ACIT, Gurgaon V. M/s. DLF Info City Developers (Chandigarh) Ltd., Gurgaon

ITA 1792/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74204 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: R K KAPOOR
• Keywords: Reopening of assessment; Additional evidence; Deemed dividend; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1792 /DEL/2012 (ASSESSMENT YEAR 2006-07) ACIT, CIRCLE 1, VS. M/S. DLF INFO CITY GURGAON DEVELOPERS (CHANDIGARH) LTD., 3 RD FLOOR, SHOPPING MALL COMPLEX, ARJUN MARG, DLF CITY, PHASE I, GURGAON PAN/GIR NO.: AABCD9114E (APPELLANTS) (RESPONDENTS) DEPARTMENT BY : SMT. NIDHI SRIVASTAVA, SR. DR ASSESSEE BY: SHRI R. K. KAPOOR, FCA ORDER PER U B S BEDI, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) FARIDABAD DATED 27.01.2012 RELEVANT TO ASSES SMENT YEAR 2006-07 WHEREIN FOLLOWING TWO EFFECTIVE GROUNDS HAVE BEEN R AISED. 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING THE ADDITIO N OF RS.7,11,38,000/- MADE BY THE A.O. ON ACCOUNT OF DEE MED DIVIDEND, IN SPITE OF THE FACT THAT BEING SUBSIDIARY OF SUBSIDIA RY THE TRANSACTION OF LOAN BY M/S. DLF COMMERCIAL DEVELOPERS LTD. TO M/S. DLF INFOCITY DEVELOPERS (BANGALORE) LTD., FALL IN THE CATEGORY O F DEEMED DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE AC T? IN THE LIGHT OF RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CA SE OF KISHAN I.T.A. NO. 1792/DEL/2012 2 CHAND THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS CLEARLY APPLICABLE IN THE PRESENT CASE. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING THE ADDITI ON OF RS.7,11,38,000/- ON THE BASIS OF ADDITIONAL EVIDENC E ACCEPTED DURING APPELLATE PROCEEDINGS? 2. SINCE, BOTH THE GROUNDS RELATE TO DELETION OF AD DITION OF RS.7,11,38,000/- WHEN IN THE 1 ST GROUND, CHALLENGE IS WITH REGARD TO DELETION OF ADDITION OF THE SAID AMOUNT MADE U/S 2(22)(E) OF THE ACT, WHEREAS 2 ND GROUND RELATES TO SUCH DELETION OF ADDITION ON THE BAISS OF ADDITIONAL EVIDENCE ACCEPTED DURING THE 1 ST APPELLATE PROCEEDINGS. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE RETU RN OF INCOME DECLARING LOSS OF RS.5,28,23,912/- WAS E-FILED BY THE ASSESSE E ON 29.11.2006. THEREAFTER, A REVISE RETURN WAS FILED ON 30.06.2007 DECLARING LOSS OF RS.13,40,71,436/-, WHICH WAS PROCESSED U/S 143(1) O F THE ACT. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM ACIT, CIRCLE-10(1) , NEW, DELHI, VIDE LETTER DATED 24.06.2009, WHEREIN IT WAS REPORTED TH AT IN THE ASSESSMENT OF DLF LIMITED COMPLETED BY THE ADD!. CIT FOR A.Y.2006 -07 PURSUANT TO SPECIAL AUDIT U/S 142(2A), DLF COMMERCIAL DEVELOPER S LIMITED WAS FOUND TO HAVE ADVANCED A LOAN OF RS.7,11,38,000J- TO DLF INFO CITY DEVELOPERS (CHANDIGARH) LIMITED. THE DLF COMMERCIAL DEVELOPERS LIMITED IS A COMPANY IN WHICH DLF LIMITED HELD 100% SHARES AND D LF LIMITED ALSO HELD MORE THAN 50% SHARES OF DLF INFO CITY DEVELOPE RS (CHANDIGARH) LIMITED. THUS, THE TRANSACTION OF LOAN BY DLF COMME RCIAL DEVELOPERS LIMITED TO DLF INFO CITY DEVELOPERS (CHANDIGARH) LI MITED FELL IN THE CATEGORY OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT . ON RECEIPT OF AFORESAID INFORMATION, THE AO RECORDED THE REASONS THAT THE I NCOME TO THE EXTENT OF I.T.A. NO. 1792/DEL/2012 3 RS.7,11,38,000/- HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. CONSEQUENTLY, A NOTICE U/S 148 OF THE A CT WAS ISSUED ON 06.08.2009 AFTER RECORDING THE REASONS. IN COMPLIAN CE TO NOTICE U/S 148, THE ASSESSEE, VIDE LETTER DATED 21.10.2009, SUBMITTED T HAT THE ORIGINAL RETURN FILED ON 29.11.2006 AND SUBSEQUENTLY REVISED ON 30.06.200 7 MAY BE TREATED AS A RETURN HAVING BEEN FILED IN COMPLIANCE TO NOTICE U/ S 148. ON THE REQUEST OF ASSESSEE MADE VIDE LETTER DATED 16.09.2009, THE REA SONS RECORDED FOR REOPENING OF ASSESSMENT U/S 147 WERE PROVIDED. THE ASSESSEE FILED OBJECTIONS TO THE REOPENING OF ASSESSMENT CONTENDIN G THAT THE ASSESSEE HAD NO BUSINESS RELATION WITH DLF LTD. THE OBJECTIONS S O RAISED WERE DISPOSED OF AND REJECTED BY THE AO RELYING UPON CERTAIN JUDI CIAL RULINGS AS MENTIONED IN THE ASSESSMENT ORDER. THE AO, AFTER RELYING UPON THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, HAS HELD THAT THE LOAN OF RS.7 ,11,38,000J-RECEIVED BY THE ASSESSEE FROM DLF COMMERCIAL DEVELOPERS LIMITED WAS DEEMED DIVIDEND AND THERE WERE VALID REASONS TO BELIEVE THAT DLF LI MITED ALSO HELD MORE THAN 50% SHARES OF DLF INFO CITY DEVELOPERS (CHANDI GARH) LIMITED. CONSEQUENTLY, THE AO HAS MADE ADDITION OF RS.7,11,3 8,000/- ON ACCOUNT OF LOAN RECEIVED BY THE ASSESSEE FROM DLF COMMERCIAL D EVELOPERS LIMITED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE A.O., APPEAL WAS F ILED BEFORE LD. CIT(A), AND BESIDES CHALLENGING INITIATION OF REASS ESSMENT PROCEEDINGS, ASSESSEE HAS CHALLENGED ADDITION OF RS.7,11,38,000/ - MADE BY THE A.O. RELYING UPON BY THE PROVISION OF SECTION 2(22)(E) O F THE ACT. LD. CIT(A) WHILE CONSIDERING AND NOT ACCEPTING THE PLEA WITH R EGARD TO INITIATION OF REASSESSMENT PROCEEDINGS AS CHALLENGED IN GROUNDS N O.1-3 HAS ALLOWED THE I.T.A. NO. 1792/DEL/2012 4 APPEAL OF THE ASSESSEE ON MERITS, WHICH WAS CONTAIN ED IN GROUNDS NO.4-6, DELETED THE ADDITION OF RS.7,11,38,000/- U/S 2(22)( E) OF THE ACT WHILE ELABORATELY DISCUSSING THE ISSUE AND AFTER INCORPOR ATING THE RELEVANT PROVISIONS OF LAW AND FACTS OF THE CASE. 5. AGGRIEVED BY THE ORDER OR LD. CIT(A), DEPARTMENT HAS COME UP IN APPEAL AND CHALLENGED THE DELETION OF ADDITION OF R S.7,11,38,000/- MADE U/S 2(22)(E) OF THE ACT FIRSTLY ON THE GROUND THAT DELE TION IS NEITHER JUSTIFIED NOR APPROPRIATE AND SECONDLY IT IS CONTENDED THAT DELET ION OF ADDITION IS ON THE BASIS OF ADDITIONAL EVIDENCE ACCEPTED DURING THE AP PELLATE PROCEEDINGS. 6. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIRSTLY THERE IS NO ADDITIONAL EVIDENCE EITHER FILED OR ACC EPTED BY THE FIRST APPELLATE AUTHORITY BEFORE DECIDING THE ISSUE SO GROUNDS RAIS ED IN THIS REGARD IS NOT SUSTAINABLE WHICH SHOULD BE DISMISSED. AS REGARDS THE DELETION OF ADDITION OF RS.7,11,38,000/- ON MERIT IS CONCERNED, LD. COUN SEL FOR THE ASSESSEE STRONGLY PLEADED THAT IT IS A CASE WHERE LOAN HAS B EEN GIVEN BY THE SHAREHOLDERS I.E. DLF COMMERCIAL LTD. (HOLDING COMP ANY) TO THE ASSESSEE COMPANY SO, IT IS A TRANSACTION OF A LOAN FROM SH AREHOLDERS AND NOT LOAN TO A SHAREHOLDER AS ENVISAGED U/S 2(22)(E) OF THE I. T. ACT, 1961 SO ADDITION COULD NOT BE MADE IN THIS REGARD, WHICH HA S RIGHTLY BEEN DELETED AND WHILE RELYING UPON THE ORDER OF LD. CIT(A) IN ITS T OTALITY ON THE ISSUE OF MERIT, IT WAS PLEADED FOR DISMISSAL OF THIS GROUND OF APPEAL OF THE REVENUE. 7. LD. D.R. COULD NOT PINPOINT ANY MATERIAL WHICH H AS BEEN FILED AND ACCEPTED AS ADDITIONAL EVIDENCE AS ALLEGED IN THE G ROUND OF APPEAL. THEREFORE, IN OUR CONSIDERED VIEW, THE GROUND IS MI SCONCEIVED AND LIABLE TO BE REJECTED, WHICH AS SUCH REJECTED. AS REGARDS TH E MERIT OF ADDITION IS I.T.A. NO. 1792/DEL/2012 5 CONCERNED, LD. D.R. HAS RELIED UPON THE ORDER OF TH E A.O. TO PLEAD FOR REVERSAL OF THE ORDER OF LD. CIT(A) IN THIS REGARD. LD. D.R. WHEN ASKED TO POINT OUT ANY FLAW OR MISTAKE IN THE ORDER OF LD. C IT(A), SHE WAS NOT ABLE TO DO. 8. AFTER HAVING HEARD BOTH THE SIDES AND CONSIDERIN G THE MATERIAL ON RECORD, WE FIND THAT AS REGARDS THE MERIT OF ADDITI ON MADE U/S 2(22)(E) IS CONCERNED, THE SAME APPEARS TO HAVE BEEN DEALT WITH AND CONSIDERED VERY APPROPRIATELY BY LD. CIT(A) BY PASSING A DETAILED O RDER GIVING RELEVANT PROVISIONS OF LAW, FACTS OF THE CASE AND DETAILED D ISCUSSION WHICH COULD NOT BE REBUTTED BY THE LD. D.R. SINCE, THE ISSUE INVOL VED IN GROUND NO.1 HAS APPROPRIATELY BEEN DEALT WITH AND JUST AND PROPER O RDER HAS BEEN PASSED, WHEN NO MISTAKE OR AMBIGUITY HAS BEEN POINTED OUT O R NOTED, WE HAVE NO OPTION BUT TO UPHOLD THE ORDER OF LD. CIT(A) IN THI S REGARD. AS SUCH, WHILE CONCURRING WITH THE FINDINGS OF LD. CIT(A) ON THE I SSUE OF MERIT, WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISM ISS THIS GROUND ALSO OF APPEAL OF THE REVENUE. 9. AS A RESULT, APPEAL OF THE REVENUE GETS DISMISSE D. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEB., 2014 AFTER THE CONCLUSION OF HEARING. SD./- SD./- (SHAMIMN YAHYA) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 25 TH FEB., 2014. SP. I.T.A. NO. 1792/DEL/2012 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI