ACIT, CHENNAI V. Tallboy Stationery Private Limited, CHENNAI

ITA 2291/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9422 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: G BASKAR
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.2291 & 2292/MDS/2015 ( )( / ASSESSMENT YEARS : 2011-12 & 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI - 600 034. V. M/S TALLBOY STATIONERY PVT. LTD., NEW NO.130, OLD NO.34, NELSON MANICKAM ROAD, AMINJIKARAI, CHENNAI - 600 029. PAN : AACCT 3483 H (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI A.B. KOLI, JCIT -.+, / 0 / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE 1 / 2% / DATE OF HEARING : 02.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 29.04.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI, DATED 14.10.2015, FOR THE ASSESSMENT YEARS 2011-12 AND 2008-09. SINCE COMMON ISSUE ARISES FOR CONSIDERATI ON IN BOTH 2 I.T.A. NOS.2291 & 2292/MDS/15 THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SH. A.B. KOLI, THE LD. DEPARTMENTAL REPRESENTATI VE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IN BOTH THE APPEALS IS WITH REGARD TO ADDITION MADE BY THE ASSE SSING OFFICER UNDER SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. D.R., THE ASSESSING OF FICER FOUND THAT THE ASSESSEE RECEIVED A LOAN OF ` 3,92,05,903/- FROM M/S CHENNAI MICRO PRINT PVT. LTD. THE ASSESSEE-COMPANY AND M/S CHENNAI MICRO PRINT PVT. LTD. HAD COMMON DIRECTORS. ONE SH RI S. RAMU IS HOLDING 50% SHARES IN THE ASSESSEE-COMPANY AND ALSO HOLDING 50% SHARES IN CHENNAI MICRO PRINT PVT. LTD. SIMILA RLY, ONE SHRI V. RAMESH IS HOLDING 50% SHARES IN THE ASSESSEE-COMPAN Y AND 50% IN CHENNAI MICRO PRINT PVT. LTD. SINCE BOTH THE CO MPANIES ARE HAVING COMMON SHAREHOLDERS, THE ASSESSING OFFICER F OUND THAT THE LOAN WAS ADVANCED FOR THE BENEFIT OF SHAREHOLDERS. THEREFORE, THE SAME WAS TREATED AS DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. THE LD. D.R. FURTHER SUBMITTED THAT CHENNAI MICRO P RINT PVT. LTD. HAS ACCUMULATED PROFITS OF ` 7,98,16,378/- AS ON 01.04.2010 AND THEIR ACCUMULATED PROFITS AS ON 31.103.2011 WAS ` 9,53,94,286/-. 3 I.T.A. NOS.2291 & 2292/MDS/15 THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN DEL ETING THE ADDITION MADE BY THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT RECEIVING THE LOAN BY THE ASSESSEE- COMPANY IS NOT IN DISPUTE. BOTH THE COMPANIES, NAM ELY, ASSESSEE- COMPANY AND CHENNAI MICRO PRINT PVT. LTD. HAD COMMO N SHAREHOLDERS. WHEN THE LOAN WAS ADVANCED FOR THE B ENEFIT OF THE SHAREHOLDERS, THE ADDITION HAS TO BE MADE ONLY IN T HE HANDS OF SHAREHOLDERS AND NOT IN THE HANDS OF OTHERS. IN TH E CASE BEFORE US, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER OF CHENNAI MICRO PRINT PVT. LTD. THERE FORE, THE CIT(APPEALS) BY PLACING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. PRINTWAVE SERVICES P. LTD. (2015) 3 73 ITR 665 AND THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSES SEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 IN I.T.A. NO. 562/MDS/2 015, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, RECEI PT OF LOAN BY THE ASSESSEE-COMPANY FROM M/S CHENNAI MICRO PRINT PVT. LTD. IS NOT IN 4 I.T.A. NOS.2291 & 2292/MDS/15 DISPUTE. IT IS ALSO NOT IN DISPUTE THAT BOTH THE COMPANIES HAVE COMMON SHAREHOLDERS. THE ONLY CONTENTION OF THE AS SESSEE IS THAT IF AT ALL ANY DEEMED DIVIDEND IS TO BE ASSESSED, IT HAS TO BE ASSESSED ONLY IN THE HANDS OF SHAREHOLDERS AND NOT IN THE HANDS OF OTHER PERSONS. THIS IS WHAT EXACTLY HELD BY THE MA DRAS HIGH COURT IN PRINTWAVE SERVICES P. LTD. (SUPRA), WHICH WAS FO LLOWED BY THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 IN I.T.A. NO. 562/MDS/2015. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DEEMED DIVIDEND HAS TO BE ASSESSED ONLY IN THE HANDS OF THE SHAREHOLDERS FOR WHOSE BENEFIT THE LOAN WAS GIVEN TO THE ASSESSEE-COMPANY. THE AS SESSEE- COMPANY ADMITTEDLY IS NOT A SHAREHOLDER OF CHENNAI MICRO PRINT PVT. LTD. THEREFORE, THERE CANNOT BE ANY ADDITION UNDER SECTION 2(22)(E) OF THE ACT IN THE HANDS OF ASSESSEE-COMPANY. THERE FORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDERS OF THE CIT(APPEALS) AND ACCORDINGLY, THE SAME ARE CONFIRME D. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. 5 I.T.A. NOS.2291 & 2292/MDS/15 ORDER PRONOUNCED ON 29 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 29 TH APRIL, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-11, CHENNAI-34 4. PRINCIPAL CIT-3, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.