Shri J.V. Chowdhury, CHENNAI V. ACIT, Coimbatore

ITA 1975/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4614 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A. NO. 1975/MDS/2011 ASSESSMENT YEAR : 2008-09 SHRI J.V. CHOWDHURY, NO.1, PALANISWAMY NAIDU STREET, AVANASHI ROAD, COIMBATORE 641 018. [PAN: ABNPC 1700 F] (APPELLANT) VS ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(1) COIMBATORE. (RESPONDENT) APPELLANT BY : DR. ANITA SUMANTH, ADVOCATE RESPONDENT BY : SHRI T.N. BETGERI, JCIT DATE OF HEARING : 21-08-2013 DATE OF PRONOUNCEMENT : 11-09-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMB ATORE DATED 28-09-2011 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 8-09. THE I.T.A. NO. 1975/MDS/2011 2 ONLY ISSUE RAISED BY THE ASSESSEE IN THE APPEAL BEF ORE US IS WITH REGARD TO ADDITION OF ` 1,29,20,492/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSEE WA S HAVING MAJORITY OF SHARES IN M/S. SUPER AIRPORT INFRA (I) P. LTD., AND M/S. RATHNA AIRPORT INFRA (I) P. LTD., IN THE PERIOD REL EVANT TO THE AY. 2008-09. THE ASSESSEE HAD SOLD SHARES OF THE ABOVE TWO COMPANIES TO M/S. SUPER COOK INDIA P. LTD., (SUBSEQ UENTLY NAMED AS M/S. SUPER AIRPORT HOLDINGS INDIA P. LTD.,). TH E SAID SUPER AIRPORT HOLDINGS INDIA P. LTD., HAD BECOME THE HOLD ING COMPANY OF ALL THE AIRPORT COMPANIES. IN ORDER TO ACQUIRE SHA RES OF M/S. SUPER AIRPORT INFRA (I) P. LTD., AND M/S. RATHNA AIRPORT INFRA (I) P. LTD., M/S. SUPER AIRPORT HOLDINGS INDIA P. LTD., ADVANCED A SUM OF ` 1,52,66,000/- TO THE ASSESSEE. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY. 2008-09 ON 30-09-2008 DECLARING HIS INCOME AS ` 93,42,929/- AND AGRICULTURAL INCOME OF ` 1,30,440/-. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND NOTIC E U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 03-09-2009. THE ASSE SSING OFFICER WHILE FINALIZING THE ASSESSMENT, HELD THAT THE ADVA NCE OF ` 1,52,66,000/- TO THE ASSESSEE IS A DEEMED DIVIDEND UNDER THE I.T.A. NO. 1975/MDS/2011 3 PROVISIONS OF THE SECTION 2(22)(E) OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT SINCE THE COMPANY IS HAVING ACCUMULATED PROFITS TO THE TUNE OF ` 1,29,20,492/- AS ON 31-03-2008, THEREFORE, TO THE EXTENT OF ACCUMULATED PROFITS, ADDITION IS MADE AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 22-12 -2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) CONFIRMED THE ASSESSMENT ORDER AND DIS MISSED THE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE US ASSAILING THE ORDER OF THE CIT(APP EALS). 3. DR. ANITA SUMANTH, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AMOUNT OF ` 1,52,66,000/- RECEIVED BY THE ASSESSEE WAS NOTHING BUT ADVANCE AGAINST THE SH ARES SOLD BY THE ASSESSEE TO SUPER AIRPORT HOLDINGS INDIA P. LTD ., SINCE, THE SHARES WERE TRANSFERRED IN THE NEXT AY. I.E., AY. 2 009-10, THE SAME WAS OFFERED TO TAX IN THE RETURN OF INCOME FIL ED BY THE ASSESSEE RELEVANT TO THE AY. 2009-10. THE SALE CON SIDERATION WAS ADVANCED BY THE COMPANY TO THE ASSESSEE IN AY. 2008 -09 BUT THE TRANSFER WAS COMPLETED IN THE AY. 2009-10. THE LD. AR OF THE ASSESSEE PLACED ON RECORD THE RETURN OF INCOME FOR THE AY. I.T.A. NO. 1975/MDS/2011 4 2009-10 TO SHOW THAT THE CAPITAL GAINS ARISING FROM THE SALE OF SHARES WERE OFFERED TO TAX IN AY. 2009-10. 4. ON THE OTHER HAND, SHRI T.N. BETGERI APPEARING O N BEHALF OF THE REVENUE STRONGLY SUPPORTING THE ORDER OF THE CI T(APPEALS) SUBMITTED THAT THE AMOUNT OF ` 1,29,00,000/- HAS TO BE TREATED AS DEEMED DIVIDEND AS THE AUDITORS IN THE ANNEXURE TO THE AUDIT REPORT FOR THE F.Y. 2007-08 HAVE CATEGORICALLY STAT ED THAT THE COMPANY HAS GIVEN LOAN TO ONE PARTY COVERED IN THE REGISTER MAINTAINED U/S. 301 OF THE COMPANIES ACT, 1956. TH E MAXIMUM AMOUNT INVOLVED DURING THE YEAR WAS ` 152.51 LAKHS AND THE YEAR END BALANCE OF LOAN GIVEN TO SUCH PARTIES IS ` 152.51 LAKHS. THE LD. DR PRAYED FOR THE DISMISSAL OF THE APPEAL OF TH E ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE CONTENTIONS OF T HE ASSESSEE, AN AMOUNT OF ` 1,56,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE AS ADVANCE ON ACCOUNT OF SALE OF 1,90,000 SHARES OF M/ S. SUPER AIRPORT INFRA (I) P. LTD., AND 5,00,000 SHARES OF M /S. RATHNA AIRPORT INFRA (I) P. LTD., TO M/S. SUPER AIRPORT HOLDINGS I NDIA P. LTD. A PERUSAL OF THE SCHEDULE-8 OF THE BALANCE SHEET OF M /S. SUPER I.T.A. NO. 1975/MDS/2011 5 COOK INDIA P. LTD., (SUBSEQUENTLY NAMED AS M/S. SUP ER AIRPORT HOLDINGS INDIA P. LTD.,) AS ON 31-03-2008 SHOWS THA T UNDER LOANS AND ADVANCES AN AMOUNT OF ` 1,52,51,000/- IS SHOWN AS DUE FROM DIRECTOR SHRI J.V. CHOWDHURY. THE BALANCE SHEET AL ONG WITH AUDITORS AND DIRECTORS REPORT AS ON 31-03-2008 IS P LACED ON RECORD AT PAGE NO. 36 TO 60 OF THE PAPER BOOK. DUR ING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS AL SO PLACED ON RECORD THE RETURN OF INCOME AND ASSESSMENT ORDER DA TED 29-11-2011 RELATING TO THE AY. 2009-10 OF THE ASSES SEE. THE SAID RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31 ST JULY 2009. IN RETURN, THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN ARISING OUT OF SALE OF ABOVE MENTIONED SHARES AND THE AMOU NT OF SALE CONSIDERATION RECEIVED IS SHOWN AS ` 1,48,62,500/-. THUS, IT IS EVIDENT FROM THE RECORDS THAT THE AMOUNT OF ` 1,52,66,000/- WHICH WAS CONSIDERED AS LOAN BY THE COMPANY TO THE ASSESS EE IS IN FACT ADVANCE AGAINST SALE OF SHARES. HOWEVER, THE ACTUAL SALE OF SHARES AMOUNTED TO ` 1,48,62,500/- WHEREAS THE ADVANCE SHOWN IS ` 1,52,51,000/-. THE DIFFERENCE BETWEEN THE ADVANCE AND THE ACTUAL S ALE CONSIDERATION BE TREATED AS LOAN TO THE DIRECTOR AN D IS THUS ASSESSABLE AS DEEMED DIVIDEND TO THE EXTENT OF PROF ITS AVAILABLE. I.T.A. NO. 1975/MDS/2011 6 IN VIEW OF OUR ABOVE FINDINGS, WE SET ASIDE THE ORD ER OF THE CIT(APPEALS) AND PARTLY ALLOW THE APPEAL OF THE ASS ESSEE. ORDER PRONOUNCED ON WEDNESDAY, THE 11 TH SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 11 TH SEPTEMBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR