ASHOK GOYAL, MUMBAI V. ACIT CIR 6(1), MUMBAI

ITA 1647/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75223 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: S C TIWARI; NATASHA MANGAT
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 1645 & 1647/M/2011 ASSESSMENT YEAR S : 2001 - 02 & 2003 - 04 SHRI ASHOK GOYAL 303/304, SHAGUN TOWER, B WING , GEN. A.K. VAIDYA MARG, MALAD (E), MUMBAI 400 097 PAN: AAFPG8896D VS. ACIT, CIRCLE 6(1) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.C. TIWARI & MS. NATASHA MANGAT REVENUE BY : SHRI O.P. SINGH, D.R. DATE OF HEARING : 07.01. 201 4 DATE OF PRONOUNCEMENT : 07.01.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE NOTED TWO APPEALS FILED BY THE SAME ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 09.12.10 ARE RELATING TO DIF FERENT ASSESSMENT YEARS I.E. A.Y. 2001 - 0 2 AND A.Y. 2003 - 0 4 RESPECTIVELY. SINCE BOTH THE APPEALS ARE RELATING TO THE SAME ASSESSEE INVOLVING IDENTICAL ISSUES, HENCE THE SAME ARE DISPOSED OFF WITH THIS COMMON ORDER. 2. THE SHORT GRIEVANCE THAT WE ARE REQUIR ED TO ADJUDICATE IN THESE APPEALS IS WHETHER OR NOT THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 5,35,943/ - RELEVANT TO ASSESSMENT YEAR 2001 - 02 AND RS. 9,87,146/ - RELEVANT TO ASSESSMENT YEAR 2003 - 04 MADE IN THE HANDS OF THE ASSESSEE AS DEEMED DI VIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. ITA NO.1645 & 1647/M/2011 SHRI ASHOK GOYAL 2 3 . AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, VIDE ORDER DATED 03.03.11 PASSED IN ITA NO . 7412/M/2010 , WITH THE SINGLE ME MBER JUDGMENT OF THE TRIBUNAL PASSED IN THE OWN CASE OF THE ASSESSEE IN IMMEDIATELY PRECEDING YEAR DURING WHICH THE DISALLOWANCE HA D BEEN MADE BY THE AO RELATING TO THE IDENTICAL TRANSACTION. 4 . THE RELEVANT FINDINGS OF THE TRIBUNAL OF THE TRIBUNAL ARE RE PRODUCED AS UNDER: 6. I HAVE NOTICED THAT THE COMMERCIAL ARRANGEMENTS OF GRANTING CREDIT LINE TO THE LANDLORD BY BLR INDIA PVT LTD, IN LIEU OF INTEREST FREE DEPOSITS, WHICH BLR INDIA PVT. LTD WAS REQUIRED TO PLACE IN THE NORMAL COURSE OF BUSINESS, HAS NO T BEEN QUESTIONED BY ANY OF THE AUTHORITIES BELOW. I HAVE ALSO NOTICED THAT THE ASSESSEE HAS DULY FURNISHED THE BOARD RESOLUTION AUTHORIZING THE ABOVE COMMERCIAL ARRANGEMENTS AND IT IS NOT EVEN THE REVENUES CASE THAT THE SAID ARRANGEMENT OF GRANTING CREDI T LINE TO MRS NILU GOYAL AND HER FAMILY MEMBERS WAS A SHAM OR ARTIFICIAL ARRANGEMENT. THE SHORT REASON FOR WHICH THE AMOUNT HAVING BEEN RECEIVED IN THE ORDINARY COURSE OF BUSINESS IS THAT WHILE WAREHOUSES WERE OWNED BY MRS NILU GOYAL, THERE WAS NO JUSTIFIC ATION IN GIVING MONIES DIRECTLY TO HER HUSBAND I.E. ASSESSEE BEFORE ME. HOWEVER, SO FAR AS THIS ASPECT OF THE MATTER IS CONCERNED, IT IS PURELY A COMMERCIAL DECISION AS TO WHETHER OR NOT THE CREDIT LINE IS TO BE ALLOWED TO THE LANDLORD AND TO HER OTHER FA MILY AS WELL AND AS LONG AS THE BENEFITS OF THE COMMERCIAL ARRANGEMENT ARE NOT IN CHALLENGE, IT CANNOT BE OPEN TO THE ASSESSING OFFICER TO TREAT THE MONIES, HAVING BEEN RECEIVED UNDER THESE COMMERCIAL ARRANGEMENTS, AS LOANS FROM THE BLR INDIA PVT LTD. IN T HIS VIEW OF THE MATTER, I DECLINE TO UPHOLD THE OBJECTION TAKEN BY THE AUTHORITIES BELOW AND DIRECT THE AO TO DELETE THE IMPUGNED DISALLOWANCE. IT IS NOT IN DISPUTE THAT IN THE EVENT OF THE AMOUNT HAVING BEEN RECEIVED BY THE ASSESSEE AS PART OF THE COMMERC IAL TRANSACTION WITH THE BLR INDIA PVT LTD, THE SAID AMOUNT CANNOT BE TAXED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. I ACCORDINGLY UPHOLD THE GRIEVANCE OF THE ASSESSEE AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 5 . WE MAY OBSERVE THAT THE IS SUE UNDER CONSIDERATION IS SQUARELY COVERED WITH THE FINDINGS OF THE CO - ORDINATE BENCH OF THE T RIBUNAL GIVEN IN THE OWN CASE OF THE ASSESSEE FOR A.Y. 2002 - 03 AS REPRODUCED ABOVE. THE LD. D.R. COULD NOT BRING BEFORE US ANY CONTRARY FACT OR CASE LAW WHICH M AY JUSTIFY DEPARTURE THERE FROM. SO RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO ORDINATE BENCH OF ITA NO.1645 & 1647/M/2011 SHRI ASHOK GOYAL 3 THE T RIBUNAL FOR THE EARLIER YEAR, BOTH THE ISSUE S ARE DECIDED IN FAVOUR OF THE ASSESSEE. 6 . ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.01.2014 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 07.01.2014 . * KISHORE CO PY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.