ITO 20(1)(3), MUMBAI V. HITESH CONSTRUCTION CO, MUMBAI

ITA 1521/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100739 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHENDRA G VASHI
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

M/S HITESH CONSTRUCTION CO ITA NO. 1521 /MUM/20 1 4 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H , MUMBAI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI GOPAL KEDIA , ACCOUNTANT MEMBER ITA NO. : 1 5 21 /MUM/20 1 4 ( ASSESSMENT YEAR: 200 4 - 0 5 ) INCOME TAX OFF ICER - 20(1)(3), ROOM NO. 607, PIRAMAL CHAMBERS, LAL BAUG, MUMBAI - 400 012 VS M/S HITESH CONSTRUCTION CO , PANCHRATNA BUILDING, GROUND FLOOR, PANCHMARG, NEAR PANCHVATI TOWER, OFF YARI ROAD, VERSOVA ROAD, ANDHERI (WEST), MUMBAI - 400 061 .: PA N: AA CFH 2238 K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JEEVAN LAL LAVIDIYA RESPONDENT BY : S HRI MAHENDRA G VASHI /DATE OF HEARING : 2 4 - 08 - 201 5 / DAT E OF PRONOUNCEMENT : 28 - 08 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 20 . 12 .2013 , PASSED BY CIT (A) - 31 , MUMBAI , FOR THE QUANTUM OF ASSESSMENT PAS SED U/S 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 20 0 4 - 0 5 ON THE FOLLOWING SOLE EFFECTIVE GROUND : - THE LD. CIT(A) ERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION MADE U/S 2(22)(E) BEING DEEMED DIVID END AMOUNTING TO RS. 43,46,673/ - . 2. BRIEF FACTS ARE THAT, DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER FROM THE PERUSAL OF BALANCE SHEET NOTED THAT , ASSESSEE HAS SHOWN AN AMOUNT OF RS. 48,09,441/ - AS UNSECURED LOAN FROM M/S JAYCEE HOMES & HOTELS LTD. (PRESENTLY KNOWN AS M/S JAYCEE HOMES LTD). HE FURTHER NOTED M/S HITESH CONSTRUCTION CO ITA NO. 1521 /MUM/20 1 4 2 THAT TWO PARTNERS OF THE ASSESSEE - FIRM WERE ALSO DIRECTORS OF THE SAID COMPANY. IN RESPONSE TO THE SHOW CAUSE NOTICE , AS TO WHY SUM OF RS. 48,09,441/ - SHOULD NOT BE ADDED AS D EEMED DIVIDEND U/S 2(22)(E), THE ASSESSEE SUBMITTED THAT IT HAD NO SHARES IN THE SAID COMPANY AND FIRM IS NOT A SHAREHOLDER. IT WAS FURTHER SUBMITTED THAT THE SAID AMOUNT WAS EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PROJECTS OF THE COMPANY AND WAS REF LECTED AS WORK - IN - PROGRESS (WIP) IN THE ACCOUNTS, WHICH WAS TRANSFERRED TO THE BOOKS OF THE COMPANY AS COST OF THE PROJECT ITSELF. FURTHER, THIS AMOUNT OF RS. 48,09,441/ - WAS BALANCE REMAINING AMOUNT FROM AN AMOUNT OF RS. 1,39,35,059/ - WHICH WAS RECEIVAB LE FR O M THE COMPANY AS ON 31 ST MARCH, 2000 AND HAD BEEN REDUCED OR INCREASED AS PER MUTUAL INCOMING OR OUTGOING. THIS AMOUNT WAS SHOWN AS UNSECURED LOANS IN THE BALANCE SHEET OF THE COMPANY. LASTLY, IT WAS SUBMIT TED THAT, OUT OF THE SAID AMOUNT , ONLY RS. 5,64,768/ - WAS THE AMOUNT DURING THE YEAR AND THE BALANCE WAS ON ACCOUNT OF OPENING BALANCE. 3. IN THE FIRST APPEAL, T HE LD. CIT(A), REDUCED THE SAID ADDITION ON ACCOUNT OF DEEMED DIVIDEND ON THE GROUND THAT, OUT OF THE TOTAL AMOUNT OF RS. 48,09,441/ - WHICH WAS SHOWN UNDER THE HEAD CLOSING BALANCE, INCLUDED AN AMOUNT AS OPENING BALANCE OF RS. 43,46,673/ - , THEREFORE, THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND SHOULD BE TAKEN AT , RS. 5,62,768/ - WHICH WAS UPHELD BY HIM AND BALANCE WAS DELETED. 4. AFT ER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE IMPUGNED ORDERS, WE FIND THAT, FIRST OF ALL, THE ASSESSEE FIRM IS NOT SHAREHOLDER IN M/S JAYCEE HOMES & HOTELS LTD. ALBEIT ITS PARTNERS WERE DIRECTORS IN THE SAID COMPANY. IT WAS IN THIS BACKGROUND THAT AMO UNT OF RS. 48,09,441/ - WHICH WAS REFLECTED AS LOAN IN THE BALANCE SHEETS HAVE BEEN TREATED AS DEEMED DIVIDEND. WITHOUT GOING INTO THE ASPECT , WHETHER DEEMED DIVIDEND AT ALL CAN BE ATTRACTED WHEN THE ASS ESSEE FIRM IS NOT A SHAREHOLDER AS T HE SAME HAS NO T BEEN CHALLENGED, BEFORE US, HOWEVER WE FIND THAT THE FINDING M/S HITESH CONSTRUCTION CO ITA NO. 1521 /MUM/20 1 4 3 OF THE CIT(A) THAT THE ADDITION CAN BE MADE ONLY OF THE CUMULATIVE VALUE OF THE TRANSACTI ONS CARRIED OUT DURING THE YEAR VIZ. AT RS. 5,62,768/ - SHOULD BE ADDED AS DEEMED DIVIDEND, WHICH IS THE DIFFERENCE BETWEEN THE OPENING BALANCE OF RS. 43,46,673/ - AND CLOSING BALANCE OF RS. 48,09,441/ - APPEARS TO BE CORRECT AND SAME HAS NOT BEEN REBUTTED BEFORE US. HENCE, WE DO NOT FIND ANY MERITS IN THE GROUND RAISED BY THE REVENUE AND ACCORDINGLY , THE SAME IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST , 2015. SD/ - S D/ - ( GOPAL KEDIA ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 28 TH AUGUST , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 31 , MUMBAI . 4) THE CIT 20 , MUMBAI . 5) , , / THE D.R. H BENCH, MUMBAI. 6) \ COPY TO GUARD FILE. / BY O RDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS