ITO 4(1)(1), MUMBAI V. SHREEPATI COMMODITIES LTD, MUMBAI

ITA 1487/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8069 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Deemed dividend
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI R.K.PANDA, ACCOUNTANT MEMBER ITA. NO. 1487/MUM/2009 ASSESSMENT YEAR 2005-2006 INCOME TAX OFFICER 4 (1) (1) MUMBAI 400 020 VS. SHREEPATI COMMODITIES LTD. MUMBAI 7 PANAAACB6428N (APPELLANT) (RESPONDENT) FOR APPELLANT : MS. ASHIMA GUPTA FOR RESPONDENT : SHRI HIRO RAI ORDER PER D. MANMOHAN, V.P. 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 17-12-2008 PASSED BY THE CIT(A)-IV, MUMBAI AN D IT PERTAINS TO THE ASSESSMENT YEAR 2005-2006. THOUGH THE REVENUE H AS RAISED AS MANY AS 5 GROUNDS, IN THE GROUNDS OF APPEAL ANNEXED TO FORM 36 THE CASE OF THE REVENUE IS THAT THE ITO WAS JUSTIFIED I N MAKING ADDITION OF RS.64,59,260/- AS DEEMED DIVIDEND UNDER THE HEAD INCOME FROM OTHER SOURCES. 2. THE CASE OF THE REVENUE IS THAT THE ASSESSEE HA S RECEIVED A LOAN OF RS. 25 LAKHS ON 8-9-2009 FROM INDO UNIQUE TRADING PRIVATE LIMITED AND RETURNED THE SAME IN TWO INSTALMENTS. T HE ASSESSING OFFICER STATES THAT THE ASSESSEE MAINTAINED A RUNNI NG ACCOUNT OF LOAN FROM M/S. SHREEPATI HOLDINGS & FINANCE PVT. LTD. SI NCE LOAN WAS ADVANCED TO ASSESSEE, WHICH IS A SISTER CONCERN IN WHICH SHAREHOLDERS OF THE AFOREMENTIONED COMPANIES ARE HAVING MORE THA N 10% EQUITY SHARES, THE ASSESSING OFFICER CONCLUDED THAT THE LO AN TAKEN BY THE ASSESSEE FROM M/S. UNIQUE TRADING PRIVATE LIMITED A ND M/S. SHREEPATI HOLDINGS & FINANCE PVT. LTD. ATTRACTS THE PROVISIONS OF SUB- CLAUSE (E) OF SECTION 2 (22) OF THE ACT. 2 3. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT (A) OBSERVED THAT THE TRANSACTIONS BETWEEN THE ASSESSEE -COMPANY AND M/S. M/S. UNIQUE TRADING PRIVATE LIMITED ARE NOT BY WAY OF ADVANCE OR LOAN. IN THIS REGARD, HE HAS TAKEN INTO CONSIDER ATION THE REMAND REPORT OF THE ASSESSING OFFICER. HE ALSO NOTICED TH AT THE ASSESSEE- COMPANY IS A MEMBER OF THE COMMODITY EXCHANGE AND T RANSFER OF MONEY TO ASSESSEE-COMPANY WAS MADE BY M/S. UNIQUE T RADING PRIVATE LIMITED IN REGULAR COURSE OF THE BUSINESS. THUS, HE HELD THAT PROVISIONS OF SECTION 2 (22) (E) ARE NOT APPLICABLE TO THE INSTANT CASE. SIMILARLY, THE NATURE OF TRANSACTION BETWEEN THE AS SESSEE-COMPANY AND M/S. SHREEPATI HOLDINGS & FINANCE PVT. LTD. WAS ALSO FOUND TO BE A TRANSACTION IN THE REGULAR COURSE OF BUSINESS. IN THIS REGARD HE HAS TAKEN NOTE OF THE APPELLATE ORDER PASSED IN THE CAS E OF M/S. M/S. SHREEPATI HOLDINGS & FINANCE PVT. LTD. FOR ASSESSME NT YEAR 2005- 2006 WHEREIN IT WAS FOUND THAT THE TRANSACTION BETW EEN M/S. SHREEPATI HOLDINGS & FINANCE PVT. LTD. AND THE AFOR EMENTIONED COMPANY WAS BASICALLY THROUGH A RUNNING ACCOUNT IN THE REGULAR COURSE OF BUSINESS AND TRANSFER OF MONEY HAD TAKEN PLACE NOT BY WAY OF ADVANCE OR LOAN AND THUS PROVISIONS OF SECTION 2 (22) (E) DO NOT GET ATTRACTED. 4. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. LEAR NED DR STRONGLY RELIED UPON THE ORDER PASSED BY THE ASSESS ING OFFICER. 5. ON THE OTHER HAND, THE LEARNED COUNSEL, APPEARI NG ON BEHALF OF THE ASSESSEE, RELIED UPON THE ORDER OF TH E LEARNED CIT(A) AND ALSO PLACED BEFORE US A COPY OF THE ORDER OF THE IT AT, E BENCH, MUMBAI, IN THE CASE OF M/S. SHREEPATI HOLDINGS & FI NANCE PVT. LTD. FOR THE ASSESSMENT YEAR 2005-2006 (ITA. NO. 1498 AN D 760/MUM/2009) AND ADVERTED OUR ATTENTION TO PAGE 9 OF THE ORDER OF THE ITAT. IT WAS CONTENDED THAT IF A SHAREHOLDER IS NOT A REGISTERED SHAREHOLDER, SECTION 2 (22) (E) DOES NOT GET ATTRAC TED. THE BENCH HAD TAKEN NOTE OF THE DECISION OF THE ITAT, B BENCH, IN THE CASE OF M/S. 3 BHOUMIK COLOUR PVT. LTD. 118 ITD 1 TO HOLD THAT M/S . SHREEPATI HOLDINGS & FINANCE PVT. LTD. IS NOT A REGISTERED SH ARE-HOLDER AND THEREFORE, PROVISIONS OF SECTION 2 (22) (E) ARE NOT APPLICABLE. IT WAS FURTHER CONTENDED THAT THE FINDINGS OF THE LEARNED CIT(A) (FROM PARA 16 OF HIS ORDER) WERE NOT CONTROVERTED BY THE LEARNED DR AND THUS THE CASE OF THE REVENUE HAS NO LEGS TO STAND. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD. APART FROM THE FACT THAT THE PA RTIES ARE NOT REGISTERED SHARE-HOLDERS AND THEREFORE, PROVISIONS OF SECTION 2 (22)(E) IS NOT ATTRACTED, THE LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, RELIED UPON THE FINDINGS OF THE LEARNED C IT(A) WHEREIN IT WAS STATED THAT TRANSFER OF MONEY WAS IN THE REGULAR CO URSE OF BUSINESS. THEREFORE, IT CANNOT BE TREATED AS A LOAN OR ADVAN CE SO AS TO FALL WITHIN THE AMBIT OF SECTION 2 (22) (E) OF THE ACT. SINCE LEARNED DR WAS NOT ABLE TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY TH E LEARNED CIT(A) AND THEREFORE, AFFIRM THE ORDER OF THE FIRST APPELL ATE AUTHORITY AND DISMISS THE APPEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 22 ND DAY OF MARCH, 2011. SD/- SD/- (R.K.PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 22 ND MARCH, 2011 VBP/- 4 COPY TO 1. SHREEPATI COMMODITIES PVT. LTD., MEHTA MAHAL, 4 TH FLOOR, SOUTH SIDE, MATHEW ROAD, OPERA HOUSE, MUMBAI 400 00 7 PAN AAACS8111R 2. ITO 4(1)(1), AAYAKAR BHAVAN, MAHARSHI KARVE MARG , MUMBAI-400 020. 3. CIT(A)-IV, MUMBAI 4. CIT-4, MUMBAI 5. DR E BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.