SARDAR MADAN SINGH BHARARA, MUMBAI V. JCIT (OSD) RG 8(1), MUMBAI

ITA 1563/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8373 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tangible material; Deemed dividend
• Section: 147; 56

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , , , , BEFORE SHRI RAJENDRA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1562/MUM/2010 & 1563/MUM/2010 ( !' #' / ASSESSMENT YEAR: 2006-07 & 2008-09) SARDAR MADAN SINGH BHARARA SANTOSH NIWAS, PHIROZ ROAD, SANTACRUZ (W), MUMBAI 400054 / VS. JOINT COMMISSIONER OF INCOME TAX RANGE 8(1) AAYAKAR BHAVAN, MUMBAI - 400020 ./ ./PAN/GIR NO. : AABPB9330M ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 30.11.2016 /DATE OF PRONOUNCEMENT: 23.02.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEALS AGAINST THE ORDER DATED 12.01.2012 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) 16, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ] RELEVANT TO THE A.Y.2006-07 & 2008-09. ITA 1562/M/2012:- 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: NONE REVENUE BY: SHRI SAURABH KUMAR RAI ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 2 1. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN CONFIRMING THE ORDER PASSED BY THE JOINT COMMISSION ER OF INCOME TAX WITHOUT CONSIDERING THE CIRCUMSTANCES OF THE CASE IN JUDICIOUS MANNER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 29.07.2006, DECLARING TOTAL INCOME TO THE TUNE OF RS.19,46,726/-. THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF TH E INCOME TAX ACT, 1961 ( IN SHORT THE ACT). SUBSEQUENTLY, NOTICE U /S.148 OF THE ACT DATED 28.03.2011 WAS ISSUED AND SERVED UPON THE ASSESSEE. FOLLOWING REASON FOR WERE MENTIONED FOR THE REOPENING THE ASSESSMENT OF THE CASE:- IN THIS CASE, THE ASSESSEE, SHRI MADANSINGH BHARAR A, FILED RETURN OF INCOME FOR THE A.Y.2006-07 ON 29.07.2006, DECLARING TOTAL INCOME AT RS.19,46,726/-. THE RETU RN OF INCOME WAS PROCESSED U/S.143(1) OF THE INCOME TAX A CT, 1961. SUBSEQUENTLY, NO SCRUTINY ASSESSMENT HAS BEE N DONE IN THIS CASE. IT IS SEEN THAT IN THE ASSESSMENT YEARS 2006-07 AND 2008-09, SHRI MADANSINGH BHARARA, WHO IS ASSESSED IN THIS CH ARGE, IS THE REGISTERED & BENEFICIAL SHAREHOLDER, HAVING MOR E THAN 20% SHARE, IN THE FOLLOWING PRIVATE LIMITED COMPANI ES: SR. NO. NAME OF THE COMPANY ASST. YEAR ASSESSED WITH %AGE OF SHAREHOLDING 1. M/S.OM SIDHIVINAYAK CREATIONS PVT. LTD. 2006-07 ITO- 8(2)(4), MUMBAI 90% 2. M/S. GAZEBO DEVELOPERS PVT. LTD. 2008-09 DCIT- 8(1), MUMBAI 98% ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 3 IT IS FURTHER SEEN THAT M/S. GAZEBO DEVELOPERS PVT. LTD., WHICH IS ASSESSED IN THIS CHARGE, GAVE LOANS/ADVAN CES OF RS.37,50,000/- TO M/S. OM SIDHIVINAYAK CREATIONS PV T. LTD., WHICH IS ASSESSED WITH ITO 8(2)(4), MUMBAI. HENCE, IN THE CASE OF M/S. OM SIDHIVINAYAK CREATION S PVT. LTD. FOR A.Y.2006-07, THE ITO 8(2)(4), MUMBAI ADDED AS SUM OF RS.37,50,000/- TO THE TOTAL INCOME OF M/S. OM SIDHIVINAYAK CREATIONS PVT. LTD., AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX A CT, 1961. AGGRIEVED, M/S. OM SIDHIVINAYAK CRATIONS PVT. LTD., FILED AN APPEAL BEFORE THE LD. CIT(A)-17, MUMBAI. THE LD. CIT(A)-17, MUMBAI VIDE HIS ORDER DATED 25.02.20 10 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER U/S.2(22)(E), FOLLOWING THE DECISION OF THE HONBLE ITAT, MUMBAI IN THE CASE OF M/S. BHAUMIK COLOUR PVT. LTD. THE LD. CIT(A), THEREFORE, HELD THAT AS PER THE SAI D DECISION OF THE HONBLE ITAT, MUMBAI, DEEMED DIVIDEND U/S.2(22)(E) CAN ONLY BE TREATED IN THE HA NDS OF REGISTERED AND BENEFICIAL SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF THE BORROWING COMPA NY, IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER HAVING SUBSTANTIAL INTEREST. ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 4 SHRI MADANSHINGH BHARARA, IS REGISTERED AND BENEFIC IAL SHAREHOLDER OF GAZEBO DEVELOPERS PVT. LTD. (WHICH I S THE LENDER COMPANY IN THIS CASE), HAVING MORE THAN 20% SHAREHOLDING, AS STATED ABOVE. SINCE, IN THE CASE OF MANDANSINGH BHARARA, NO SCRUTINY ASSESSMENT HAS BEE N DONE, A SUM OF RS.37,50,000/- U/S.2(22)(E) HAS REMA INED TO BE ADDED TO HIS TOTAL INCOME. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T INCOME OF RS.37,50,000/- U/S.2(22)(E) HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE ALSO FILED THE REPLY BY VIRTUE OF L ETTER DATED 16.11.2011, THEREAFTER, THE ASSESSING OFFICER COMPL ETED THE ASSESSMENT BY MAKING THE ADDITION U/S.2(22)(E) OF T HE ACT TO THE TUNE OF RS.37,50,000/-. REVISED TOTAL INCOME WAS ASSESS ED TO THE TUNE OF RS.56,96,730/-. SUBSEQUENTLY THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, TH EREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION TO THE TUNE OF RS.37,50,000/- IN VIEW OF THE PROVISION U/S.2(22)(E) OF THE ACT. DESPITE KNOWLEDGE THE ASS ESSEE DID NOT ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 5 APPEAR BEFORE US. HOWEVER, ON THE OTHER HAND THE L EARNED REPRESENTATIVE OF THE REVENUE HAS STRONGLY RELIED U PON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BEFORE GOING FURTHER, I T IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD: 2.3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION O F THE APPELLANT AND ALSO CAREFULLY GONE THROUGH THE DOCUM ENTS AVAILABLE ON RECORD. BEFORE, I DISCUSS THE LAW POSI TION IN THIS REGARD, IT WOULD BE PRUDENT TO TAKE NOTE OF THE PRO VISION OF S. 2(22)(E) OF THE ACT. IT READS AS UNDER: (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF A NY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS OF TH E COMPANY OR OTHERWISE) MADE AFTER THE 31ST MAY, 1987 , BY WAY OF ADVANCE OR LOAN TO A, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITL ED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RI GHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN P ER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH H E HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE RE FERRED TO AS THE SAID CONCERN OR ANY PAYMENT BY ANY SUCH COMP ANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SU CH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 6 CASE POSSESSES ACCUMULATED PROFITS; BUT DIVIDEND' D OES NOT INCLUDE - (I) A DISTRIBUTION MADE IN ACCORDANCE WITH SUB-CL. (C) OR SUB-CL. (D) IN RESPECT OF ANY SHARE ISSUED FOR FULL CASH CONSIDERATION, WHERE THE HOLDER OF THE SHARE IS NOT ENTITLED IN THE EVENT OF LIQUIDATION TO PARTICIPATE IN THE SURPLUS ASSETS; (IA) A DISTRIBUTION MADE IN ACCORDANCE WITH SUB-CL. (C) OR SUB-CL. (D) INSOFAR AS SUCH DISTRIBUTION IS ATTRIBU TABLE TO THE CAPITALISED PROFITS OF THE COMPANY REPRESENTING BONUS SHARES ALLOTTED TO ITS EQUITY SHAREHOLDERS AFTER TH E 31ST MARCH, 1964, (AND BEFORE THE 1ST APRIL, 1965) (II) ANY ADVANCE OR LOAN MADE TO A SHAREHOLDER OR T HE SAID CONCERN BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS, WHERE THE LENDING OF MONEY IS A SUBSTANTI AL PART OF THE BUSINESS OF THE COMPANY; (III) ANY DIVIDEND PAID BY A COMPANY WHICH IS SET O FF BY THE COMPANY AGAINST THE WHOLE OR ANY PART OF ANY SU M PREVIOUSLY PAID BY IT AND TREATED AS A DIVIDEND WIT HIN THE MEANING OF SUB-CL. (E), TO THE EXTENT TO WHICH IT I S SO SET OFF; ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 7 (IV) ANY PAYMENT MADE BY A COMPANY ON PURCHASE OF I TS OWN SHARES FROM A SHAREHOLDER IN ACCORDANCE WITH TH E PROVISIONS OF S. 77A OF THE COMPANIES ACT, 1956 (1 OF 1956); (V) ANY DISTRIBUTION OF SHARES PURSUANT TO A DEMERG ER BY THE RESULTING COMPANY TO THE SHAREHOLDERS OF THE DEMERGED COMPANY (WHETHER OR NOT THERE IS A REDUCTI ON OF CAPITAL IN THE DEMERGED COMPANY. 2.3.2. THE NEW CATEGORY OF PAYMENT WHICH WAS CONSID ERED AS DIVIDEND INTRODUCED BY THE FINANCE ACT, 1987 W.E.F. 1ST APRIL, 1988 BY THE SECOND LIMB OF S. 2(22)(E) IS PAYMENT T O ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST. FOR THE PUR POSES OF THESE FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFIED F OR APPLICATION OF THE ABOVE CATEGORY OF PAYMENT TO BE REGARDED AS DIVIDEND. THEY ARE: (A) THERE MUST BE A PAYMENT TO A CONCERN BY A COMPA NY. (B) A PERSON MUST BE A SHAREHOLDER OF THE COMPANY B EING A REGISTERED HOLDER AND BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND W HETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER. THI S IS ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 8 BECAUSE OF THE EXPRESSION 'SUCH SHAREHOLDER' FOUND IN THE RELEVANT PROVISION. THIS EXPRESSION ONLY REFERS TO THE SHAREHOLDER REFERRED TO IN THE EARLIER PART OF S. 2 (22)(E) VIZ., A REGISTERED AND A BENEFICIAL HOLDER OF SHARE S HOLDING 10 PER CENT VOTING POWER. THE HON'HLE RAJASTHAN HIG H COURT IN THE CASE OF UNION OF INDIA VS. WAZIR SINGH , WHILE DEALING WITH AN EXPRESSION 'NO SUCH APPLICATI ON' IN THE CONTEXT OF R. 97 OF THE RAJASTHAN HIGH COURT RU LES, 1952 HAS HELD AS FOLLOWS: GENERALLY THE WORD SUCH' REFERS ONLY TO PREVIOUSLY INDICATED, CHARACTERIZED OR SPECIFIED. ' SC1' IS AN ADJECTIVE MEANING, THE ONE PREVIOUSLY INDICATED OR REFERS ONLY TO SOMETHING WHICH HAS BEEN SAID BEFORE. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF MOHAN LAL & ANR. VS. GRAIN CHAMBERS LTD. AIR 1959 ALL 279 HAS HELD AS FOLLOWS: IN FACT, IT APPEARS TO US THAT THE WORD 'SUCH' IS U SED BEFORE A NOUN IN A LATTER PART OF A SENTENCE, THE PROPER CONSTRUCTION IN THE ENGLISH LANGUAGE IS TO HOLD THAT THE SAME NOUN IS BEING USED AFTER THE WORD 'SUCH WITH ALL ITS CHARACTERISTICS WHICH MIGHT HAVE BEEN INDICATED EARLIER IN THE SAME SENTENCE. ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 9 (C) THE VERY SAME PERSON REFERRED TO IN (B) ABOVE M UST ALSO BE A MEMBER OR A PARTNER IN THE CONCERN HOLDIN G SUBSTANTIAL INTEREST IN THE CONCERN VIZ., WHEN THE CONCERN IS NOT A COMPANY, HE MUST AT ANY TIME DURING THE PREVIOUS YEAR, BE BENEFICIALLY ENTITLED TO NOT LESS THAN TWENTY PER CENT OF THE INCOME OF SUCH CONCERN; AND WHERE THE CONCERN IS A COMPANY HE MUST BE THE OWNER OF SHARES, NOT BEING SHARES ENTITLED TO A FIXED RATE O F DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICI PATE IN PROFITS, CARRYING NOT LESS THAN TWENTY PER CENT OF THE VOTING POWER. (D) IF THE ABOVE CONDITIONS ARE SATISFIED THEN THE PAYMENT BY THE COMPANY TO THE CONCERN WILL BE DIVIDEND. 2.3.3 THE INTENTION BEHIND ENACTING PROVISIONS OF S . 2(22)(E) IS THAT CLOSELY- HELD COMPANIES (I.E. COMPANIES IN WHI CH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED), WHICH ARE CONTROLLED BY A GROUP OF MEMBERS, EVEN THOUGH THE COMPANY HAS ACCUMULATED PR OFITS WOULD NOT DISTRIBUTE SUCH PROFIT AS DIVIDEND BECAUS E IF SO DISTRIBUTED THE DIVIDEND INCOME WOULD BECOME TAXABL E IN THE HANDS OF THE SHAREHOLDERS. INSTEAD OF DISTRIBUTING ACCUMULATED PROFITS AS DIVIDEND, COMPANIES DISTRIBUTE THEM AS L OAN OR ADVANCES TO SHAREHOLDERS OR TO CONCERN IN WHICH SUC H SHAREHOLDERS HAVE SUBSTANTIAL INTEREST OR MAKE ANY PAYMENT ON ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 10 BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF SUCH SHA REHOLDER. IN SUCH AN EVENT, BY THE DEEMING PROVISIONS, SUCH PAYM ENT BY THE COMPANY IS TREATED. AS DIVIDEND. THE INTENTION BEHI ND THE PROVISIONS OF S. 2(22)(E) OF THE ACT IS TO TAX DIVI DEND IN THE HANDS OF SHAREHOLDERS. THE DEEMING PROVISIONS AS IT APPLIES TO THE CASE OF LOANS OR ADVANCES BY A COMPANY TO A CON CERN IN WHICH ITS SHAREHOLDER HAS SUBSTANTIAL INTEREST, IS BASED ON THE PRESUMPTION THAT THE LOANS OR ADVANCES WOULD ULTIMA TELY BE MADE AVAILABLE TO THE SHAREHOLDERS OF THE COMPANY G IVING THE LOAN OR ADVANCE. FURTHER, IT IS AN ADMITTED CASE TH AT UNDER NORMAL CIRCUMSTANCES, SUCH A LOAN OR ADVANCE GIVEN TO THE SHAREHOLDERS OR TO A CONCERN, WOULD NOT QUALIFY AS DIVIDEND. IT HAS BEEN MADE SO BY LEGAL FICTION CREATED UNDER S. 2(22)(E) OF THE ACT. WE HAVE TO KEEP IN MIND THAT THIS LEGAL PR OVISION RELATES TO 'DIVIDEND'. THUS, BY A DEEMING PROVISION , IT IS THE DEFINITION OF DIVIDEND WHICH IS ENLARGED. LEGAL FIC TION DOES NOT EXTEND TO 'SHAREHOLDER'. WHEN WE KEEP IN MIND THIS ASPECT, THE CONCLUSION WOULD BE OBVIOUS, VIZ., LOAN OR ADVANCE GIVEN UNDER THE CONDITIONS SPECIFIED UNDER S. 2(22)(E) OF THE A CT WOULD ALSO BE TREATED AS DIVIDEND. THE FICTION HAS TO STOP HER E AND IS NOT TO BE EXTENDED FURTHER FOR BROADENING THE CONCEPT OF S HAREHOLDERS BY WAY OF LEGAL FICTION. ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 11 2.3.4 THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HOTEL HILLTOP (2008) 217 CTR (RAJ) 527 HAD INTERPRE TED THE PROVISION IN IDENTICAL MANNER. IT WOULD BE APT TO Q UOTE PARA 7 OF THE SAID JUDGMENT WHICH CONTAINS THE RELEVANT DI SCUSSION: 'THE MORE IMPORTANT ASPECT, BEING THE REQUIREMENT O F S. 2(22)(E) IS, THAT 'THE PAYMENT MAY BE MADE TO ANY CONCERN, IN WHICH SUCH SHAREHOLDER IS A MEMBER, OR THE PARTNER, AND IN WHICH HE HAS SUBSTANTIAL INTEREST, OR ANY PAYMENT BY ANY SUCH COMPANY, ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER....' THU S, THE SUBSTANCE OF THE REQUIREMENT IS, THAT THE PAYMENT S HOULD BE MADE OIL OF OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER, OBVIOUSLY, THE PROVISION IS INTENDED T O ATTRACT THE LIABILITY OF TAX ON THE PERSON, ON WHOS E BEHALF, OR FOR WHOSE INDIVIDUAL BENEFIT, THE AMOUNT IS PAID BY THE COMPANY, WHETHER TO THE SHAREHOLDER, OR TO THE CONC ERN FIRM. IN WHICH EVENT, IT WOULD FALL WITHIN THE EXPR ESSION 'DEEMED DIVIDEND'. OBVIOUSLY, INCOME FROM DIVIDEND, IS TAXABLE AS INCOME FROM OTHER SOURCES, UNDER S. 56 O F THE ACT, AND IN THE VERY NATURE OF THINGS, THE INCOME H AS TO BE, OF THE PERSON EARNING THE INCOME. THE ASSESSEE IN THE PRESENT CASE IS NOT SHOWN TO BE ONE OF THE PERSONS, BEING SHAREHOLDER. OF COURSE THE TWO INDIVIDUALS BEING RO OP ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 12 KUMAR AND DEVENDRA KUINAR, ARE THE COMMON PERSONS, HOLDING MORE THAN REQUISITE AMOUNT OF SHAREHOLDING, AND ARE HAVING REQUISITE INTEREST, IN THE FIRM, BUT THE N, THEREBY THE DEEMED DIVIDEND WOULD NOT BE DEEMED DIVIDEND IN THE HANDS OF THE FIRM, RATHER IT WOULD OBVIOUSLY BE DEEMED DIVIDEND IN THE HANDS OF THE INDIVIDUALS, ON WHOSE BEHALF, OR ON WHOSE INDIVIDUAL BENEFIT, BEING SUCH SHAREHOLDER, THE AMOUNT IS PAID BY THE COMPANY TO T HE CONCERN.' 2.3.5 IT IS NOT IN DISPUTE THAT SECTION 2 (22) (E) OF THE ACT CREATES A FICTION OF MAKING SUCH LOAN AND ADVANCE U NDER CIRCUMSTANCES, AS DEEMED DIVIDEND, WOULD BE ATTRACT ED ONLY WHEN SOME LOAN OR ADVANCE IS GIVEN BY THE COMPANY T O ANOTHER PERSON WHO IS HAVING PARTICULAR SHAREHOLDING IN THE SAID COMPANY. THE UNDISPUTED FACT IN THE APPELLANT CASE IS THAT M/S. GAZEBO DEVELOPERS PVT. LTD. A CONCERN IN WHICH DIRE CTOR MR. MADAN SINGH BHARARA HAD A SUBSTANTIAL INTEREST AND GIVEN A LOAN OF 33,95,000/- TO M/S. OM SIDDI VINAYAK CREATI ON PVT. LTD. IN WHICH MR. MADAN SINGH BHARARA HAS A SUBSTAN TIAL INTEREST. THE AO ASSESSING THE CASE OF M/S. OM SIDD I VINAYAK CREATION PVT. LTD. HAS ADDED THIS SUM AS DEEMED DIV IDEND IN THE HANDS OF M/S. OM SIDDI VINAYAK CREATION PVT. LT D. WHICH IS NOT A SHAREHOLDER IN THE M/S. GAZEBO DEVELOPERS PVT. LTD. ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 13 THE HON'BLE ITAT FOLLOWING THE DECISION OF M/S. BHA UMIK COLOUR LAB. PVT. LTD., 118 ITD 1 MUMBAI SPECIAL BEN CH AND CIT VS. UNIVERSAL MEDICARE PVT. LTD. 324 ITR 263 (B ORN.) HAS DELETED THE ADDITIONS. THE LD.CIT(A)-17 WHILE DECID ING THE CASE OF M/S. OM SIDDI VINAYAK CREATION PVT. LTD. DE LETED THE SAID ADDITION. THE LD.A0 OF THE APPELLANT STATED TH AT SHRI MADAN SINGH BHARARA IS A REGISTERED AND BENEFICIAL SHAREHOLDER OF M/S. GAZEBO DEVELOPERS PVT. LTD. WHICH IS A LEND ER COMPANY IN THIS CASE AND HAVING MORE THAN 20% OF SHAREHOLDING ALSO HOLDS A SUBSTANTIAL SHAREHOLDING IN M/S. OM SIDDI VINAYAK CREATION PVT. LTD. WHEREIN HE HOLDS 9 0% OF THE SHAREHOLDING. IT IS ALSO A MATTER OF FACT AS REPORT ED BY THE APPELLANT THAT THE APPELLANT HAD GIVEN A LOAN TO M/ S. GAZEBO DEVELOPERS PVT. LTD. AMOUNTING TO Z6,32,63,745/-. T HEREFORE, THE ADVANCING OF LOAN BY M/S. GAZEBO DEVELOPERS PVT . LTD. TO M/S. OM SIDDI VINAYAK CREATION PVT. LTD. IN WHICH T HE APPELLANT IS ALSO A BENEFICIAL SHAREHOLDER IS NOTHI NG BUT FOR THE BENEFIT OF THE REGISTERED AND BENEFICIAL SHAREHOLDE R OF M/S. GAZEBO DEVELOPERS. THEREFORE, THE PROVISIONS OF SEC TION 2(22)(E) ARE SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT. THE ADDITION MADE BY THE LD.A0 IS ACCORDINGLY CONFI RMED. 3. IN THE RESULT, THE APPEAL IS DISMISSED. ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 14 5. THE ASSESSEE FAILED TO APPEAR BEFORE THE TRIBUNA L TO REPRESENT HIS CASE. NO DISTINGUISHABLE FACTS HAVE BEEN PRODU CED BEFORE US. NOTHING CAME INTO THE NOTICE THAT IN WHICH CIRCUMST ANCES THE ORDER PASSED BY THE CIT(A) IS WRONG AGAINST LAW AND FACTS . THE ASSESSEE WAS HAVING THE SUBSTANTIAL SHARE IN BOTH THE COMPAN IES I.E. M/S. OM SIDHIVINAYAK CREATIONS PVT. LTD. AND M/S. GAZEBO DE VELOPERS PVT. LTD. THE ASSESSEE COMPANY WAS HAVING 90% SHARE IN M/S. OM SIDHIVINAYAK CREATIONS PVT. LTD. AND 