The ACIT, Circle-1, Bhavnagar V. Natraj Logistics & Services Pvt.Ltd., Bhavnagar

ITA 1408/AHD/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1196 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Keywords: Depreciation; Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATURV EDI, A.M.) I.T. A. NO.1408/AHD/2012 (ASSESS MENT YEAR: 2008-09) THE ACIT CIRCLE-1, BHAVNAGAR V/S NATRAJ LOGISTICS & SERVICES P. LTD., 105-106, SHOPPER POINT, PARIMAL, WAGHAWADI ROAD, BHAVNAGAR-364002 (APPELLANT) (RESPONDENT) PAN: AABCN9380Q APPELLANT BY : SHRI D.C. MISHRA, SR. D.R. RESPONDENT BY : SHRI TUSHAR HEMANI ( )/ ORDER DATE OF HEARING : 13-08-201 5 DATE OF PRONOUNCEMENT : 21 -08-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-XX, AHMEDABAD DATED 04.04.2012 FOR A.Y. 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF TRANSPORT AND TRAVEL AGENCY. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 ON 27.09.2008 DECLARING TOTAL INCOME AT RS. NIL. THE C ASE WAS SELECTED FOR ITA NO 1408/ AHD/2012 . A.Y. 2008-0 9 2 SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ORDER DATED 22.12.2010 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 36,01,790/-. AGGRIEVED BY THE ORDER OF A.O., ASSES SEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 04.04.2012 G RANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER O F LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUNDS:- 1.THE LD.CIT(A)~XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS DEPRECIATION OF RS. 1,25,711/- ON COMPUTER SOFTWARE. 1.2THE LD.CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE WEBSITE CREATED BY THE ASSESSEE COULD NOT BE TREATED AS SOFTWARE. 2.THE LD.CIT(A)XX, AHMEDABAD HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE PROVISO TO U/S 2(22)(E) OF THE I T ACT. 2.1 THE LD.CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THOUGH THE LOANS HAD BEEN TAKEN BY THE ASSESSEE COMPANY FROM TWO OTHER COMPANIES TH E DIRECTORS OF THE ASSESSEE COMPANY HAD SUBSTANTIAL INTEREST IN SUCH COMPANIES AS THEY WERE HOLDING MORE THAN 20% OF THE SHARES OF THOSE COMPANIES. 1 ST GROUND IS WITH RESPECT TO DEPRECIATION ON COMPUTER SOFTWARE 4. AO ON PERUSING THE AUDIT REPORT NOTICED THAT ASSESS EE HAD MADE ADDITION TO THE COMPUTERS AND HAD CLAIMED DEPRECIATION AT 60%. A.O WAS OF THE VIEW THAT ASSESSEE IS ELIGIBLE FOR DEPRECIATION AT 25%. HE ACCORDINGLY WORKED OUT THE DEPRECIATION @ 25% AND THE EXCESS DEPRECIATION OF RS. 1,25,711/- AS WORKED OUT BY HIM WAS ADDED TO THE INCOME. AGGRIEVE D BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO 1408/ AHD/2012 . A.Y. 2008-0 9 3 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NO W IN APPEAL BEFORE US. 6. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE HAS HELD THAT ASSESSEE WAS ELIGIBLE FOR DEPRECIATION AT 60%. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVER T THE FINDINGS OF LD. CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WI TH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 2 ND GROUND IS WITH RESPECT TO DELETION OF ADDITION MAD E U/S. 2(22)(E) 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD TAKEN LOAN OF RS. 78,15,940/- FROM LEELA SHIP RECYC LING PVT. LTD. AND RS. 11,47,000/- FROM LEELA NEWS NETWORK PVT. LTD. HE AL SO NOTICED THAT SHRI KOMALKANT SHARMA AND SMT. PURNIMA SHARMA WERE HOLDI NG 35.71% SHARES OF THE ASSESSEE COMPANY AND WERE ALSO HOLDING THE S HARES IN THE TWO COMPANIES FROM WHOM ASSESSEE HAD TAKEN LOAN. A.O WA S THEREFORE OF THE VIEW THAT THE PROVISIONS OF SECTION 2(22)(E) WERE A PPLICABLE IN THE PRESENT CASE. HE THEREAFTER ON THE BASIS OF THE ACCUMULATED PROFITS OF THOSE TWO COMPANIES WORKED OUT THE DEEMED DIVIDEND OF RS. 35, 69,005/- U/S. 2(22)(E) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSE E CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION BY RELYI NG ON THE DECISION IN THE ITA NO 1408/ AHD/2012 . A.Y. 2008-0 9 4 CASE OF CIT VS. ANKITECH PVT. LTD. (2011) 199 TAXMA N.COM 341 (DEL) AND OTHER DECISIONS. 9. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US, BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE ABOUT DEEMED DIVIDEND U/S . 2(22)(E) OF THE ACT. WE FIND THAT LD. CIT(A) AFTER PLACING RELIANCE ON THE DECISIONS CITED IN HIS ORDER HAS NOTED THAT THE PROVISIONS OF SECTION 2(22)(E) W ERE NOT APPLICABLE TO THE ASSESSEE AND THAT THE ASSESSEE IS NOT A REGISTERED SHAREHOLDER OF THE LENDER COMPANIES AND THEREFORE DELETED THE ADDITION. WE FU RTHER FIND THAT LD. CIT(A) HAD NOTED THAT A.O WAS AT LIBERTY TO TAKE AP PROPRIATE ACTION IN THE CASE OF COMMON SHAREHOLDERS IN WHOSE CASE THE DEEME D DIVIDEND WERE ASSESSABLE IN ACCORDANCE WITH LAW. BEFORE US, REVEN UE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD . CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. C IT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 - 08 - 20 15. SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER