Vijay Kumar Bothra, Kolkata V. DCIT, CC - XX, Kolkata, Kolkata

ITA 185/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1626 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2013
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2012
• Court: TRIBUNAL
• Department Lawyers: ASOKE KUMAR DEY
• Keywords: Deemed dividend
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , ! ''# $ ''# $ ''# $ ''# $ ] ]] ] [BEFORE HONBLE SRI P.K.BANSAL, AM & HONBLE SRI GEORGE MATHAN, JM] !& !& !& !& /ITA NO.185/KOL/2012 '( )*/ ASSESSMENT YEAR : 2005-06 ($, / APPELLANT ) - - ( ./$, /RESPONDENT) VIJAY KUMAR BOTHRA D.C.I.T. CENTRAL CIRCLE-XX, KOLKATA -VERSUS- KOLKATA (PAN: AELPB 1129 E ) $, 0 1 / FOR THE APPELLANT: SHRI SUBASH AGARWAL ./$, 0 1 / FOR THE RESPONDENT: SHRI ASOKE KUMAR DEY, SR.DR 2 3 0 4 /DATE OF HEARING : 07.02.2013 5) 0 4 /DATE OF PRONOUNCEMENT : 07.02.2013. 6 / ORDER PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. C.I.T. (A)- CENTRAL-III, KOLKATA DATED 24.01.2011. THE APPEAL IS BARRED BY LIMITATION BY 20 DAYS. THE ASSESSEE SUBMITTED THE REASONS ALONG WITH THE APPLICATION FOR CONDONATION OF THE D ELAY AND AN AFFIDAVIT IN THIS REGARD WAS ALSO FILED . AFTER HEARING THE LD. DR ON THE C ONDONATION OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE WAS PREVENTED FROM SOME CAUSE TO FILE THE APPEAL WITHIN THE TIME. WE ACCORDINGLY CONDONE THE DELAY. 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FOLLOW ING TWO EFFECTIVE GROUNDS :- 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOM E TAX (APPEAL)-C-III UPHOLDING THE ADDITION OF RS.35,63,996/- AS DEEMED DIVIDEND U /S 2(22)(E) OFT EH ACT MADE BY THE ASSESSING OFFICER IS ERRONEOUS IN LAW AS WELL AS ON THE FACTS OF THE CASE. 2. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-C-III CONFIRMING THE DISALLOWANCE OF RS.64,798/- U/S 14A OF THE INCOME T AX ACT MADE BY THE ASSESSING OFFICER IS ERRONEOUS IN LAW AS WELL AS ON THE FACTS OF THE CASE. ITA NO.185/KOL/2012 2 3. THE FIRST GROUND OF APPEAL RELATES TO THE ADDITION OF RS.35,63,996/- AS DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T.ACT. 4. THE BRIEF FACTS RELATING TO THIS GROUND ARE THA T THE ASSESSEE WAS HAVING SHARE HOLDING IN M/S. BOTHRA AUTOMATIVE (P) LTD MORE THAN 10%. THE ASSESSEE HAD RECEIVED A LOAN FROM THE SAID COMPANY. THE TOTAL AMOUNT RECE IVED BY THE ASSESSEE FROM THE COMPANY WERE TO THE EXTENT OF RS.66,05,357/-. THE C OMPANY HAD THE RESERVE AND SURPLUS TO THE EXTENT OF RS.35,63,996/-. THE ASSESS ING OFFICER, THEREFORE, INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND MADE THE ADDITION OF RS.35,63,996/- AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THE A SSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ORDER OF T HE AO AS PER THE FINDINGS GIVEN IN PARAS 5 AND 6 OF ITS ORDER. 5. BEFORE US, THE LD. AR VEHEMENTLY CONTENDED THAT THE ASSESSEE WAS HAVING THE CURRENT ACCOUNT WITH THE COMPANY TO WHOM THE PAYMEN TS WERE REGULARLY MADE OR RECEIVED AND SUCH PAYMENTS ARE NOT IN THE NATURE OF ADVANCE. SINCE THE PAYMENTS ARE NOT ADVANCE OR LOAN THEREFORE THE PROVISIONS OF SEC TION 2(22)(E) OF THE ACT ARE NOT APPLICABLE. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE OR DERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME. IN OUR OPINION, THE AMOUNT RECEIVED BY THE ASSESSEE FROM T HE COMPANY ARE CLEAR CUT IN THE NATURE OF ADVANCES. THE ASSESSEE WAS HOLDING SHARE IN THE COMPANY MORE THAN 10% THE ASSESEE WAS A BENEFICIAL OWNER AS WELL AS SHARE HOLDER OF THE COMPANY. THE PROVISION OF SECTION 2(22)(E) ARE CLEARLY APPLICABL E IN THE HANDS OF THE ASSESSEE EVEN THOUGH THE COMPANY HAD GIVEN ADVANCE TO THE ASSESSE E TO THE EXTENT OF RS.66,95,367/- BUT THE AO HAD RESTRICTED THE ADDITION TO RS.35,63, 996/- TO THE EXTENT THAT THE ASSESSEE COMPANY WAS HAVING ACCUMULATED RESERVES. THIS FACT HAS NOT BEEN DENIED BY THE LD. AR. IN OUR OPINION, THE AO HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND RESTRICTED THE ADDITION TO RS.35,63,996 /- AS DEEMED DIVIDEND IN THE HANDS ITA NO.185/KOL/2012 3 OF THE ASSESSEE. WE ACCORDINGLY CONFIRM THE ORDER O F THE AUTHORITIES BELOW AND DISMISS GROUND NO.1 TAKEN BY THE ASSESSEE. 8. GROUND NO.2 IN THIS ASSESSEES APPEAL RELATES T O THE DISALLOWANCE OF RS.64,798/- U/S 14A OF THE IT ACT. 9. THE BRIEF FACTS OF THIS GROUND IN THIS APPEAL AR E THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN OUT OF WHICH A SUM OF RS.6,21,300/- WAS GIVEN TO M/S.KIRAN INVESTMENTS CORPORATION AND THE BALANCE AMOUNT WAS DEPLOYED IN THE COMPANY FROM WHICH THE ASSESEE DERIVED DIVIDEND INCOME. THE AO N OTED THAT THE ASSESSEE PAID INTEREST TO THE EXTENT OF RS.1,16,098/- . THE ASSES SEE HAD ALSO RECEIVED IN CASH FROM M.S. KIRAN INVESTMENTS CORPORATION TO THE EXTENT OF RS.51,300/-. THE AO, THEREFORE, WORKED OUT THE INTEREST PAID BY THE ASSESSEE AMOUNT ING TO RS.64,798/- BUT THE FUNDS WHICH WAS TAKEN ON LOAN WAS INVESTED IN THE SHARES . THE ASSESSEE HAD DERIVED DIVIDEND INCOME ON THESE SHARES TO THE EXTENT OF RS .4,377/-. THE INTEREST WAS CLAIMED BY THE ASSESSEE AS DEDUCTION WHILE COMPUTING THE TA XABLE INCOME. THE AO DISALLOWED THE SAME TO THE EXTENT OF RS.64,798/- BY INVOKING T HE PROVISION OF SECTION 14A OF THE IT ACT. THEN THE MATTER WENT TO THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE AO. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME. BEFORE US, EVEN THOUGH THE LD. AR VEHEMENTLY CONTENDED THA T THE PROVISIONS OF SECTION 14A OF THE ACT ARE NOT APPLICABLE IN THE CASE OF THE AS SESSEE TO WHICH HE HAD NOT DENIED THAT THE MONEY BORROWED EXCEPT RS.51,300/- WAS INVE STED ON THE PURCHASE OF THE SHARES ON WHICH THE ASSESSEE GOT THE DIVIDEND INCOM E. THE DIVIDEND INCOME WAS EXEMPTED FORM TAX AND THE INTEREST HAS BEEN INCURRE D BY THE ASSESSEE FOR EARNING OF THE DIVIDEND INCOME. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAD RIGHTLY SUSTAINED THIS ADDITION. IN THE RESULT GROUND NO.2 TAKEN BY THE ASSESSEE IS DISMISSED. ITA NO.185/KOL/2012 4 11. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 07.02.2013. SD/- SD/- [ .''# $ , ] [ .., ,, , ] [ GEORGE MATHAN ] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 07.02.2013. R.G.(.P.S.) 6 0 .''7 87)9- COPY OF THE ORDER FORWARDED TO: 1. VIJAY KUMAR BOTHRA, 16, EVEREST HOUSE, 46C, J.L.NEH RU ROAD, KOLKATA-700071. 2 D.C.I.T., CENTRAL CIRCLE-XX, KOLKATA 3 . CIT KOLKATA 4 . CIT(A)-CENTRAL-III, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. /7 .'/ TRUE COPY, 62/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES