M/s Jet Age Securities Pvt. Ltd., Kolkata V. DCIT, CIR-7(1), KOLKATA, Kolkata

ITA 187/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9217 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2016
• Court: TRIBUNAL
• Department Lawyers: DR AMLAN TRIPATHY
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Revision of order; Deemed dividend
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAI NI, AM ./ ITA NO.187/KOL/2016 ( / ASSESSMENT YEAR:2011-12) M/S JET AGE SECURITIES PVT. LTD. 804, SUBHAM BUILDING,8 TH FLOOR 1, SAROJINI NAIDU SARANI, KOLKATA-700017 VS. DCIT, CIRCLE-7(1), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 ./ ./PAN/GIR NO.: AABCJ 0993 R ( /APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI MANOJ KATARUKA, ADVOCATE REVENUE BY : DR. AMLAN TRIPATHY / DATE OF HEARING : 10/01/2017 /DATE OF PRONOUNCEMENT 22/03/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO ASSESSMENT YEAR 2011-2012, IS DIRECTED AGAINST THE ORDER PASSED BY LD. PR.COMMISSIONER OF INCOME TAX, KOLKATA-3, UNDER SEC TION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT), DATED 14.01.2016. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON DATED 28/09/2011 DECLARING TOTAL INCOME AT RS.2,13,73,564/-. THE ASS ESSEE HAS INCOME FROM STOCK BROKING/TRADING AND INVESTMENT. ASSESSME NT U/S 143(3) WAS COMPLETED ON DATED 18.03.2014 BUT LATER ON THE COM MISSIONER OF INCOME TAX EXERCISED HAS JURISDICTION U/S 263 OF THE I.T. ACT. THE COMMISSIONER OF INCOME TAX FOUND THAT THE ASSESSEE COMPANY HAD RECEIVED AN AMOUNT OF RS.5,75,00,0000/- AS LOAN FROM JET AGE FI NANCE PVT.LTD., A CLOSELY HELD COMPANY. SRI HARSHAVARDHAN HIMATSINGKA WAS HOLDING ITA NO.187/2016 M/S JET AGE SECURITIES PVT. LTD. 2 55.87% SHARES AND 26.38% SHARES IN JET AGE FINANCE SECURITIES PVT.LTD AND JET AGE FINANCE PVT. LTD. RESPECTIVELY DURING T HE PERIOD RELEVANT TO THE A.Y.2010-11. AS PER PROVISIONS, LOAN AMOUNT WAS REQUIRED TO BE TREATED AS DEEMED DIVIDEND U/S 2(22) (E) OF THE ACT . HOWEVER, THE LOAN AMOUNT OF RS.5,75,00,000/- WAS NOT TREATED AS DEEME D DIVIDEND INCOME AS PER PROVISIONS OF SECTION 2(22) (E) OF THE ACT. AS PER SECTION 2(22) (E) OF THE INCOME TAX ACT,1961, DIVIDEND INCLUDES ANY PAYM ENT BY A COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTE D, OF ANY SUM, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WH O IS THE BENEFICIAL OWNER OF SHARES HOLDING NOT LESS THAN 10% OF THE VO TING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS MEMBER OR PART NER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST. THE WRONGFUL ACT ON THE PART OF THE AO ON THE POINT ABOVE HAS MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE, THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 18.03.2014 WAS THUS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF REVENUE. 3. AGGRIEVED FROM THE ORDER OF LD CIT U/S 263 OF TH E ACT, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE MATERIAL EVIDENCES ON RECORD THE ACTION OF THE LD. CLT TO INITIATE REVISION PROCEEDINGS U/S 263 OF THE I.T. ACT IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , REVISION PROCEEDINGS INITIATED BY THE LD.CLT IN EXERCISE OF HIS POWERS U/S 263 OF THE I.T. ACT TO TREAT THE ORDER PASSED BY TH E ASSESSING OFFICER U/S 143(3) OF THE I.T. ACT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IS INCORRECT IN LAW. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE ACTION OF THE LD CIT TO HOLD THAT THE PROVISIONS OF SECTION ITA NO.187/2016 M/S JET AGE SECURITIES PVT. LTD. 3 2(22)(E) IS APPLICABLE IN THE CASE OF THE ASSESSEE IS ERRONEOUS AND BAD IN LAW. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE ACTION OF THE LEARNED CIT IN PASSING ORDER U/S 263 OF THE IT ACT BY DIRECTING THE ASSESSING OFFICER TO FRAME THE ASS ESSMENT DE NOVO IS BAD IN LAW. 5. THAT THE ORDER OF THE LEARNED CIT U/S 263 OF TH E IT ACT SETTING ASIDE THE ASSESSMENT FRAMED U/S 143(3) AND DIRECTIN G TO BE FRAMED DE NOVO IS BAD IN LAW. 4. LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE HAS OBJECTED TO THE ISSUE OF NOTICE U/S. 263 OF THE ACT, FOR THE REASON THAT LOAN WAS NOT PROVIDED TO BENEFICIAL SHAREHOLDER THE REFORE, PROVISION OF SEC. 2(22)(E) IS NOT APPLICABLE. THAT IS, THE ASSESSEE ( M/S JET AGE SECURITIES (P) LTD.) IS NOT A SHAREHOLDER/BENEFICIAL SHAREHOLDER IN THE JET AGE F INANCE PVT. LTD, FROM WHOM THE ASSESSEE COMPANY TOOK LOAN. IF THE ASSESSE E COMPANY, ( M/S JET AGE SECURITIES (P) LTD.) AND ANOTHER COMPANY, M /S JET AGE FINANCE PVT. LTD PROVIDED LOAN TO SRI HARSHAVARDHAN HIMATSI NGKA, THEN THE SAID LOAN MAY BE DEEMED DIVIDEND U/S 2 (22) (E) OF THE A CT IN THE HANDS OF SRI HARSHAVARDHAN HIMATSINGKA. 5. LD. DR FOR THE REVENUE HAS ALSO PRIMARILY RELIED ON THE FINDINGS OF THE AO WHICH WE HAVE ALREADY NOTED IN OUR EARLIER P ARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 6. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF LD. AR FOR THE ASSESSEE, AS THE PROPOSITION CANVASSED BY LD. AR FO R THE ASSESSEE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE. AS TH E LD AR FOR THE ITA NO.187/2016 M/S JET AGE SECURITIES PVT. LTD. 4 ASSESSEE POINTED OUT THAT THE ASSESSEE ( M/S JET AGE SECURITIES (P) LTD.) IS NOT A SHAREHOLDER/BENEFICIAL SHAREHOLDER IN THE JET AGE FINANCE PVT. LTD, FROM WHOM THE ASSESSEE COMPANY TOOK LOAN THEREFORE THE PROVIS IONS OF SECTION 2(22) (E) DO NOT APPLICABLE AT ALL. IN THE INSTANT CASE, THE ASSESSEE COMPANY HAD RECEIVED AN AMOUNT OF RS.5,75,00,0000/- AS LOAN FROM JET AGE FINANCE PVT LTD, AND THE ASSESSEE COMPANY IS NOT A BENEFICIAL SHAREHOLDER IN JET AGE FINANCE PVT LTD, THEREFORE T HE PROVISIONS OF SECTION 2(22) (E) DOES NOT APPLY TO THE ASSESSEE COMPANY. T HEREFORE, CONSIDERING THE FACTUAL POSITION EXPLAINED ABOVE, WE ARE OF THE VIEW THAT LD CIT HAS WRONGLY EXERCISED HIS JURISDICTION UNDER SECTION 26 3 OF THE ACT, BECAUSE IN THE INSTANT CASE THE ORDER MADE BY THE ASSESSING OF FICER U/S 143(3) IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F REVENUE. ACCORDINGLY, WE SET ASIDE/ CANCEL THE ORDER PASSED BY LD CIT U/S 263 OF THE I.T.ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22/03 /2017. SD/ - (S.S.VISWANETHRA RAVI) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 22/03/2017 ' $%& /PRAKASH MISHRA , 0 . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) % & , / ITAT, 1. / THE APPELLANT-M/S JET AGE SECURITIES PVT. LTD. 2. / THE RESPONDENT.- DCIT, CIRCLE-7(1), KOLKATA 3. 1 ( ) / THE CIT(A), KOLKATA. 4. 1 / CIT 5. 23 4 0056 , 56 , / DR, ITAT, KOLKATA 6. 4 78 / GUARD FILE. 2 0 //TRUE COPY//