ACIT, CHENNAI V. V.K.C.Finsoft Solutions Pvt Ltd., CHENNAI

ITA 1919/CHNY/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4687 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1919 & 1920/CHNY/2016 ' (' / ASSESSMENT YEARS : 2011-12 & 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI - 600 034. V. M/S V.K.C. FINSOFT SOLUTIONS PVT. LTD., JAYAM KONDAR APARTMENTS, UNIT NO.1-B, 1 ST FLOOR, 40/12, MURRAYS GATE ROAD, ALWARPET, CHENNAI - 600 018. PAN : AABCV 2278 D (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SMT. RUBY GEORGE, CIT ,-*+ . / / RESPONDENT BY : SHRI D. PALANIVEL, ADVOCATE AND SH. PHILIP GEORGE, ADVOCATE 0 . 1$ / DATE OF HEARING : 15.02.2018 2!( . 1$ / DATE OF PRONOUNCEMENT : 28.02.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGA INST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS)-11, CHENNAI, DATED 28.03.2016 AND PERTAIN TO ASSESSMENT YEARS 2011-12 AND 2012-13. SINCE COMMON ISSUE 2 I.T.A. NOS.1919 & 1920/CHNY/16 ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HE ARD BOTH THE APPEALS TOGETHER AND DISPOSING THE SAME BY THIS COM MON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS IS WITH REGARD TO THE ADDITION MADE BY THE ASSESSING O FFICER UNDER SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961 (IN SH ORT 'THE ACT') TOWARDS DEEMED DIVIDEND IN RESPECT OF THE AMOUNT RE CEIVED BY THE ASSESSEE FROM M/S V.K.C. CREDIT AND FOREX SERVICES PVT. LTD. 3. SMT. RUBY GEORGE, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSEE AND OTHER SHAREHOLDERS ARE HOLDING MORE THAN 20% OF BENEFICIAL SHARES, THEREFORE, THE CIT(APPEALS) IS NOT CORRECT IN DELETING THE ADDITION MADE BY THE AS SESSING OFFICER. ON A QUERY FROM THE BENCH, IT WAS CLARIFIED BY BOTH THE LD. D.R. AND THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE-C OMPANY IS HOLDING ONLY LESS THAN 10% AND SHAREHOLDERS OF THE ASSESSEE- COMPANY ARE HOLDING OTHER SHARES. IT IS NOT IN DIS PUTE THAT THE SHAREHOLDERS ARE HOLDING THE SHARES IN THE INDIVIDU AL CAPACITY BY INVESTING THEIR OWN FUNDS. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE IS HO LDING ONLY LESS THAN 10% OF THE SHARES, THE PROVISIONS OF SECTION 2 (22)(E) OF THE ACT IS NOT APPLICABLE AT ALL. 3 I.T.A. NOS.1919 & 1920/CHNY/16 4. THE HOLDING OF SHARES BY SHAREHOLDERS OF THE ASS ESSEE- COMPANY CANNOT BE CONSTRUED TO BE THE SHARES OF THE ASSESSEE. THE SHAREHOLDERS ARE DIFFERENT LEGAL PERSONS AND TH E ASSESSEE- COMPANY IS DIFFERENT AND DISTINCT LEGAL ENTITY. TH EREFORE, THE SHARES OF INDIVIDUAL SHAREHOLDERS OF THE ASSESSEE-COMPANY CANNOT, BY ANY STRETCH OF IMAGINATION, BE CONSIDERED AS SHARES OF THE ASSESSEE- COMPANY. THEREFORE, WE ARE UNABLE TO FIND ANY MERI T IN THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS CONFIRMED. 4. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE STAND DISMISSED. ORDER PRONOUNCED ON 28 TH FEBRUARY, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 28 TH FEBRUARY, 2018. KRI. 4 I.T.A. NOS.1919 & 1920/CHNY/16 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-11, CHENNAI-34 4. PRINCIPAL CIT-3, CHENNAI. 5. 69 ,1 /DR 6. :' ; /GF.