98% SHARES IN M/S. GAZEBO DEVELOPERS PVT. LTD. IT IS NOT IN DISPUTE THAT THE M/S. GAZEBO DEVELOPERS PVT. LTD. ADVANCED THE LOAN TO THE TUNE OF RS.37,50,000/- TO M/S. OM SIDHIVINAYAK CREATIONS PVT. LTD. AT THE TIME OF THE FINALIZING THE ASSESSMENT OF M/S. OM SIDHIVINAYAK C REATIONS PVT. LTD. THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS DECID ED THAT THE ADDITION OF DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT IS REQUIRED TO BE ADDED IN CASE OF REGISTERED AND BENEFICIAL SHAREHOL DERS OF M/S. GAZEBO DEVELOPERS PVT. LTD. I.E. LENDER COMPANY WHI CH WAS DECIDED IN CONSEQUENCES OF THE DECISION OF THE HONBLE INCO ME TAX APPELLATE TRIBUNAL, MUMBAI, SPECIAL BENCH IN THE CASE OF BHAU MIK COLOUR P. LTD. (313 ITR (AT) 146. THEREAFTER, THE SAID ADDIT ION WAS MADE AND UPHELD UP TO THE CIT(A) BY VIRTUE OF ORDER IN QUEST ION. SINCE NO TANGIBLE MATERIAL OF ANY KIND WAS PRODUCED BEFORE U S TO WHICH IT CAN BE ASSUMED THAT THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS, THEREFORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECT LY WHICH IS NOT ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 15 REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAG E. HENCE, WE DISMISSED THIS APPEAL OF THE ASSESSEE. ITA NO.1563/MUM/2012:- 6. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN CONFIRMING THE ORDER PASSED BY THE JOINT COMMISSION ER OF INCOME TAX WITHOUT CONSIDERING THE CIRCUMSTANCES OF THE CASE IN JUDICIOUS MANNER. 7. THE FACTS OF THE CASE ARE QUITE SIMILAR WITH THE FACTS IN THE CASE NARRATED ABOVE. IN THIS APPEAL ALSO, THE ISSUE RAI SED BY THE ASSESSEE IS THE SAME WHICH HAS BEEN RAISED IN THE ABOVE MENTION ED APPEAL. HOWEVER, IN THE PRESENT CASE THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY ADDING AN AMOUNT TO THE TUNE OF RS.33 ,95,000/- U/S.2(22)(E) OF THE ACT WHICH HAS BEEN CONFIRMED BY THE CIT(A) BY VIRTUE OF ORDER IN QUESTION. IN THIS REGARD WE HAV E ALREADY DECIDED THIS ISSUE AGAINST THE ASSESSEE WHILE DECIDING THE APPEAL OF THE ASSESSEE MENTIONED ABOVE, THEREFORE ACCORDINGLY, FI NDING FACTS AND CIRCUMSTANCES SIMILAR TO THE ABOVE MENTIONED APPEAL , WE ARE OF THE VIEW THAT THE SAME FINDING WOULD BE APPLICABLE TO T HE ASSESSEES PRESENT APPEAL ALSO. THERE IS NO NEED TO REPEAT TH E FINDING ON THE SIMILAR ISSUE HENCE THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE. ACCORDINGLY, WE DISMISSED T HE APPEAL OF THE ASSESSEE. ITA NO.1562&1563/M/2012 A.Y. 20 06-07 & 2008-09 16 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2017 . SD/- SD/- (RAJENDRA) (AMARJIT SINGH) !' / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 23 RD , 2017 MP & '# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. , , , , / DR, ITAT, MUMBAI 6. + -. / GUARD FILE. / BY ORDER, % % //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI