RAVIKUMAR D TREHAN, MUMBAI V. DCIT 22(2), MUMBAI

ITA 221/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2796 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 221/MUM/2015 (ASSESSMENT YEAR : 2009-10) MR. RAVIKUMAR D. TREHAN, NO.7, DIVYA SWAPNA, DR.CHOITRAM GIDWANI MARG, CHEMBUR, MUMBAI 400 074 PAN:AAKPT 9533B ... APPELL ANT VS. THE DCIT 22(3) MUMBAI .... RESPONDENT APPELLANT BY : SHRI ANANT PAI RESPONDENT BY : SHRI SANTOSH MANKOSKAR DATE OF HEARING : 22/06/2016 DATE OF PRONOUNCEMENT : 30/06/2016 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERT AINING TO ASSESSMENT YEAR 2009-10 IS DIRECTED AGAINST AN OR DER PASSED BY CIT(A)-7, MUMBAI DATED 31/10/2014, WHICH IN TURN AR ISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 25 /11/2011. 2. THE SOLITARY ISSUE IN THIS APPEAL RELATES TO AN ADDITION OF S.5,75,902/- SUSTAINED BY THE CIT(APPEALS) BY INVOK ING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 2 ITA NO. 221/MUM/2015 (ASSESSMENT YEAR : 2009-10) 2. THE SOLITARY ISSUE IN THIS APPEAL RELATES TO AN ADDITION OF RS.5,75,902/- SUSTAINED BY THE CIT(A) BY INVOKING T HE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 3. BRIEFLY PUT, THE FACTS RELEVANT TO DECIDE THE IM PUGNED CONTROVERSY CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE IS AN INDIVIDUAL, WHO IS A SHAREHOLDER AS WELL AS DIRECTOR IN A CONCERN, M/S. RAMLAKS EXPORTS PVT. LTD. THE SAID CONCERN I.E. M/S.RAMLAKS EXPORTS PV T. LTD. WAS FOUND TO HAVE PAID A SUM OF RS.5,75,902/- TO JASLOK HOSPITAL , WHERE ASSESSEES FATHER WAS AVAILING MEDICAL TREATMENT. THE SAID PA YMENT HAS BEEN HELD BY THE LOWER AUTHORITIES TO FALLING WITHIN THE MEAN ING OF DEEMED DIVIDEND DEFINED UNDER SECTION 2(22)(E) OF THE ACT . 4. BEFORE ME, THE LD. REPRESENTATIVE FOR THE ASSESS EE HAS RAISED A SINGULAR PLEA, WHICH IS TO THE EFFECT THAT THE SAID AMOUNT WAS PAID BY THE CONCERN, M/S.RAMLAKS EXPORTS PVT. LTD. IN TERM S OF THE EMPLOYMENT CONTRACT WITH THE ASSESSEE. AT THE TIME OF HEARING REFERENCE WAS MADE TO THE TERMS OF THE EMPLOYMENT CONTRACT DATED 10/1 0/2004, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK IN PAGE -13 . IN TERMS THEREOF, IT IS PROVIDED THAT THE CONCERN, M/S.RAMLAKS EXPO RTS PVT. LTD. WAS TO PAY FOR CURRENT MEDICAL AND EMERGENCY EXPENSES FOR ASSESSEE AND HIS FAMILY MEMBERS SUBJECT TO THE LIMITS PRESCRIBED AS PER THE COMPANY RULES. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, POINTED OUT THAT THE CIT(A) SUSTAINED THE TREATMENT OF THE IMPUGNED SUM AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) ON THE GRO UND THAT THE PAYMENT MADE BY THE COMPANY IS OF PERSONAL NATURE. 3 ITA NO. 221/MUM/2015 (ASSESSMENT YEAR : 2009-10) 6. HAVING CONSIDERED THE RELEVANT MATERIAL, IT IS QUITE CLEAR THAT THE AMOUNT PAID BY THE CONCERN M/S.RAMLAKS EXPORTS PVT . LTD. TO JASLOK HOSPITAL IS IN TERMS OF THE EMPLOYMENT CONTRACT WIT H THE ASSESSEE. BE THAT AS IT MAY, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT , SO FAR AS IT IS RELEVANT FOR THE PRESENT PURPOSE, ARE ATTRACTED ON LY WHERE PAYMENT IS MADE BY A CONCERN FOR THE INDIVIDUAL BENEFIT OF THE SHAREHOLDER. IN THE PRESENT CASE, THE FACTUM OF THE PAYMENT HAVING BEEN MADE IN TERMS OF THE EMPLOYMENT CONTRACT IS EMERGING FROM R ECORD AND, THEREFORE, SUCH PAYMENT CANNOT BE CONSTRUED TO BE FOR INDIVIDUAL BENEFIT OF THE SHAREHOLDER, AS UNDERSTOOD FOR THE PURPOSES OF SECTION 2(22)(E) OF THE ACT. ACCORDINGLY, ON THIS SHORT P OINT, I DEEM IT FIT AND PROPER TO SET-ASIDE THE ORDER OF THE CIT(A) AND DIR ECT THE ASSESSING OFFICER TO DELETE THE ADDITION, SINCE SUCH SUM IS O UTSIDE THE PURVIEW OF SECTION 2(22)(E) BEING A PAYMENT MADE IN TERMS OF T HE EMPLOYMENT CONTRACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON /06/2 016 SD/- (G.S. PANNU) ACCOU NTANT MEMBER MUMBAI, DATED /06/2016 VM , SR. PS 4 ITA NO. 221/MUM/2015 (ASSESSMENT YEAR : 2009-10) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI