The Dy. Commissioner of Income-tax, Amritsar. V. M/s. Amritsar Transport Co., Pvt. Ltd, Amritsar.

ITA 221/ASR/2014

• Counselvise Citation: 22120914 RSA 2014
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 04-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: P N ARORA
• Keywords: Proportionate interest; Deemed dividend; Assessment record
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.221(ASR)/2014 ASSESSMENT YEAR:2005-06 PAN :AABCA6200A DY.COMMR. OF INCOME TAX, VS. M/S. AMRITSAR TRANSPOR T CO.PVT. LTD. CIRCLE-1, AMRITSAR. I/S GHEE MANDI, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.V.K. SINGH, DR RESPONDENT BY:SH.P.N.ARORA, ADVOCATE DATE OF HEARING:19/02/2015 DATE OF PRONOUNCEMENT:26/02/2015 ORDER PER A.D.JAIN, JM: THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2005-06 AGAINST THE ORDER OF THE CIT(A), AMRITSAR, DATED 17.01.2014 . THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER WORTHY CIT(A) IS RIGHT IN DELETING THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND OF R.380886/- U/S 2(22)( E) WHICH WAS SHOWN AS SURPLUS IN PROFIT AND LOSS ACCOUNT. 2. WHETHER WORTHY CIT(A) IS RIGHT IN DELETING THE A DDITION ON ACCOUNT OF DEEMED DIVIDEND OF R.7,92,429/- U/S 2(22 )(E) WHICH WAS SHOWN BY ASSESSEE AS LOAN AND ADVANCES RECOVERA BLE FROM COMPANIES IN WHICH DIRECTORS ARE INTERESTED. 3. WHETHER WORTHY CIT(A) IS RIGHT IN DELETING THE A DDITION ON ACCOUNT OF PROPORTIONATE INTEREST ON ADVANCE FOR PL OT OF RS.28,78,303/- WHICH IS NOT INCIDENTAL TO THE BUSIN ESS. ITA NO.221(ASR)/2014 2 4. WHETHER WORTHY CIT(A) IS RIGHT IN DELETING THE A BOVE ADDITIONS ON THE GROUND THAT THERE WAS NO MISTAKE APPARENT FR OM RECORD AND THUS SECTION 154 OF THE INCOME TAX ACT, IS NOT APPLICABLE. 2. VIDE ORDER DATED 23.12.2009, PASSED U/S 154/155 OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE COMPANY, IN THE RETURN F ILED, HAD DECLARED NIL INCOME., THAT THIS RETURN WAS PROCESSED AND LATER O N, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAD BEEN COMPLETED. IT WAS NOTICED FROM THE ASSESSMENT RECORD THAT THE ASSESSEE-COMPANY HAD NOT ACCUMULATED PROFIT, WHEREAS, AS PER SCHEDULE FORMING PART OF THE BALANC E SHEET AS ON 31.03.2005, HAD SHOWN SURPLUS IN THE PROFIT & LOSS ACCOUNT, AMO UNTING TO RS.3,80,886/-. THE AO WAS, THUS, OF THE OPINION THAT THE PROVISION OF SECTION 2(22)(E) OF THE ACT AND AS PROVIDED UNDER SECTION 115(O) OF THE ACT WERE APPLICABLE AND TAX WAS CHARGEABLE. THE AO OBSERVED THAT AS SUCH, SURPL US IN THE PROFIT & LOSS ACCOUNT WAS NOT ADMISSIBLE. THIS WAS TAXED UNDER SE CTION 115(O) OF THE ACT @ 12.5%. 3. THE AO FURTHER, OBSERVED THAT AS PER SCHEDULE G OF BALANCE SHEET, THE LOANS AND ADVANCES INCLUDED LOANS AND ADVANCES RECOVERABLE FROM COMPANIES IN WHICH DIRECTORS OF THE ASSESSEE COMPAN Y WERE INTERESTED. THESE LOANS AND ADVANCES AMOUNTED TO RS.7,92,429/-. THE AO OBSERVED THAT AS PER PROVISIONS OF SECTION 2(22)(E) OF THE ACT, L OANS AND ADVANCES MADE BY THE DIRECTORS ARE LIABLE TO TAX U/S 115(O) OF THE ACT @ 12.5% IN THE HANDS OF THE ASSESSEE-COMPANY. THE AO CHARGED SUCH TAX AS HE OBSERVED THAT NOTHING ITA NO.221(ASR)/2014 3 WAS ON RECORD SHOWING THAT TAX U/S 115(O) OF THE AC T HAD BEEN CHARGED IN ASSESSEES CASE. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. AGGRIEVED, THE DEPARTMENT I S IN APPEAL. 6. BEFORE US, THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE BY THE AO., TH AT WHILE DOING SO, THE LD. CIT(A) ERRED IN OBSERVING THAT THERE WAS NO MISTAKE APPARENT FROM THE RECORD., AND THAT, THEREFORE, THE PROVISIONS OF SEC TION 154 OF THE ACT WERE NOT APPLICABLE. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTEND ED THAT THE LD. CIT(A) HAS CORRECTLY HELD THAT THERE WAS NO MISTAKE APPARE NT FROM THE RECORD AND SO THE PROVISIONS OF SECTION 154 OF THE ACT WERE NOT A TTRACTED. 8. IN THIS REGARD, IT IS SEEN THAT IN THE ORDER PA SSED U/S 154 OF THE ACT, THE AO MADE ADDITION PERTAINING TO THE PROVISIONS OF SE CTION 2(22)(E) AND SECTION 115 (O) OF THE ACT. 9. THE AO ALSO MADE AN ADDITION OF RS.28,78,303/- O N ACCOUNT OF CAPITAL INVESTMENT ON PLOT. HERE ALSO, THE PROVISIONS OF SE CTION 2(22)(E) WERE INVOKED AND THE AMOUNT WAS TAXED U/S 115(O) OF THE ACT. 10. AT THE OUTSET, THE ISSUE AS TO WHETHER THE QUES TION REGARDING CORRECTNESS OR OTHERWISE OF AN ADDITION UNDER THE P ROVISIONS OF SECTION ITA NO.221(ASR)/2014 4 2(22)(E) OF THE ACT, INVOLVES LENGTHY ARGUMENT AND ASCERTAINMENT THEREBY OBVIATING THE APPLICABILITY OF THE SECTION 154 OF T HE ACT, THERE BEING NO MISTAKE APPARENT FROM THE RECORD STANDS ADDRESSED I N ITO VS. VOLKART BROS. REPORTED IN 82 ITR 50 (SC), CIT VS. HERO CY CLES PVT. LTD. REPORTED IN 228 ITR 463(SC), CIT VS. HAJI ABDUL HAMID REP ORTED IN 292 ITR 143 (ALL.) AND EXPORT CORORATION LTD. REPORTED IN 27 9 ITR 477 (GUJ.), AMONGST OTHERS. IN ALL THESE CASES, IT HAS BEEN HELD TO THE EFFECT THAT A MISTAKE APPARENT FROM RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG-DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPI NIONS., THAT A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARE NT FROM THE RECORD, THAT RECTIFICATION U/S 154 OF THE ACT, CAN ONLY BE MADE WHEN A GLARING MISTAKE OF FACT OR LAW HAS BEEN COMMITTED BY THE OFFICER PASSI NG THE ORDER AND IT BECOMES APPARENT FROM THE RECORD, THAT RECTIFICATIO N IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE AND THAT THE POINT WHICH IS NOT EXAMINED ON FACT OR IN LAW CANNOT BE DEALT WITH AS A MISTAKE APPARENT FRO M THE RECORD. 11. IN THE PRESENT CASE, THE LD. CIT(A), WHILE DECI DING THE MATTER IN FAVOUR OF THE ASSESSEE, HAS HELD AS FOLLOWS: THE ISSUE OF DEEMED DIVIDEND REQUIRES DETAILED INV ESTIGATION AND ASCERTAINMENT OF THE FACTS TO ESTABLISH IT. FUR THER, THIS ISSUE OF DEEMED DIVIDEND WAS CONSIDERED BY THE AO DURING REG ULAR ASSESSMENT PROCEEDING AND ASSESSEE HAS TWICE SUBMI TTED ITS EXPLANATION ON THIS ISSUE DETAILS OF WHICH ARE AVAI LABLE IN OFFICE RECORD ON PAGE NUMBER 207 TO 210. EVEN ON MERIT NO CASE HAS BEEN ITA NO.221(ASR)/2014 5 MADE BY THE AO ON THE ISSUE OF DEEMED DIVIDEND U/S 2(22)(E) R.W.S. 115(O) AS HE HAS NOT IDENTIFIED SHAREHOLDERS OR ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WH ICH HE HAS SUBSTANTIAL INTEREST AND TO WHOM DURING YEAR ANY LO AN OR ADVANCES HAVE BEEN GIVEN BY THE ASSESSEE. IN VIEW OF THE ABOVE, APPEAL ON ALL QUANTUM ISSUE I S DECIDED IN FAVOUR OF THE ASSESSEE. 12. THAT ISSUES FALLING UNDER THE PROVISIONS OF SEC TION 2(22)(E) OF THE ACT ARE VEXED QUESTIONS INVOLVING LENGTHY ARGUMENTS AND ASCERTAINMENT CANNOT BE REFUTED. THIS HAS DULY BEEN TAKEN INTO CONSIDERA TION BY THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER. WE DO NOT FIND A NY ERROR IN THE ORDER OF THE LD. CIT(A). THE SAME IS HEREBY CONFIRMED. 13. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH FEBRUARY, 2015. SD/- SD/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26TH FEBRUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. AMRITSAR TRANSAPORT CO.PVT. LTD. AMRITSAR. 2. THE DCIT, CIR-1, ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.