The Dy. Commissioner of Income Tax, Central Circle-1(1)(1), Ahmedabad V. Shri Mehul Pratap Asnani, Ahmedabad

ITA 2190/AHD/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7425 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-03-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 23-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Salary income; Deemed dividend; Assessment record; TDS; CHAPTER IV
• Section: 143(3); 2(22)(e); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER DCIT, CIRCLE-1(1)(1), AHMEDABAD (APPELLANT) VS MEHUL PRATAP ASNANI, 4, GARDEN ENCLAVE, LAW GARDEN, ELLISBRIDGE, AHMEDABAD-380006 PAN: ACMPA6996R (RESPONDENT) REVENUE BY: SHRI R.R. MAKWANA, SR. D.R. ASSESSEE BY: SHRI BANDISH SOPARKAR, A.R. DATE OF HEARING : 04-08-2021 DATE OF PRONOUNCEMENT : 27-08-202 1 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS REVENUES APPEAL FOR A.Y. 2013-14, ARISES FROM ORDER OF THE CIT(A)-1, AHMEDABAD DATED 29-06-2016, IN PROCEEDIN GS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE SOLITARY GROUND OF APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-1 AHMEDABAD IN DELETING THE ADD ITION OF RS. 2,06,53,898/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/ S. 2(22)(E) OF THE ACT. ITA NO. 2190/AHD/2016 ASSESSMENT YEAR 2013-14 I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 2 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECL ARING TOTAL INCOME OF RS. 3,79,13,200/- WAS FILED ON 17 TH FEB, 2014. THE CASE WAS SUBJECT TO SCRUTINY ASSESSMENT AND NOTICE U/S. 143(2) OF THE ACT WAS IS SUED ON 8 TH SEP, 2014. 3.1 DURING THE COURSE OF ASSESSMENT, ASSESSING OFFI CER NOTICED THAT ASSESSEE HAS SHOWN IN HIS RETURN OF INCOME SALARY I NCOME IN THE CAPACITY OF DIRECTORS OF TWO COMPANIES NAMELY BIOTECH VISION C LEAR PVT. LTD. AND BIOTECH OPTHALMICS PVT. LTD. AS UNDER:- NATURE OF INCOME AMOUNT NAME OF THE COMPANY NAME OF THE COMPANY SALARY- 60,00,000 BIOTECH VISION CARE PVT. LTD. SALARY 19,20,000 BIOTECH OPTHALMICS PVT. LTD. ON PERUSAL OF THE DETAIL FILED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS WITHDRAWN A SUM OF RS. 1,67,53,24 6/- FROM SALARY ACCOUNT AT THE END OF YOUR AND THE ACCOUNT HAS BEEN SQUARED UP BY A JOURNAL ENTRY. THE ASSESSING OFFICER HAS ALSO NOTICED THAT IN THE ACCOUNT NAME MEHUL ASNANI EXPENSES ACCOUNT A DEBIT OF RS. 29,29,006/- WAS SHOWN AND THE SAME HAD BEEN SQUARED UP BY A JOURNAL ENTRY. THE ASSESSING OFFICER NOTICED THAT WITH BIOTECH VISION CLEAR PVT. LTD. TH E ASSESSEE WAS HAVING ONE MORE ACCOUNT IN THE NATURE OF MEHUL ASNANI-WIP WH EREIN A DEBIT BALANCE OF RS. 69,71,646/- WAS SQUARED BY A JOURNAL ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF THE JOURNAL ENTRIES MADE I N SALARY ACCOUNT, EXPENSES I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 3 ACCOUNT AS WELL AS WIP ACCOUNT. THE ASSESSEE HAS EXPLAINED THE SAME AS UNDER:- '1. VIDE POINT 1 AND 2 YOUR GOOD SEINES HAVE ASKED TO PROVIDE EXPLANATION FOR ENTRIES REGARDING REDUCTION IN DEBIT BALANCE SHOWN IN 'MEHUL ASNANI SALARY A/C' AND 'MEHUL ASNANI EXPENSE A/C' TO NIL BY JOURNAL EN TRIES UNDER THE NARRATION 'PGEN-JV/1213/00930' AND TGBN-JV/1213/01070'. IN RE LATION TO THIS THE ASSESSEE WOULD LIKE TO STATE THAT DURING THE ASSESS MENT PERIOD THE ASSESSEE HAD TAKEN VARIOUS ADVANCES IN THE FORM OF SALARY FROM T HE BEGINNING OF THE ASSESSMENT PERIOD WHICH HAS BEEN ACCOUNTED IN RESPECTIVE ACCOU NTS AS ADVANCES. AT THE END OF THE ASSESSMENT PERIOD THE REMUNERATION OF THE AS SESSEE IS DETERMINED ON THE BASIS OF PERCENTAGE OF SALE OF THE COMPANY DURING T HE PERIOD AND THE SAME IS ADJUSTED AGAINST 'MEHUL ASNANI SALARY A/C' AND 'MEH UL ASNANI EXPENSE A/C' RESPECTIVELY. THE COPY OF BOTH THE J.VIS ATTACHED V IDE AN.NEXU.RE 1. IT IS SUBMITTED THAT THE ASSESSEE BEING DIRECTOR OF THE COMPANY IS ENTITLED TO REMUNERATION IN THE FORM OF SALARY. AS THE SALARY IS DETERMINED AT YEAR END BASED ON ANNUAL PERFORMANCE OF THE COMPANY THE ASSESSEE KEEPS ON WI THDRAWING AMOUNT IN ADVANCE WHILE THE SALARY IS DETERMINED AT THE YEAR END UPON FINALIZATION OF ACCOUNTS OF THE COMPANY. ACCORDINGLY, SUCH AMOUNT K EEPS ON SHOWING AS DEBIT BALANCES IN COMPANY'S BOOKS WHICH GETS SETTLED UPON DETERMINATION OF SALARIES AT YEAR END. IT IS ALSO SUBMITTED THAT THE COMPANY HAS ALSO DEDUCTED LDS ON THE SALARIES WHILE ADJUSTING AGAINST ADVANCE AND THE AS SESSEE HAS ALSO PAID TAX BY OFFERING THIS INCOME IN RETURN OF INCOME(ROI). 2. VIDE POINT 3 YOUR GOOD SELVES HAVE ASKED THE ASS ESSEE TO PROVIDE EXPLANATION FOR ENTRIES REGARDING REDUCTION IN DEBIT BALANCE SH OWN IN 'MEHUL ASNANI WIP ACCOUNT' TO NIL BY JOURNAL ENTRIES UNDER THE NARRAT ION 'PGEN-JV/1213/00969'. IN RELATION TO THIS THE ASSESSEE WOULD LIKE TO STAT E THAT DURING THE YEAR BIO-TECH VISION CARE PRIVATE LIMITED HAS MADE PAYMENT TO THE ASSESSEE IN RELATION TO PURCHASE OF BUILDING THE AMOUNT PAID TO THE ASSESSE E HAS AT THE END OF THE YEAR TRANSFERRED TO CWIP BUILDING A/C AS THE TRANSFER CO ULD NOT GET COMPLETED AT THE YEAR END. THE ASSESSEE WOULD LIKE TO ATTACH J. V. O F THE SAME VIDE ANNEXURE 2. 3. VIDE POINT 4 YOUR GOOD SELF HAVE ASKED THE ASSES SEE TO CLARIFY WHETHER ANY OF THE LOAN AMOUNT OF RS. 52,50,274/- SHOWN IN BALANCE SHEET OF BIOTECH OPHTHALMIC PRIVATE LIMITED RELATES TO THE ASSESSEE. IN RELATIO N TO THE SAME THE ASSESSEE WOULD LIKE TO STATE THAT NO PORTION OF AMOUNT RELATES TO THE ASSESSEE.' AS REGARDS THE SALARY ACCOUNT, THE ASSESSEE STATED THAT HE HAD WITHDRAWN VARIOUS ADVANCES FROM SALARY DURING THE YEAR AND TH E FINAL AMOUNT PAYABLE BY THE COMPANY WAS ADJUSTED AGAINST SUCH ADVANCES T AKEN BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD OFFERED SALARY INCOME OF RS. 60 LACS FROM BIOTECH VISION CARE PVT. LTD. BUT HE HAS I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 4 WITHDRAWN TOTAL AMOUNT OF RS. 1,67,53,246/- AND RS. 29,29,006/- FROM SALARY ACCOUNT AND EXPENSES ACCOUNT. THEREFORE, EXTRA AMO UNT WITHDRAWN WAS TREATED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT . SIMILARLY, THE DEBIT BALANCE IN MEHUL ASNANI WIP OF RS. 69,71,646/- PERT AINED TO THE PURCHASING OF BUILDING IN THE NAME OF THE ASSESSEE BY COMPANY OUT OF THEIR FUND, THE ASSESSING OFFICER HAS ALSO TREATED THIS AMOUNT OF R S. 69,71,646/- AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE HAS EARNED DEEMED DIVIDEND IN EXCESS OF SALARY INCOME TO THE AMOUNT OF RS. 2,06,53,898/- RS. 1,07, 53,246/- (1,67,53,246 60,00,000) + 29,29,006/- + RS. 69,71,646/- AS DEEME D DIVIDEND AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS DELETED THE ADDITION. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER:- 3.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AND THE SUBMISSION FILED BY THE APPELLANT. FURTHER, ON GOING THROUGH THE ASSESSMENT RECORDS, I FIND THAT SIMILAR ISSUE HAD COME UP FOR ADJUDICATION IN THE CASE OF APPELLANT IN ASSESSMENT YEAR 2012-13 AND UNDERSIGNED VIDE ORDER DATED 26 TH AUGUST, 2015 HAS DELETED THE ADDITION. THE RELEVAN T PORTION OF THE APPELLATE ORDER FOR THE A. Y. 2012-13 READS AS UNDER: 'I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A ND SUBMISSION FILED BY APPELLANT, THE ASSESSING OFFICER HAS OBSERVED THAT APPELLANT IS BE NEFICIAL OWNER OF MORE THAN 94.92% SHARES OF BIO-TECH VISION CARE PVT. LIMITED WHO HAS RESERVES OFRS.3.38 CRORES AS ON 1 ST APRIL, 2011 AND RS. 3.81 CRORES AS ON 31 S< MARCH, 2012. THE ASSESSING OFFICER FURTHER OBSERVED THAT APPELLANT HAS WITHDRAWN VARIOUS AMOUN TS FROM SAID COMPANY AND PEAK OF DAILY BALANCE IN THE ABOVE ACCOUNT WORKS OUT TO RS. 1,47,89,965. THE ASSESSING OFFICER HAS NOT ACCEPTED APPELLANT'S CONTENTION THAT ADVANC ES WAS AGAINST SALARY AND INCENTIVE TREATING IT AS AN AFTERTHOUGHT. THE ASSESSING OFFIC ER A/SO OBSERVED THAT EVEN THOUGH ON IDENTICAL FACTS CIT (APPEALS) IN A. Y. 2010-11 HAS DECIDED THE ISSUE IN FAVOUR OF APPELLANT, DEPARTMENT IS IN APPEAL BEFORE HON'BLE I .T.A.T., ADDITION OF RS.1,47,89,965/- WAS MADE. ON THE OTHER HAND, APPELLANT HAS ARGUED T HAT HE WAS HAVING CURRENT ACCOUNT WITH THE COMPANY AND SUCH ADVANCES WERE ADJUSTED AG AINST SALARY AS WELL AS INCENTIVE PAYABLE BY SAID COMPANY IT WAS ALSO ARGUED BY APPE LLANT THAT SAID COMPANY HAS DEDUCTED TDS ON AFORESAID PAYMENT MADE TO APPELLANT AND THIS BEING ADVANCE AGAINST INCENTIVE/SALARY, SAME IS OUT OF THE PURVIEW OF SEC TION 2(22)(E) OF THE ACT. THE APPELLANT HAS ALSO STATED THAT INCENTIVE AND SALARY RECEIVED FROM COMPANY IS ALREADY OFFERED TO TAX WHILE FILING RETURN OF INCOME HENCE ADVANCE RECEIVE D AGAINST SUCH SALARY AND CONSIDERED I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 5 WHILE MAKING ADDITION UNDER SECTION 2(22)(E)HAS RES ULTED INTO DOUBLE ADDITION IN THE CASE OF APPELLANT. ON CAREFUL CONSIDERATION OF ENTIRE FACTS, IT IS OBS ERVED THAT APPELLANT IS RECEIVING INCENTIVE ALONG WITH SALARY FROM A. Y. 2010-11 HENC E CONTENTION OF ASSESSING OFFICER THAT ADVANCE WAS AGAINST SALARY AND SAME AFTERTHOUGHT CA NNOT BE ACCEPTED. IT IS PERTINENT TO NOTE THAT DURING YEAR UNDER CONSIDERATION APPELLANT HAS RECEIVED TOTAL SALARY OF RS.2.25 CRORES INCLUDING INCENTIVE OF RS.1.65 CRORES FROM B IO TECH VISION CARE PVT. LTD AND SUCH AMOUNT IS ALREADY OFFERED TO TAX. THE ABOVE COMPANY HAS ALSO DEDUCTED TDS OF RS.67,95,559 ON ABOVE PAYMENT, IT IS OBSERVED THAT SIMILAR ISSUE WAS RAISED IN CASE OF APPELLANT IN A.Y. 2010-11 WHEREIN MY PREDECESSOR CI T(APPEALS) HAS DECIDED THE ISSUE IN FAVOUR OF APPELLANT BY HOLDING AS UNDER '4.3 IN THE ASSESSMENT ORDER, A.O. OBSERVED THA T THE APPELLANT WAS DIRECTOR IN TWO OPPORTUNITIES NAMELY BIO TECH VISION CARE PVT. LTD. AND BIO TECH OPHTHALMIC PVT. LTD.; HE HAD WITHDRAWN HUGE AMOUNTS ON VARIOUS OCCASIONS FROM BIOTECH VISION PVT. LTD.; HE WAS HOLDING AND BENEFICIAL OWNER OF MORE THAN 94.92 % SHARES OF THE SAID COMPANY THROUGHOUT THE YEAR; HE HAD ALSO RECEIVED SALARY FR OM THE SAID COMPANY; THE AMOUNTS DRAWN BY HIM FROM THE COMPANY WERE ADJUSTED AGAINST THE SALARY BY PASSING JOURNAL ENTRIES ON THE LAST DAY OF THE FINANCIAL YEAR I.E. 31.03.2010; THE COMPANY HAD FREE RESERVES OF MORE THAN 25 CRORES AS ON 01.04.2009 AND OF MORE THAN 29 CRORES AS ON 31.03.2010; IT HAD GIVEN ADVANCES TO THE APPELLANT, WHO WAS A SHARE HOLDER A ND ALSO BENEFICIAL OWNER HAVING VOTING RIGHT OF MORE THAN 10% IN THE SAID COMPANY; APPELLANT HIMSELF AGREED THAT THE COMPANY HAD GIVEN ADVANCES, WHICH WERE LATER ADJUST ED AGAINST SALARY; IN THE LIGHT OF THE DECISIONS IN THE CASES OFCIT VS. ABUBAKER AND P. SA RADA VS. C/T(229 ITR 444 (SC)) IT IS IMMATERIAL WHETHER THE ADVANCES WERE REPAID OR ADJU STED BY ANY OTHER MODE; TAX WAS DEDUCTED ON THE PAYMENT OF SALARY ON VARIOUS DATES DURING THE PREVIOUS YEAR; MAJOR TAX DEDUCTED OF OVER RS. 67 LACS WAS IN DECEMBER 2010; FORM 16A WAS ISSUED ON 07.06.2010, WHICH WAS NOT POSSIBLE; COMPANY HAD FIL ED THE RETURN OF INCOME FOR A.Y. 2010-11 ON 15.10.2010; NO ACCOUNTING ENTRIES FOR TH E 70S OF RS. 67,25,5357- WERE MADE ON THE LAST DAY OF THE FINANCIAL YEAR I.E. 31.03.2010; IN VIEW OF THESE FACTS IT IS CLEAR THAT THERE WAS NO INTENTION ON THE PART OF THE COMPANY T O GIVE ADVANCES AGAINST SALARY / INCENTIVE; IT WAS JUST AN AFTERTHOUGHT WITH THE SOL E MOTIVE TO OVERCOME SECTION 2(22)(E) AND THEREFORE THE PEAK DAILY BALANCE IN THE ACCOUNT OF THE APPELLANT WITH THE COMPANY AS ON 22.02.2010 OF RS. 58,12,7547- AND THE AMOUNT OF RS. 83.1 LACS ADVANCED BY THE COMPANY TOTALING TO RS. 1,41,22,154/- WAS BEING ADD ED AS DEEMED DIVIDEND U/S 2(22)(E). 4.4 THE CONTENTIONS OF THE ID. A.R. ARE THAT IN LIE U OF SERVICES RENDERED BY THE APPELLANT IN THE CAPACITY OF DIRECTOR TO THE COMPANY, IT WAS AGR EED BETWEEN THE PARTIES THAT THE DIRECTOR SHALL RECEIVE CERTAIN INCENTIVE OVER AND A BOVE SALARY; CERTAIN EXPENSES OF THE APPELLANT WERE DIRECTLY PAID BY THE COMPANY ON BEHA LF OF THE APPELLANT; SUCH PAYMENTS WERE ADJUSTED AGAINST INCENTIVE AND SALARY PAYABLE TO HIM; FOR THIS PURPOSE A RUNNING CURRENT ACCOUNT OF THE APPELLANT WAS KEPT BY THE CO MPANY; ~ON THE SALARY AND INCENTIVE, FAX WAS DULY DEDUCTED BY THE COMPANY; THE RUNNING A CCOUNT REPRESENTED INTEREST ACCOUNT WHICH WAS ADJUSTED BEFORE THE END OF THE FINANCIAL YEAR; SINCE IT WAS A RUNNING ACCOUNT, THE DEBIT BALANCE AT SOME POINT GOT CONVERTED INTO CREDIT BALANCE LATER, THE AMOUNT ADVANCED BY THE COMPANY WAS NOT IN THE NATURE OF LO AN; ADVANCE IN LIEU OF SALARY CANNOT BE TREATED AS DEEMED DIVIDEND IN THE LIGHT OF THE J UDICIAL PRONOUNCEMENTS; THERE WAS NO LIABILITY ON THE PART OF THE APPELLANT TO REPAY THE ADVANCES; THE APPELLANT HAD PAID TAX ON THE SALARY AND INCENTIVE RECEIVED BY HIM; TAXING TH E SAME AMOUNT AS DEEMED DIVIDED WOULD RESULT IN DOUBLE TAXATION; THE CASE LAWS RELI ED ON BY THE A. & WERE ON DIFFEFENT~SET_OF 7ACTS AND ARE DISTINGUISHABLE FROM THE FACTS OF THE INSTANT CASE; AO'S OBSERVATION THAT TAX OF RS. ~67,25,5357- WAS DEDUCT ED IN DECEMBER, 2010 IS FACTUALLY INCORRECT; THE TAX WAS DEDUCTED DULY ON 31.03.2010, BUT WAS REMITTED TO THE GOVERNMENT ALONG WITH INTEREST IN DECEMBER, 2010; THE TAX DEDU CTED WAS DULY ACCOUNTED FOR IN THE I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 6 BOOKS OF ACCOUNT AS ON 31.03.2010; THE TDS WAS INCL UDED IN THE CURRENT LIABILITIES APPEARING ON THE CREDIT SIDE OF THE BALANCE SHEET; AS ON 31.03.2010 APPELLANT'S ACCOUNT IN THE BOOKS OF THE COMPANY SHOWS CREDIT BALANCE OF OVER RS. 10 LACS, WHICH SHOWS THAT APPELLANT WAS TO RECEIVE SUCH AMOUNT FROM THE COMPA NY; THIS PROVES THAT THE ADJUSTMENTS OF THE ADVANCES AGAINST SALARY AND INCENTIVE WAS BO NA FIDE AND NOT AN AFTERTHOUGHT AND THEREFORE IMPUGNED ADDITION MADE BY THE A.O. ON ASS UMPTIONS WAS UNWARRANTED. 4.5 HAVING CONSIDERED THE FACTS OF THE MATTER, I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE ID. A.R., APPELLANT WAS PAID SALARY OF RS. 5 LA CS PER MONTH (AS WAS DONE IN THE PRECEDING YEAR), FAX WAS BEING DEDUCTED MONTHLY ON THE PAYMENT OF SALARY TO THE APPELLANT. INCENTIVE WAS CREDITED ON 31-03-2010 AND TAX WAS DEDUCTED ON THE SAME DAY. AO'S OBSERVATION THAT MOST OF THE TAX WAS DEDUCTED IN DECEMBER, 2010 IS FOUND TO BE FACTUALLY INCORRECT. INSTEAD THE TAX DEDUCTED ON TH E SALARY AND INCENTIVE WAS REMITTED TO THE GOVERNMENT ACCOUNT IN THE MONTH OF DECEMBER, 20 10. AS SEEN FROM THE BOARD RESOLUTION DATED 16.04.2009 OF BIO TECH VISION CARE PVT. LTD., CONSENT HAD BEEN GIVEN FOR THE PAYMENT OF INCENTIVE TO THE APPELLANT AT TH E RATE OF 5.5% ON THE NET SALES ACHIEVED IN THE FINANCIAL YEAR 2009-10. THE INCENTIVE PAID W AS RS. 2,17,65,484/~ .IN THE EARLIER YEARS NO SUCH INCENTIVE WAS PAID TO THE APPELLANT. HOWEVER, SINCE THE BOARD RESOLUTION IS DATED 16.04.2009, AO'S OBSERVATIONS (THAT ADJUSTMEN T OF THE ADVANCES GIVEN AGAINST THE SALARY AND INCENTIVE WAS AN AFTERTHOUGHT) DOES NOT STAND TO REASON. THE INCENTIVE WAS QUANTIFIED ON THE LAST DATE OF THE PREVIOUS YEAR AN D WAS CREDITED ON THE SAME DAY TO THE APPELLANT'S ACCOUNT. TAX ON THE PAYMENT OF INCENTIV E WAS ALSO DEDUCTED ON THE SAME DAY AND WAS REMITTED IN DECEMBER, 2010. AS SEEN FROM TH E AUDITOR'S REPORT IN FORM 3CD, IT WAS STATED THAT THE TAX DEDUCTED WAS REMAINING UNPA ID AT THE END OF THE YEAR. THE OUTSTANDING TDS WAS REFLECTED IN THE BALANCE SHEET UNDER 'CURRENT LIABILITIES'. IN THE LIGHT OF THESE FACTS, IT HAS TO BE HELD THAT THE ADVANCES GIVEN BY THE COMPANY TO THE APPELLANT CAME TO ADJUSTED AGAINST THE SALARY/INCENTIVE PAID TO HIM. AT THE END OF THE YEAR APPELLANT WAS TO RECEIVE OVER RS. 10 LACS FROM THE COMPANY IN DICATING THEREBY THAT THE SALARY AND INCENTIVE TOTALING TO RS.2.77 CRORES RECEIVED BY TH E APPELLANT WERE SUCH MORE THAN THE AMOUNT OF ADDITION MADE BY THE AO OF RS. 1.41 CRORE S (BEING THE PEAK AMOUNT OF THE CREDIT RECEIVED AND THE PAYMENT MADE BY THE COMPANY ON BEHALF OF THE APPELLANT FOR THE PURCHASE OF IMMOVABLE PROPERTY IN HIS NAME). FURTHE R IT IS SEEN THAT INCENTIVE WAS PAID IN SUCCEEDING TWO YEARS ALSO. 4.6 IN VIEW OF THE ABOVE DISCUSSION, THE ISSUE FOR CONSIDERATION IS WHETHER THE PROVISIONS OF SECTION 2(22)(E) CAN BE INVOKED IN A CASE WHERE THE ADVANCES ARE ADJUSTED AGAINST SALARY/INCENTIVE. IN VIEW A NUMBER OF DECISIONS REL IED ON BY THE ID. A.R. (AS REPRODUCED AT PARA 4.2 ABOVE), THIS ISSUE HAS TO BE ANSWERED I N FAVOUR OF THE APPELLANT FURTHER, IT IS SEEN FROM THE RETURN OF INCOME FILED BY THE APPELLA NT FOR THE YEAR UNDER CONSIDERATION THAT HE HAD ADMITTED SALARY INCOME (INCLUDING THE I NCENTIVE) OF RS. 2,77,65,484/- FROM BIO TECH VISION CARE PVT. LTD. BESIDES HE HAD ADMIT TED SALARY INCOME OF RS. 19,20,000/~ FROM BIO TECH OPHTHALMIC PVT. LTD. THUS THE SALARY ADMITTED TOTALED UP TO RS. 2.96,85,484/-. THIS FACT WAS MENTIONED BY THE AO AT PARA 3 OF THE ASSESSMENT ORDER. THE CONTENTION OF THE ID. AR (THAT THE TAXING THE SALAR Y AND INCENTIVE ALREADY ADMITTED BY THE APPELLANT IN THE RETURN OF INCOME ONCE AGAIN AS DIV IDEND INCOME U/S 2(22)(E) WOULD LEAD TO TAXING THE SAME AMOUNT TWICE) IS TENABLE. 4.7 IN VIEW OF THE FORGOING DISCUSSION, IMPUGNED AD DITION MADE BY THE AO U/S 2(22)(E) IS NOT SUSTAINABLE. IT IS DELETED. THIS GROUND OF APPE AL IS ALLOWED.' THE FACTS OF THE YEAR UNDER CONSIDERATION ARE SIMIL AR TO THE FACTS OF PRECEDING ASSESSMENT YEAR HENCE RATIO OF ABOVE DECISION SQUARELY APPLIES TO A PPELLANT'S CASE. IT IS PERTINENT TO NOTE THAT ADVANCE RECEIVED FROM COMPANY AND TREATED AS DEEMED DIVIDEND WAS ADJUSTED AGAINST SALARY AND INCENTIVE AND ON IDENTICAL FACTS HON'BLE AHMEDABAD I.T.A.T., IN THE CASE OF RAKESH M. GOYA/ REFERRED IN APPELLANT'S SUBMISSION HAS CLEARLY STAT ED THAT PROVISIONS OF SECTION 2(22)(E) ARE NOT APPLICABLE. IT IS PERTINENT TO NOTE THAT IN PRESENT CASE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT APPELLANT HAS NOT RECEIVED ANY REMUNERATION OR INCENTIVE FROM COMPANY HENCE AMOUNT RECEIVED AGAINST SUCH REMUNERATION/INCENTIVE AND TA XED AS DEEMED DIVIDEND HAS RESULTED INTO I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 7 DOUBLE ADDITION OF SAME INCOME IN CASE OF APPELLANT . CONSIDERING THE FACTS DISCUSSED HEREIN ABOVE AND RELYING UPON DECISION OF MY PREDECESSOR CIT(APP EALS), ADDITION MADE BY ASSESSING OFFICER FOR RS. 1,47,89,965 IS DELETED. HOWEVER, IT IS OBSE RVED THAT BIO TECH VISION PVT. LIMITED HAS DEDUCTED TDS ON INCENTIVE ONLY AT THE YEAR END AND NOT DEDUCTED AND PAID TDS ON ADVANCES MADE TO APPELLANT WHICH IS ADJUSTED AGAINST SUCH INCENTI VE. CONSIDERING THESE FACTS, ASSESSING OFFICER IS DIRECTED TO COMPUTE INTEREST UNDER SECTION 201(1A) IN THE CASE OF COMPANY AS PER PROVISIONS OF LAW. ON THIS BACKGROUND, THIS GROUND OF APPEAL IS A LLOWED'. 3.4 THE FACTS OF THE CASE IN THE PRESENT APPEAL FOR THE A.Y. 2013-14 ARE IDENTICAL THOSE FOR A.Y. 2012-13 WHEREIN SIMILAR ADDITION WAS DELETED B Y~TJN3ERSIGNED. IT IS ALSO OBSERVED THAT APPELLANT HAS RECEIVED SALARY INCOME OF RS.60,00,00 0/- AND INCENTIVE INCOME OF RS.2,98,31,964/- FROM BIOTECH VISION CARE PVT. LIMITED. THE ASSE SSING OFFICER HAS OBSERVED THAT SAID COMPANY HAS MAINTAINED THREE ACCOUNTS OF APPELLANT WHICH, I NTER ALIA, INCLUDE SALARY ACCOUNT, EXPENSES ACCOUNT AND CAPITAL WIP. THE ASSESSING OFFICER HAS CONSIDERED THAT DEBIT BALANCE IN SUCH ACCOUNTS ARE FOR RS. 1,67,53,246/- IN SALARY ACCOUN T, RS.29,29,006/- IN EXPENSES ACCOUNT AND RS.69,71,646/- IN CAPITAL WIP ACCOUNT THE AGGREGATE DEBIT BALANCE OF SUCH ADVANCES IS FOR RS.2,66,53,898/- AND SALARY PAID BY SAID COMPANY TO APPELLANT IS RS.60,00,000/-.ASSESSING OFFICER MADE NET ADDITION OF RS.2,06,53,893/-. HOWEVER, THE APPELLANT HAS ALSO RECEIVED INCENTIVE INCOME OF RS.2,98,31,964/- AND SAME IS PART OF TOTAL INCOM E SHOWN IN RETURN OF INCOME AND SUCH INCENTIVE INCOME IS A/SO ADJUSTED AGAINST DEBIT BALANCE IN AB OVE THREE ACCOUNTS. THUS, THE AGGREGATE INCOME RECEIVED BY APPELLANT FROM BIOTECH VISION CA RE PVT. LIMITED IS IN EXCESS OF ADVANCES REFERRED BY ASSESSING OFFICER AND WHEN ASSESSING OF FICER HIMSELF HAS ALLOWED CREDIT OF SALARY PAYMENT OF RS. 60,00,000/- THERE IS NO REASON FOR N OT ALLOWING ADJUSTMENT OF INCENTIVE PAYMENT ADJUSTED AGAINST ABOVE REFERRED ADVANCES. IT IS ALS O OBSERVED THAT ASSESSMENT ORDER IN CASE OF ABOVE REFERRED COMPANY WAS ALSO PASSED ON 31 ST MARCH, 2016 (AS SUBMITTED BY APPELLANT IN PAPER BOOK), SALARY AS WELL AS INCENTIVE PAYMENTS MADE TO APPELLANT IS ACCEPTED AS SUCH IN SUCH ORDER. CONSIDERING THE ABOVE REFERRED FACTS ADDITION MADE BY ASSESSING OFFICER FOR RS, 2,06,53,838/- IS DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT NO RESOL UTION FOR GIVING INCENTIVE TO THE DIRECTOR WAS PASSED BY THE COMPANI ES. THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT ASSESSEE HAS WITH DRAWN THE AMOUNT AS ADVANCE AND THE ENTRIES WAS SQUARED UP BY THE JOURN AL ENTRIES OF INCENTIVES. THEREFORE, HE HAS CONTENDED THAT THE AMOUNT OF ADVA NCES TO THE ASSESSEE IS FALLEN WITHIN THE SCOPE OF THE DEEMED DIVIDEND UNDE R THE PROVISION OF SECTION 2(22)(E) OF THE ACT. THE REVENUE HAS PLAC ED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SMT. TARULA TI SHYAM VS. CIT (1977) 108 ITR 345 (SC) AND THE DECISION OF SUPREME COURT IN THE CASE OF MS. P. SARADA VS. CIT (1998) 96 TAXMAN.COM 11 (SC). THE DECISION OF HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. P. K. ABUBUCKER I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 8 (2004) 135 TAXMAN 77 (MAD) AND ALSO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF L. ALAGUSUNDARAM CIT (2002) 1 21 TAXMAN.COM (SC). ON THE OTHER HAND, LD. COUNSEL HAS CONTENDED THAT A SSESSEE WAS A DIRECTOR AND WAS HOLDING SUFFICIENT SHAREHOLDING IN BIOTECH VISI ON CARE PVT. LTD., BECAUSE OF PROMOTER OF THE COMPANY RESPONSIBILITY O F LOOKING AFTER THE AFFAIR OF THE COMPANY WAS VESTED IN HIM. THEREFORE FOR RE NDERING SERVICES TO THE COMPANY, THE ASSESSEE HAS RECEIVED SALARY FROM THE COMPANY. BECAUSE OF DEVOTING OF MAXIMUM TIME TOWARDS THE AFFAIRS OF THE COMPANY, THE ASSESSEE WAS GRANTED INCENTIVE BY THE COMPANY. THE LD. COUN SEL HAS PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF CALCUTTA I N THE CASE OF PRADIP KUMAR MALHOTRA VS. CIT (2011) 15 TAXMAN.COM 66 (CAL CUTTA) AND IN THE DECISION OF ITAT AHMEDABAD IN THE CASE OF RAKESH M. GOYAL VS. ITO VIDE ITA NO. 855/AHD/2020 DATED 26-06-2012. IN SUPPORT OF HIS INTENTION, THE LD. COUNSEL HAS ALSO REFERRED COPIES OF DOCUMENTS P LACED IN THE PAPER BOOK FILED IN SUPPORT OF HIS CONTENTION AND STATED THAT NATURE OF DEBIT BALANCE AS WELL AS THE AMOUNT RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF SALARY AND INCENTIVE ONLY AND THE SAME CANNOT BE BROUGHT TO TA X U/S. 2(22)(E) OF THE ACT. 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WITHOUT REITERATING THE FACTS AS ELABORATED ABOVE IN THIS O RDER, DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAD NOT ACCEPTED THE CONTENTION OF THE ASSESSEE THAT ADVANCES WERE AGAINST SALARY AS WELL AS INCENTIVE PAYABLE BY THE BIOTECH VISION CASE PVT. LTD., AND HELD THAT AS SESSEE HAS EARNED DEEMED DIVIDEND TO THE TUNE OF RS. 2,06,53,898/-. THE ASS ESSEE HAS SUBMITTED THAT HE WAS HAVING CURRENT ACCOUNT WITH THE COMPANY AND SUC H ADVANCES WERE ADJUSTED AGAINST SALARY AS WELL AS INCENTIVE PAID B Y THE SAID COMPANY. THE I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 9 ASSESSEE HAS ALSO BROUGHT TO THE NOTICE OF THE ASSE SSING OFFICER THAT THE SAID COMPANY HAS DEDUCTED TDS ON THE AFORESAID PAYMENT M ADE TO THE ASSESSEE. THE ASSESSEE HAS ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT HE HAS ALREADY FILED THE RETURN OF INCOME AND OFFERED THE AMOUNT RECEIVED TO TAX AGAINST SALARY AND PAID THE TAXES THEREON. IT WAS ALSO SUBMITTED THAT AGAIN ADDING THE SAME AMOUNT U/S. 2(22)(E) HAS RESULTED I NTO DOUBLE ADDITION IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAD PAID TAX ON THE SALARY AND INCENTIVE RECEIVED BY HIM, TAXING THE SAME AMOUNT AS DEEMED D IVIDEND WOULD RESULT IN DOUBLE TAXATION. THE CASE LAWS RELIED UPON BY T HE REVENUE WERE OF DIFFERENT SET OF FACTS ARE DISTINGUISHABLE FROM THE FACTS OF THE INSTANT CASE. WE HAVE ALSO GONE THROUGH THE COPY OF INCOME TAX RE TURN FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION PLACED IN THE PAPER BOOK. ON PAGE NO. 15 OF THE PAPER BOOK PERTAINING TO COMPUTATION OF TOTAL INCOME IT IS NOTICED THAT ASSESSEE HAS SHOWN THE INCOME FROM SAL ARY FROM BOTH THE COMPANIES AS UNDER:- COMPUTATION OF TOTAL INCOME INCOME FROM SALARY (CHAPTER IVA) 37749564/- BIO TECH VISION CARE PVT. LTD. 305, ASIATIC TRADE CENTRE, AHMEDABAD GUJARAT SALARY 6000000 INCENTIVE 29831964 35831964 BIOTECH OPHTHALMICS PVT. LTD 305, ASIATIC TRADE CENTRE, AHMEDABAD, GUJARAT SALARY 1920000 GROSS SALARY 1920000 37751964 PROFESSIONAL TAX U/S. 16(III) 2400 --------------- 37749564 I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 10 IT IS DEMONSTRATED FROM THE AFORESAID DETAIL IN THE INCOME TAX RETURN FILED BY THE ASSESSEE THAT ASSESSEE HAS PAID TAXES ON THE SA LARY AND INCENTIVE RECEIVED BY HIM. IT IS FURTHER NOTICED FROM THE DETAIL OF T AXES PAID ON THE AFORESAID AMOUNT WAS PAID IN THE FORM OF TDS DEDUCTED BY THE COMPANIES WHICH HAVE PAID SALARY AND INCENTIVE TO THE ASSESSEE. THE DE TAILS OF PAYMENT OF TAXES IN THE FORM OF TDS SHOWN IN THE RETURN OF INCOME ARE A S UNDER:- TOTAL INCOME 37913203 ROUND OFF U/S 288A 37913200 INCOME EXEMPT U/S. 10 2581271 DEDUCTION U/S. 10AA, 80H TO 80RRB(EXCEPT SEC. 80P) NOT CLAIMED HENCE AMT NO APPLICABLE. TAX DUE 11203960 EDUCATION CESS 336119 -------------- 11540079 T.D.S. 12443751 ------------- -963972 REFUNDABLE (ROUND OFF U/S. 288B) 963670 T.D.S./TCS FORM ----------------------- NON-SALARY(AS PER ANNEXURE) 37059 SALARY (AS PER ANNEXURE) 12406693 IT IS DEMONSTRATED FROM THE ABOVE FACTS THAT ASSESS EE HAS INCLUDED THE AMOUNT OF SALARY AND INCENTIVE RECEIVED FROM THE CO MPANY IN HIS INCOME AND CATEGORICALLY SHOWN THAT THE AFORESAID AMOUNT W AS RECEIVED FROM THE COMPANIES AFTER DEDUCTION OF TDS. IN VIEW OF THE A BOVE FACTS AND CIRCUMSTANCES, WE CONSIDER THAT ACTION OF ASSESSING OFFICER IN TAXING THE IMPUGNED AMOUNT AS DEEMED DIVIDEND HAS RESULTED INT O DOUBLE ADDITION ON SAME INCOME WHICH HAS ALREADY BEEN INCLUDED BY THE ASSESSEE IN HIS INCOME. I.T.A NO. 2190/AHD/2016 A.Y. 2013-14 PAGE NO DCIT VS. MEHUL PRATAP ASNANI 11 THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE DECI SION OF LD. CIT(A). THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-08-2021 SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27/08/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,