Hancraft Expo Designs P.Ltd, New Delhi V. DCIT, Circle-11(1), New Delhi

ITA 1333/DEL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1460 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHUTOSH JAIN; UDAYAN GARG
• Keywords: Deemed dividend
• Section: 142(1); 2(22)(e); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. NO. 133 3/DEL/201 9 A.Y 201 4 - 15 HANCRAFT EXPO DESIGNS P LTD. 302 - 302, BHIKAJI CAMA BHAWAN 3 RD FLOOR BHIKAJI CAMA PLACE NEW DELHI 110 066 PAN: AABCH1215Q VS DCIT (E) CIRCLE - 11(1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. A SHUTOSH JAIN, CA & SH. UDAYAN GARG, CA RESPONDENT BY SH. AMIT KATOCH, SR.D.R. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 2 8 /0 2 /201 8 PASSED BY CIT(A) - 4, NEW DELHI FOR ASSESSMENT YEAR 20 14 - 15. 2. THE GROUNDS OF APPEAL ARE AS UNDER: - 1. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS. 2,51,65,958, BEING LOAN RECEIVED BY THE APPELLANT FROM M/S. SUPREME ADVERTISING PVT. LTD. DURING THE RELEVANT ASSESSMENT YEAR, ALLEGING THE SAME T O BE IN THE NATURE OF DEEMED DATE OF HEARING 0 4 .06. 2019 DATE OF PRONOUNCEMENT 07 .0 6 .2019 ITA NO. 1333/DEL/2019 A.Y. 2014 - 15 HANCRAFT EXPO DESIGNS P.LTD. VS. DCIT 2 DIVIDEND IN TERMS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 AND TAXABLE IN THE HANDS OF THE RECIPIENT, AS SUCH. 1.1. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING AS ABOVE WITHOUT APPRECIATING THAT THE APPELLANT IS NOT A SHAREHOLDER IN M/S. SUPREME ADVERTISING PVT. LTD. AND, THEREFORE, NO ADDITION CAN BE MADE IN THE HANDS OF THE APPELLANT OF THE LOAN RECEIVED FROM THE PAYER COMPANY AS ALLEGED DEEMED DIVIDEND IN TERMS OF SECTION 2(22)(E) OF THE ACT. 2. T HE CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING INTEREST OF RS. 28,51,989 UNDER SECTION 234B OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, VARY, OMIT, SUBSTITUTE OR DELETE ANY OF THE AF OREMENTIONED GROUNDS OF APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DESIGNING, MANUFACTURING OF HANDICRAFTS AND ALLIED PRODUCTS. DURING THE PRESENT ASSESSMENT YEAR THE ASSESSEE HAS A TOTAL TURNOVER OF RS.4,11,81,663/ - AS COMPARED TO RS.3,72,96,043/ - IN THE LAST YEAR . THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2014 DECLARING TOTAL INCOME AT RS.2,92,49,729/ - . THE CASE WAS SELECTED F OR SCRUTINY AND NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (THE ACT) ON 22. 0 9.2015 WAS ISSUED AND SERVED UPON THE ASSESSEE. SUBSEQUENTLY NOTICE U/S 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED ON 12.09.2016. IN RESPONSE TO NOTICE , C.A., AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY ATTENDED AND FURNISHED THE DETAILS BEFORE THE ASSESSING OFFICER. THE A SSESSING O FFICER OBSERVED THAT DURING THE YEAR THE ASSESSEE HAS TAKEN LOANS FROM M/S SUPREME ADVERTISING PVT. LTD. ALL TH E SHAREHOLDER S OF M/S. SUPREME ADVERTISING PVT. LTD. (SAPL) AND THE ASSESSEE COMPANY ARE COMMON. SHRI GAJENDRA SINGH RAWAT AND SMT. POONAM RAWAT BOTH ARE COMMON SHAREHOLDERS HAVING 40% OF SHARE HOLDING IN BOTH THE COMPANIES I.E. THE ASSESSEE COMPANY AND LENDER COMPANY SAPL. THE ASSESSING OFFICER HELD THAT THE ASSESSEE COMPANY IS NOT A SHAREHOLDER OF SAPL AS PER THE ASSESSEES CONTENTION BUT THERE IS A CREDIT BALANCE THROUGHOUT THE YEAR AND THE PAYMENT IS SUPPOSEDLY MADE ON ACCOUNT OF THE ASSESSEE COMPANY IN THE FORM OF LOAN ITA NO. 1333/DEL/2019 A.Y. 2014 - 15 HANCRAFT EXPO DESIGNS P.LTD. VS. DCIT 3 WHICH IS THE ADMITTED POSITION AS PER THE LEDGER ACCOUNT SUBMITTED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HAS TAKEN ALL CREDITS AMOUNTING TO RS.2,51,65,958/ - AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT IN THE HANDS OF THE ASSESSEE AN D TAXED. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT ASSESSEES CASE IS COVERED BY THE HONBLE DELHI HIGH COURT DECISION IN CASE OF CIT VS. ANKITECH PVT. L TD. WHICH WAS NOW CONFIRMED BY THE HONBLE APEX COURT (340 ITR 14). THE LD. AR FURTHER SUBMITTED THAT THE CIT(A) THOUGH CONSIDERED THE HONBLE DELHI HIGH COURTS DECISION H AS TAKEN INTO ACCOUNT THE APEX COURT DECISION IN CASE OF GOPAL & SONS (HUF) VS. CIT (2017) 77 TAXMAN.COM 71 (S.C.) AND NATIONAL TRAVEL SERVICES VS. CIT (2018) 89 TAXMANN.COM 332 (SC) BUT HAS DISTINGUISHING FACTORS. THE LD. AR SUBMITTED THAT THE PAYMENT MADE BY SAPL TO THE ASSESSEE COMPANY IS TAXABLE IN THE HANDS OF SAPL NOT IN THE HANDS OF ASSESSEE AS DEEMED DIVIDEND IN TERMS OF P ROVISIONS OF SECTION 2(22)(E) OF THE ACT. 6. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) AND THE ASSESSMENT ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE MATERIAL AVAILABLE ON RECORD. THE HONBLE DEL H I HIGH COURT DECISION IN THE CASE OF ANKITECH PVT. LTD. (SUPRA) HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT VIDE ORDER DATED 05 TH OCTOBER, 2017 AND GIVEN A FINDING THAT THE HONBLE DELHI HIGH COURTS DECISION IS A DETAILED JUDGMENT GOING INTO S EC . 2(22)(E) OF THE ACT WHICH ARISES AT THE CORRECT CONSTRUCTION OF THE SAID SECTION. THEREFORE, THE DISMISSAL BY THE CIT(A) ON THE GROUND THAT DECISION OF HONBLE DELHI HIGH COURT IN CASE OF ANKITECH PVT. LTD. WILL NOT BE APPLICABLE, DOES NOT HOLD GOOD LAW. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 1333/DEL/2019 A.Y. 2014 - 15 HANCRAFT EXPO DESIGNS P.LTD. VS. DCIT 4 8 . IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JUNE, 2019 . SD/ - SD/ - (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 07 /06/2019 *GMV COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 1333/DEL/2019 A.Y. 2014 - 15 HANCRAFT EXPO DESIGNS P.LTD. VS. DCIT 5 DATE DRAFT DICTATED ON 04/06/19 DRAFT PLACED BEFORE AUTHOR 0 6 /06/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 07 /06/19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.