DR. V.G. BHARTU, MUMBAI V. ITO-7(3)(1), MUMBAI

ITA 196/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8117 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 15-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: DR VIVEK BHARTU
• Keywords: Deemed dividend
• Section: 143(3); 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.196 & 197/MUM/2019 ( ASSESSMENT YEARS: 2003-04 & 2008-09) DR. V.G. BHARTU, 764-E, UMRIGAR BUILDING, TILAK ROAD, PARSEE COLONY, DADAR (EAST), MUMBAI-400014. VS. I.T.O., 7(3)(1) ROOM NO. 675, 6 TH FLOOR, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI-400020. PAN/GIR NO.AACPB 7638 P (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY DR. VIVEK BHARTU REVENUE BY SHRI AKHTAR H ANSARI (DR) DATE OF HEARING 22/01/2020 DATE OF PRONOUNCEMENT 22/01/2020 / O R D E R PER: R.C. SHARMA, A.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-14, MUMBAI DATED 02/0 8/2018 FOR THE A.Y. 2003-04 & 2008-09 RESPECTIVELY IN THE MATTER O F ORDER PASSED U/S 143(3) R.W.S 254 OF THE INCOME TAX ACT, 1961 (IN SH ORT, THE ACT). 2. COMMON GRIEVANCE OF THE ASSESSEE RELATE TO ADDIT ION MADE BY INVOKING PROVISIONS OF SECTION 2(22)(E) OF THE ACT ON ACCOUNT OF DEEMED DIVIDEND. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS HOLDING SUBSTANTIAL SHAREHOLDING IN PRIVATE LIMITED COMPANIES NAMELY OM ESTATES AND FIN ANCE PVT. LIMITED ITA NO. 196 & 197/MUM/2019 DR. VG BHARTU VS ITO 2 (OEFPL), VIVEK BHARTU CONSULTANCY PVT. LTD. (VBCPL) AND BHARTU ESTATES PVT. LTD. (BEPL). THESE COMPANIES HAVE ADVA NCED AMOUNTS TO THE ASSESSEE AND HIS PROPRIETORY CONCERNS NAMELY SH REE CONSTRUCTIONS, ELEGANT EXPORTS AND AQUA ELIXIR IN T HE COURSE OF THEIR BUSINESS. THESE COMPANIES HAVE ALSO MADE PAYMENTS O N BEHALF OF THE ASSESSEE AND HIS CONCERNS FOR THEIR BUSINESS EXPENS ES. IN THE A.Y. 2003-04, THE AMOUNT OF ADVANCES AND EXPENSES PAID A MOUNTING TO RS. 2,83,512/- BY OEFPL IS TAXED BY THE A.O. AS DEE MED DIVIDEND U/S 2(22)(E) OF THE ACT. THE A.O. OBSERVED THAT THE CON DITION SPECIFIED IN SECTION 2(22)(E) OF THE ACT RELATING TO SHAREHOLDIN G HELD BY THE ASSESSEE ARE SQUARELY APPLICABLE AND SINCE LOANS HA VE BEEN GIVEN OUT OF ACCUMULATED INCOME, THE SAME IS LIABLE TO TAX U/ S 2(22)(E) OF THE ACT. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONF IRMED THE ACTION OF THE A.O., AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEALS BEFORE THE ITAT. 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM THE RECORD THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON BEHAL F OF THE COMPANY IN WHICH HE WAS THE MANAGING DIRECTOR. THE EXPENDIT URE SO INCURRED WAS PAID THROUGH HIS CREDIT CARD ACCOUNT AND THE CO MPANY HAS SUBSEQUENTLY REIMBURSED THE SAME. THUS, SUCH REIMBU RSEMENT OF EXPENDITURE DOES NOT AMOUNT OF ANY LOAN OR ADVANCE TO THE ASSESSEE. ITA NO. 196 & 197/MUM/2019 DR. VG BHARTU VS ITO 3 I HAD CAREFULLY GONE THROUGH THE STATEMENT OF ACCOU NT OF THE COMPANY WHEREIN THE COMPANY HAS DIRECTLY MADE PAYMENT TO TH E BANK IN WHICH THE ASSESSEE WAS HOLDING CREDIT CARD AND ALL PAYMEN TS WERE PERTAINING TO THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESP ECT OF THE COMPANY AND THE SAME HAVE ALSO BEEN DEBITED TO THE P&L ACCO UNT OF THE ASSESSEE. THUS, THERE IS NO ANY LOAN OR ADVANCE TO THE ASSESSEE BUT ONLY REIMBURSEMENT OF EXPENSES WHICH IS NOT COVERED BY ANY MISCHIEF OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT. ACCOR DINGLY, I DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE A.O. U/S 2(22 )(E) OF THE ACT. 5. SINCE THE FACTS AND CIRCUMSTANCES OF THE APPEAL FOR THE A.Y. 2008-09 ARE PARI MATERIA, THEREFORE, BY FOLLOWING T HE REASONING GIVING IN THE APPEAL FOR THE A.Y. 2003-04, I DID NOT FIND ANY MERIT IN THE ADDITION SO MADE BY THE A.O. FOR THE A.Y. 2008-09. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 22/01/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. ITA NO. 196 & 197/MUM/2019 DR. VG BHARTU VS ITO 4 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//