The ACIT, Circle-14, Ahmedabad V. Shri Bharatkumar Jivanlal Patel, Ahmedabad

ITA 1371/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9364 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: S N DIVETIA
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NO: 1371/AHD/2011 (ASSESSMENT YEAR: 2008-09) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-14, AHMEDABAD V/S SHRI BHARAT J. PATEL 5-6, MANICHANDRA SOCIETY, NR. SURDHARA CIRCLE, THALTEJ, AHMEDABAD PAN NO. ACOPP9183H (APPELLANT) (RESPONDENT) ITA. NO: 3140/AHD/2011 (ASSESSMENT YEAR: 2008-09) THE A.C.I.T., CIRCLE-8, AHMEDABAD V/S M/S. TECHNO INDUSTRIES LIMITED 5002, PHASE-IV, GIDC, NR. INDO GERMAN TOOL ROOM, VATVA, AHMEDABAD PAN NO. AABCT6416B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.P. MAURYA, SR. D.R. RESPONDENT BY : SHRI S.N. DIVETIA, A.R. ( )/ ORDER DATE OF HEARING : 24 -02-20 16 DATE OF PRONOUNCEMENT : 26 -02-2016 ITA NOS. 314 0 & 1371/AHD/2011 . A.Y. 2008-09 2 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THESE ARE APPEALS BY THE REVENUE AGAINST TWO DIFFER ENT ASSESSEES PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CI T(A)- XIV & XXI DATED 04.09.2011 & 21.02.2011 PERTAINING TO A.Y. 20 08-09 RESPECTIVELY. 2. IN BOTH THESE APPEALS THE FACTS IN ISSUES ARE IDENT ICAL THEREFORE BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 3140/AHD/2011FOR A. Y. 2008-09 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O FOUND THAT THE ASSESSEE HAS TAKEN LOAN OF RS. 41,13 ,966 FROM ANOTHER CONCERNS NAMELY, BARA MACHINES PVT. LTD. THE A.O FU RTHER FOUND THAT SHRI BHARATBHAI J. PATEL WAS HOLDING 79% OF SHARES IN THE ASSESSEE COMPANY AND 96% SHARES IN BARA MACHINES PVT. LTD. 4. CONSIDERING THE AFOREMENTIONED SHAREHOLDING PATTERN , THE A.O INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND F OUND THAT THERE IS ONE PERSON WHO FULFILLS THE CONDITION LAID DOWN IN THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WHICH IS BHARATBHAI J. PATEL. THEREAFTER THE A.O. PROCEEDED BY DISCUSSING CERTAIN JUDICIAL DECIS IONS AND FINALLY TREATED RS. 41,13,966 AS DEEMED DIVIDEND IN THE HAN DS OF THE ASSESSEE. 5. TO SAFEGUARD AND PROTECT THE INTEREST OF THE REVENU E, A SIMILAR ADDITION WAS MADE IN THE HANDS OF SHRI BHARATBHAI J. PATEL O N PROTECTIVE BASIS ITA NOS. 314 0 & 1371/AHD/2011 . A.Y. 2008-09 3 SINCE HE IS HAVING SUBSTANTIAL INTEREST IN TECHNO I NDUSTRIES PVT. LTD. AND BARA MACHINES PVT. LTD. BOTH THE ASSESSEES CARR IED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. BEFO RE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT SINCE TECHNO I NDUSTRIES PVT. LTD. IS NOT THE SHAREHOLDER IN THE LENDING COMPANY BARA MACHINES PVT. LTD. THERE IS NO QUESTION OF INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 6. ARGUING FOR ITA NO. 1371/AHD/2011 THAT IS APPEAL OF SHRI BHARATBHAI J. PATEL. THE LD. COUNSEL STATED THAT SINCE THE LOAN WAS NOT TAKEN BY SHRI BHARATBHAI J. PATEL AGAIN THERE IS NO QUESTION OF I NVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE LD. COUNSEL DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL SPECIAL B ENCH, MUMBAI IN THE CASE OF BHAUMIK COLOUR (P.) LTD. 118 ITD 1 WHICH H AS BEEN CONFIRMED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF UNIVERSAL MEDICARE PVT. LTD. 324 ITR 263. PER CONTRA SUPPORTING THE OR DER OF THE REVENUE AUTHORITIES, THE D.R. COULD NOT BRING ANY DECISION IN FAVOUR OF THE REVENUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SHAREHOLDING PATTERN AS DISCUS SED ELSEWHERE. IN OUR UNDERSTANDING OF THE LAW, THE EXPRESSION SHARE HOLDER REFERRED TO IN SECTION 2(22)(E) REFERS TO BOTH A REGISTERED SHA REHOLDER AND BENEFICIAL SHAREHOLDER AND, THUS, IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT BENEFICIAL SHAREHOLDER THEN PRO VISIONS OF SECTION 2(22)(E) WOULD NOT APPLY AND SIMILARLY A PERSON IS THE BENEFICIAL SHAREHOLDER BUT NOT A REGISTERED SHAREHOLDER THEN A LSO PROVISIONS OF SECTION 2(22)(E) WOULD NOT APPLY. THIS VIEW IS WELL SUPPORTED BY THE DECISION OF THE TRIBUNAL SPECIAL BENCH (SUPRA), WHI CH HAS BEEN ITA NOS. 314 0 & 1371/AHD/2011 . A.Y. 2008-09 4 CONFIRMED BY THE HONBLE HIGH COURT OF BOMBAY IN UN IVERSAL MEDICARE (SUPRA) AND WHICH HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF IMPACT CONTAINERS (P.) LTD. 367 ITR 346. IN THE CASES IN HAND BEFORE US, BARA MACHINES PVT. LTD . GAVE LOAN TO TECHNO INDUSTRIES PVT. LTD. WHERE TECHNO INDUSTRIES PVT. LTD. IS NOT A REGISTERED PLUS BENEFICIAL SHAREHOLDER OF BARA MACH INES PVT. LTD. AND SHRI BHARATBHAI J. PATEL, WHO IS A REGISTERED SHARE HOLDER IN BARA MACHINES PVT. LTD, HAS NOT TAKEN LOAN FROM THE SAID COMPANY. IN THE LIGHT OF THE DECISION OF THE HONBLE HIGH COURT (SU PRA), BOTH THESE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 26 - 02 - 2016. SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD