M/s. Shaka Properties Pvt. Ltd through banking channel. ITA No. 1298.Del.2019 M/s. International management Technologies 4 7. The bench is of considered opinion that there is settled proposition of law in favour of the assessee against which, if the assessee has made any admission of fact or law, then same cannot be considered to be conclusive admission on the principle that there is no estoppel against law and statute. The ld CIT(A) has not gone into the merits of the legal claim of the assessee and only on the basis that as the assessee had surrendered an amount before the Ld. AO closes the chapter on the issue and same is not sustainable. Ld. CIT(A) has made error in making sweeping observation that “The only argument of the Ld. AR that the loan taken was an interest bearing loan. This argument of the Ld AR does not have any basis as the provisions of Section 2(22)(e)does not have any exception for interest bearing loan and advances” is not sustainable in the light of cited judical pronouncements. 8. In the light of the aforesaid ground No. 2 as raised stands allowed and the issue is restored to the files of the Ld. AO to pass a fresh order on this issue on the basis of submission of the assessee dated 26.12.2017 and law relied by the assessee. 9. The impugned orders are accordingly set aside. The appeal however, is allowed for statistical purposes only. Order pronounced in the open court on 23 rd March, 2023. -Sd/- -Sd/- (N.K.BILLAIYA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:23.03.2023 *Binita, SR.P.S/ AK Keot* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI