ACIT Corporate Circle 4(1), CHENNAI V. Muthu Nesamani Maran, CHENNAI

ITA 1840/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4337 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: S P PALANIAPPAN
• Keywords: Deemed dividend
• Section: 2(22)(e)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO.1840/CHNY/2018 /ASSESSMENT YEAR: 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 4(1), CHENNAI. VS. SHRI MUTHU NESAMANI MARAN, NO. 1, 9 TH STREET, DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI 600 004. [PAN:AAJPM4798C] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL. CIT / RESPONDENT BY : SHRI SP PALANIAPPAN, CA / DATE OF HEARING : 06.02.2019 /DATE OF PRONOUNCEMENT : 12.02.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 8, CHENNAI DATED 08.03.2018 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF .5.50 CRORES MADE UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. 2. AT THE OUTSET, THE LD. DR SUBMITTED THAT BY CONSIDERING THE I.T.A. NO.1840/CHNY/18 2 PARTICULARS AVAILABLE IN THE LEDGER EXTRACT OF SHRI MGM MARAN IN THE BOOKS OF M/S. SOUTHERN AGRIFURANE INDUSTRIES LTD., THE LD. CIT(A) ERRONEOUSLY HELD THAT THE CURRENT ACCOUNT TRANSACTIONS ARE NOT LIABLE FOR TAXATION UNDER SECTION 2(22)(E) OF THE ACT WITHOUT OBTAINING THE REMAND REPORT FROM THE ASSESSING OFFICER IS BAD IN LAW AND PRAYED FOR SETTING ASIDE THE APPELLATE ORDER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 3. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHEN THE BENCH HAS POINTED OUT THE ONE DAY DELAY IN FILING OF THE APPEAL, THE LD. DR PRAYED FOR CONDONING THE SAME AND TO ADMIT THE APPEAL FOR HEARING, WHICH WAS DULY AGREED BY THE LD. COUNSEL FOR THE ASSESSEE. ACCORDINGLY, THE ONE DAY DELAY IN FILING THE APPEAL STANDS CONDONED AND ADMITTED THE APPEAL FOR ADJUDICATION. 4. THE ASSESSEE SHRI MGM MARAN IS A DIRECTOR AND HOLDING 80.99% OF SHARES WITH VOTING RIGHTS IN THE COMPANY M/S. SOUTHERN AGRIFURANE INDUSTRIES PVT. LTD. [SAIL] AS ON 31.03.2008. THE SAID COMPANY IS A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. AS PER THE FINAL ACCOUNTS OF THE SAID COMPANY SAIL FOR THE FINANCIAL YEAR 2007-08, THE SAID COMPANY HAS GOT ACCUMULATED PROFITS. IN ACCORDANCE WITH THE I.T.A. NO.1840/CHNY/18 3 PROVISIONS OF SECTION 2(22)(E) OF THE ACT, ANY LOAN OR DEPOSIT RECEIVED BY AN INDIVIDUAL ASSESSEE FROM A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED AND THE SAID INDIVIDUAL IS HAVING MORE THAN 10% OF SHARES WITH VOTING RIGHTS IN THE COMPANY, THE AMOUNT SO RECEIVED SHALL BE DEEMED AS DIVIDEND INCOME. THE SAME WAS PROPOSED TO THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN THE ABSENCE OF ANY LEDGER ACCOUNT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS HAVING OUTSTANDING DUES OF .5.50 CRORES TOWARDS THE LOAN RECEIVED FROM THE COMPANY. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE SAME TO TAX AS DEEMED DIVIDEND AND BROUGHT TO TAX. AFTER CONSIDERING THE DETAILS IN THE LEDGER EXTRACT OF SHRI MGM MARAN IN THE BOOKS OF M/S. SOUTHERN AGRIFURANE INDUSTRIES LTD., WHICH WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER, THE LD. CIT(A) HELD THAT THE CURRENT ACCOUNT TRANSACTIONS ARE NOT LIABLE FOR TAXATION UNDER SECTION 2(22)(E) OF THE ACT WITHOUT OBTAINING THE REMAND REPORT FROM THE ASSESSING OFFICER IS IN VIOLATION OF RULE 46A. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER VERIFICATION OF LEDGER ACCOUNTS AS MAY BE FILED BY THE ASSESSEE. THUS, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO.1840/CHNY/18 4 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 12 TH FEBRUARY, 2019 AT CHENNAI. SD/- SD/- ( INTURI RAMA RAO) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 12.02.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.