Assistant Commissioner of Income-tax, Circle - 2, Nashik V. Vilas Rasiklal Shah, Nashik

ITA 2097/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4003 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Deemed dividend
• Section: 2(22)(e)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM SHRI S.S. VISWANETHRA RAVI, JM . / ITA NO.2097/PUN/2017 / ASSESSMENT YEAR : 2013-14 THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE 2, NASHIK. . / APPELLANT. V/S SHRI VILAS RASIKLAL SHAH, 4 TH FLOOR, ABHAYANKAR TOWER, M.G. ROAD, NASHIK 422001. PAN : AFCPS6278M. . / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI. REVENUE BY : SHRI PANKAJ GARG. / DATE OF HEARING : 07-11-2019 / DATE OF PRONOUNCEMENT : 08-11-2019 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 02.06.2017 PASSED BY CIT(A)-2, NASHIK FOR A.Y. 2013-14. 2. THE ONLY ISSUE TO BE DECIDED IS WHETHER THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND U /S 2(22)(E) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 3. HEARD BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE RAISED BY THE REVENUE IS COVERED IN FAVOUR OF ASSESSEE BY THE ORDERS OF THIS TRIBUNAL FROM A.YS.2008-09, 2009-10, 2011-12 AND LATEST BEING A.Y. 2012-13 VIDE ORDER DATED 1 2.05.2018 IN ITA NO.1918/PUN/2016. FOR READY REFERENCE THE RELEVANT PORTION AT PARA NOS.8 AND 9 IS REPRODUCED HEREIN BELOW : 8. WE HAVE HEARD BOTH SIDES ON THIS LIMITED ISSUE OF INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IN RE SPECT OF THE LOANS/ADVANCES GIVEN BY THE COMPANY TO THE ASSESSEE , WHEN THE ASSESSEE MORTGAGED HIS PROPERTY AS A GUARANTEE FOR THE COMPANY TO TAKE LOAN OF HIGHER AMOUNT FROM THE BANK S. IN THE PROCESS, THE ASSESSEE GAVE UP HIS RIGHTS ON THE PRO PERTY. THEREFORE, TAKING ADVANCE OF RS.2.35 CRORES FROM HI S COMPANY IS NOT DEEMED DIVIDEND WHEN THE LIABILITY OF THE CO MPANY OF RS.5 CRORES IS ON THE ASESSEE. ON HEARING BOTH SID ES AND PERUSED THE SAID JUDGEMENT, WE FIND THE SAID JUDGEM ENT IS RELEVANT FOR THE FOLLOWING LEGAL PROPOSITION AND HE LD PORTION OF THE SAME IS EXTRACTED AS UNDER :- ALLOWING THE APPEAL, THAT FOR RETAINING THE BENEFI T OF LOAN AVAILED OF FROM THE BANK IF DECISION WAS TAKEN TO G IVE ADVANCE TO THE ASSESSEE SUCH DECISION WAS NOT TO GI VE GRATUITOUS ADVANCE TO ITS SHAREHOLDER BUT TO PROTEC T THE BUSINESS INTEREST OF THE COMPANY. THE SUM OF RS.20,75,000 COULD NOT BE TREATED AS DEEMED DIVIDEN D. 9. FROM THE ABOVE, IT IS EVIDENT THAT IN CASE OF NO N-GRATUITOUS ADVANCES, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT HAS NO APPLICATION. IT IS NOT THE CASE OF THE REVENUE THA T THE LOAN TAKEN BY THE ASSESSEE FROM THE COMPANY CONSTITUTES GRATUITOUS ADVANCES. THE FACTS OF THE COMPANY TAKING LOAN FRO M THE BANK AGAINST THE GUARANTEE OF PROPERTY OF THE ASSESSEE A ND GIVEN LOAN OF RS.2.35 CRORE TO THE ASSESSEE ARE UNDISPUTE D. THEREFORE, WE ARE OF THE OPINION THAT THE DECISION GIVEN BY THE CIT(A) IN HIS ORDER IS FAIR AND REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. 4. ON PERUSAL OF THE ABOVE, WE FIND THE ISSUE DECIDED BY T HE TRIBUNAL IN A.Y. 2012-13 IS SIMILAR AND ON SAME IDENTICAL FACTS TO THE ISSUE RAISED IN THE PRESENT APPEAL. THEREFORE, WE ARE OF T HE OPINION THAT THE ADDITION MADE BY THE AO DOES NOT ATTRACT THE PROVISIONS U/S 2(22)(E) OF THE ACT AND THE IMPUGNED ORDER PASSED BY CIT(A ) IS JUSTIFIED. 3 THUS, THE GROUNDS 1 TO 4 INVOLVING THE SAME ISSUE RAISED BY THE REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 8 TH DAY OF NOVEMBER, 2019. SD/- SD/- ( D. KARNUKARA RAO) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE; DATED : 8 TH NOVEMBER, 2019. YAMINI # $%&' (' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-2, NASHIK. PR.CIT-2, NASHIK. '#$ %%&',) &', / DR, ITAT, B PUNE; $,-./ GUARD FILE. / BY ORDER , // / TRUE COPY / / // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.