ITO, New Delhi V. M/s. Navyug Promoters Pvt. Ltd., New Delhi

ITA 1466/DEL/2013

• Counselvise Citation: 146620114 RSA 2013
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAURABH GOEL CAS ORD ORD ORD
• Keywords: Question of law; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .1466/DEL/2013 1466/DEL/2013 1466/DEL/2013 1466/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2005 2005 2005 2005- -- -06 0606 06 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -13(1), 13(1), 13(1), 13(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S NAVYUG M/S NAVYUG M/S NAVYUG M/S NAVYUG PROMOTERS PVT.LTD., PROMOTERS PVT.LTD., PROMOTERS PVT.LTD., PROMOTERS PVT.LTD., C/O SMT. BHAWNA ARORA, C/O SMT. BHAWNA ARORA, C/O SMT. BHAWNA ARORA, C/O SMT. BHAWNA ARORA, DIRECTOR, DIRECTOR, DIRECTOR, DIRECTOR, 144, GOLF LINKS, 144, GOLF LINKS, 144, GOLF LINKS, 144, GOLF LINKS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 003. 110 003. 110 003. 110 003. PAN : PAN : PAN : PAN : AAACN0195Q. AAACN0195Q. AAACN0195Q. AAACN0195Q. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KEYUR PATEL, SR.DR. RESPONDENT BY : SHRI RAJ KUMAR AND SHRI SAURABH GOEL, CAS. ORD ORD ORD ORDER ER ER ER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XVI, DELHI DATED 14 TH DECEMBER, 2012 FOR THE AY 2005- 06. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THA T THE AMOUNT RECEIVED BY THE ASSESSEE COMPANY FROM M/S B. R. ARORA & ASSOCIATES PVT.LTD. WAS NOT TAXABLE AS DEEM ED DIVIDEND U/S 2(22)(E) OF THE INCOME-TAX ACT AND NOT CONSIDERING THE FACT THAT SHRI B.R. ARORA WAS HOLDI NG MORE THAN 20% SHARES IN THE ASSESSEE COMPANY AS WELL AS IN M/S B.R. ARORA & ASSOCIATES PVT.LTD. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDE RING THE CBDTS CIRCULAR NO.495 DATED 22/09/1987, WHEREBY TH E SCOPE OF THE DEEMED DIVIDEND TAXABLE U/S 2(22)(E) O F THE ACT WAS ENLARGED TO INCLUDE PAYMENTS MADE BY A COMP ANY ITA-1466/DEL/2013 2 TO A CONCERN IN WHICH ITS SHAREHOLDER HOLDS A SUBST ANTIAL INTEREST. 3. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECI ATING THE FACT THAT THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE AS AN ADVANCE FROM M/S B.R. ARORA & ASSOCI ATES PVT.LTD. WAS ACTUALLY A LOAN AND THAT THERE WAS A C OLLUSION BETWEEN THE TWO TO SHOW IT AS AN ADVANCE AGAINST PR OPERTY WHEREAS THERE WAS NO INTENTION TO SELL THE PROPERTY . 4. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FR ESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL PLACED BEFORE US. WE FIND THAT THIS ISSUE IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2006- 07 VIDE ITA NO.2176/DEL/2010 WHEREIN THE ITAT HELD AS UNDER:- 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D .R. FOR THE REVENUE AND HAVE GONE THROUGH THE MATERIAL ON R ECORD AND THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT I T IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT SHRI B R A RORA IS HOLDING 39.27% OF THE SHARES IN THE ASSESSEE COMPAN Y AND THE SAME PERSON IS HOLDING 52.92% SHARES IN M/S. B R ARORA & ASSOCIATES PVT. LTD. AND 30.86% SHARES IN M/S. AI RCON DEVELOPERS PVT. LTD. HENCE IT IS CLEAR THAT THE ASS ESSEE COMPANY IS NOT A SHAREHOLDER HOLDING THE REQUIRED PERCENTAGE OF SHARES OF THESE TWO COMPANIES I.E. M/ S. B R ARORA & ASSOCIATES PVT. LTD. AND M/S. AIRCON DEVELO PERS PVT. LTD. AS PRESCRIBED IN SECTION 2(22)(E) OF THE I. T. ACT. IT WAS HELD BY THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF BHAUMIK COLOURS PVT. LTD. (SUPRA) THAT DEEMED DI VIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO I S A SHAREHOLDER IN THE LENDER COMPANY AND NOT IN THE HA NDS OF A PERSON OTHER THAN A SHAREHOLDER. IT WAS ALSO HELD BY THE SPECIAL BENCH OF THIS TRIBUNAL THAT SUCH SHAREHOLDE R SHOULD BE REGISTERED SHAREHOLDER AS WELL AS BENEFICIARY SHAREHOLDER. IN THE PRESENT CASE THE ASSESSEE IS NO T A SHAREHOLDER OF THESE TWO LENDER COMPANIES AND HENCE AS PER THIS DECISION OF SPECIAL BENCH OF THIS TRIBUNAL , LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. U/S 2(22)(E) OF THE I. T. ACT. ITA-1466/DEL/2013 3 6. REGARDING THE RELIANCE PLACED BY THE REVENUE IN GROUND NO.2 ON THE TRIBUNAL DECISION RENDERED IN THE COURS E OF SKYLINE INDIA RECRUIT PVT. LTD. VS ITO 24 SOT 20 (M UM.) AND EX TEMPOR SECURITIES & INVESTMENTS PVT. LTD. VS DCI T 116 TTJ 525 (MUM.), WE WOULD LIKE TO OBSERVE THAT SINCE WE ARE FOLLOWING THE DECISION OF SPECIAL BENCH OF THIS TRI BUNAL, ANY DECISION OF A DIVISION BENCH OF THE TRIBUNAL CANNOT BE CONSIDERED EVEN IF THIS DECISION IS NOT IN LINE WIT H THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL BECAUSE WE HAVE TO FOLLOW THE DECISION OF SPECIAL BENCH OF THIS TRI BUNAL IN PREFERENCE TO ANY DECISION OF A DIVISION BENCH OF T HE TRIBUNAL. HENCE, WE DECLINE TO INTERFERE IN THE ORD ER OF LD. CIT(A). 4. THE ABOVE ORDER OF THE ITAT HAS BEEN APPROVED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN ITA NO.497/2011 VIDE O RDER DATED 21 ST NOVEMBER, 2011 WHEREIN THEIR LORDSHIPS HELD AS UNDE R:- 5. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THA T THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER HOLDING THE REQUIRED PERCENTAGE OF SHARES IN ANY OF THE TWO COMPANIES. THEREFORE, THE JUDGMENT OF THIS COURT I N ANKITECH PVT.LTD. (SUPRA) FULLY APPLIES TO THE PRES ENT CASE. WE ACCORDINGLY HOLD, FOLLOWING THE SAID JUDGMENT, T HAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER O F THE TRIBUNAL. 5. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECI SION OF HON'BLE JURISDICTIONAL HIGH COURT AND OF THE ITAT IN ASSESS EES OWN CASE, WE UPHOLD THE ORDER OF LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 28.02.2014 VK. ITA-1466/DEL/2013 4 COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -13(1), NEW DELHI. 13(1), NEW DELHI. 13(1), NEW DELHI. 13(1), NEW DELHI. 2. RESPONDENT : M/S NAVYUG PROMOTERS PVT.LTD., M/S NAVYUG PROMOTERS PVT.LTD., M/S NAVYUG PROMOTERS PVT.LTD., M/S NAVYUG PROMOTERS PVT.LTD., C/O SMT. BHAWNA ARORA, DIRECTOR, C/O SMT. BHAWNA ARORA, DIRECTOR, C/O SMT. BHAWNA ARORA, DIRECTOR, C/O SMT. BHAWNA ARORA, DIRECTOR, 144, GOLF LINKS, NEW DELHI 144, GOLF LINKS, NEW DELHI 144, GOLF LINKS, NEW DELHI 144, GOLF LINKS, NEW DELHI 110 003. 110 003. 110 003. 110 003. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR