Bhotika Trade & Services Pvt. Ltd., New Delhi V. DCIT, Circle - 9(1), Kolkata, Kolkata

ITA 2034/KOL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7384 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 2034/KOL./2017 : ASSTT. YEAR : 2012-13 BHOTIKA TRADE & SERVICES PVT. LTD., EPMS, VASANT SQUARE MALL, PLOT-A, SECTOR-B, POCKET-V, COMMUNITY CENTRE, SF-11, 2 ND FLOOR, VASANT KUNJ, NEW DELHI - 110070 V S DY. COMMISSIONER OF INCOME TAX, CIRCLE-9(1), KOLKATA-700069 (APPELLANT) (RESPONDENT) PAN NO. AACCB5790K ASSESSEE BY : SH. VED JAIN, ADV. REVENUE BY : SH. JAGDISH SINGH, SR. DR DATE OF HEAR ING: 03 . 0 8 .20 20 DATE OF PRONOUNCEMENT: 26 .0 8 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-16, KOLKATA DATED 31.07 .2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT THE LD. ADDL. COMMISSIONER OF INCOME-TAX, RANGE-9, KOLKATA IS NOT JUSTIFIED BY ADDING BACK RS.1,08,05,000/- AS DEEMED DIVIDED U/S 2(22)(E) OF THE I.T. ACT, 1961 ON THE GROUND THAT THE TWO COMPANIES I.E. ASSESSEE AND BHOTIKA PIPELINE SERVIC ES CO. PVT. LTD. ARE CLOSELY HELD BY THE BHOTIKA FAMIL Y AND SUCH TRANSFER OF FUNDS, INTEREST FREE, FROM ON E COMPANY TO ANOTHER WITHIN THE SAME GROUP IS DONE AT WILL, DEPENDING ON THE AVAILABILITY OF FUNDS IN EIT HER CASE, FOR THE BENEFIT OF THE COMPANIES AND THE SHAR E HOLDERS CONCERNED. AGAINST THE ORDER WE PREFERRED A N ITA NO. 2034/KOL./2017 BHOTIKA TRADE & SERVICES PVT. LTD. 2 APPEAL BEFORE CIT(A)-16, KOLKATA. THE CIT(A) DISMISSED THE APPEAL AND CONFIRMED THE ASSESSING OFFICERS ORDER ON THE GROUND THAT THE ASSESSING OFFICER HAS CLEARLY MADE OUT THE CASE THAT THE TWO COMPANIES CLOSELY HELD COMPANIES OF THE BHOTIKA FAMILY AND SECTION 2(22)(E) IS CLEARLY ATTRACTED HE RE. THE CIT(A) BEFORE PASSING THE ORDER IGNORED ALL THE RELATED DOCUMENTS, SUBMISSION AND WITHOUT ASCERTAINING THE FACTS JUST CONFIRMED THE ASSESSING OFFICER ORDER AND DISMISSED THE APPEAL. 3. THE AO HELD THAT THE ASSESSEE HAS RECEIVED MONIE S FROM THE SISTER CONCERN NAMELY, BHOTIKA PIPELINE SERVICE S PVT. LTD. WHEREIN THE ENTITY NAMELY ROSEBAY GARDEN INDIA PVT. LTD. IS HAVING MORE THAN 40% OF SHARE HOLDING IN BOTH THE C OMPANIES AND HENCE THE AMOUNTS RECEIVED FROM BHOTIKA PIPELIN E SERVICES PVT. LTD. IS LIABLE TO BE TAX U/S 2(22)(E) OF THE I NCOME TAX ACT, 1961. THE LD. CIT (A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER. 4. BEFORE US DURING THE ARGUMENTS, THE LD. AR ARGUE D THAT BHOTIKA PIPELINE SERVICES PVT. LTD. IS NOT A BENEFI CIAL OWNER OF THE SHARES OF THE ASSESSEE COMPANY AND HENCE NO ADD ITION U/S 2(22)(E) IS CALLED FOR. HE RELIED ON THE JUDGMENT I N THE CASE OF DCIT VS EAST END SILKS PVT. LTD. IN ITA 87/KOL/2013 , DCIT VS HALANI SHIPPING PVT. LTD. IN ITA NO. 1919/MUM/2013. HE FURTHER ARGUED THAT THESE ARE BUSINESS TRANSACTIONS CONDUCT ED REGULARLY BETWEEN THE TWO ENTITIES. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE JUDG MENT OF HONBLE DELHI HIGH COURT IN THE CASE OF NATIONAL TR AVEL SERVICES 14 TAXMAN 14 (DEL.) AND CIT VS BHARTI OVERSEAS TRAD ING COMPANY 21 TAXMAN 543 (DEL.). ITA NO. 2034/KOL./2017 BHOTIKA TRADE & SERVICES PVT. LTD. 3 6. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 7. THERE IS NO DISPUTE THAT THE ENTITY NAMELY, ROSE BAY GARDEN PVT. LTD. IS A COMMON SHARE HOLDER IN THE AS SESSEE COMPANY AS WELL AS BHOTIKA PIPELINE SERVICES PVT. L TD. WE ALSO FIND THAT BHOTIKA PIPELINE SERVICES PVT. LTD. IS NO T A SHARE HOLDER OF THE ASSESSEE COMPANY NOR ASSESSEE COMPANY IS A SHARE HOLDER OF THE BHOTIKA PIPELINE SERVICES PVT. LTD. WE ALSO FIND THAT THERE HAS BEEN AN OPENING DEBIT BALANCE O F RS.54,56,041/- AND AN AMOUNT OF RS.256,15,000/- HAS BEEN TRANSACTED BETWEEN BOTH THE ENTITIES DURING THE YEA R. THE ASSESSING OFFICER HAS ONLY TAKEN INTO CONSIDERATION THE TRANSACTIONS CONDUCTED BETWEEN 07.12.2011 TO 22.02. 2012 DISREGARDING THE FACT THAT THERE HAS BEEN A CLOSING DEBIT BALANCE OF RS.54.30 LAKHS AS ON 30.03.2012. 8. HENCE, KEEPING IN VIEW THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANKITECH PVT. LTD. 340 ITR 14, JUDGMENTS OF HONBLE MUMBAI HIGH COURT IN THE CASE OF BHAUMIK COLOUR PVT. LTD. 313 ITR 146 AND KEEPING IN VIEW TH E FACT THAT THE TRANSACTIONS ARE IN THE NATURE OF REGULAR BUSIN ESS TRANSACTIONS WHICH ARE NOT LIABLE TO BE TAXED U/S 2 (22)(E) AS HELD IN THE CASE OF CIT VS SURAJ DEVI DADA 367 ITR 78 (P&H), WE HEREBY HOLD THAT NO ADDITION IN THE HANDS OF THE ASSESSEE IS CALLED FOR U/S 2(22)(E). ITA NO. 2034/KOL./2017 BHOTIKA TRADE & SERVICES PVT. LTD. 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 26/08/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR