ACIT 33(3), MUMBAI V. XERXES RAO, MUMBAI

ITA 2352/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9088 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2006-2007
• Appeal Filed On: 24-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA RAO
• Keywords: Salary income

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -JBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND PAWAN SINGH,JUDICIAL MEMBER ./ITA/2352/MUM/2015 , /ASSESSMENT YEAR:2006-07 ACIT-33(3) C-13, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI-400 051. VS. SHRI XERXES K. RAO BL-6, JAI BONANZA INDL. ESTATE CHAKRAVARTHY ASHOK ROAD KANDIVALI-E MUMBAI 400 101. PAN:AADPR 8519 G ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI ANU KRISHNA RAO ASSESSEE BY: SHRI DHARMESH SHAH / DATE OF HEARING: 03.01.2017 / DATE OF PRONOUNCEMENT: 03.01.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , -PER RAJENDRA,AM: CHALLENGING THE ORDER,DATED 26.12.2014,OF THE CIT(A )-49,MUMBAI THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVI DUAL,DERIVING INCOME FROM SALARY, COMMISSION AND HOUSE PROPERTY FILED HIS RETURN OF I NCOME ON 31.07.2006 DECLARING INCOME OF RS. 2.57 CRORES.THE AO COMPLETED THE ASSESSMENT U/S .143(3)R.W.S.147 OF THE ACT,ON 31.10. 2013,DETERMINING HIS INCOME AT RS.3.03 CRORES. 2 .EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE A DDITION,MADE BY THE AO,U/S.2(22)(E) OF THE ACT.THE FIRST APPELLATE AUTHORITY(FAA),FOLLOWIN G THE ORDER OF THE TRIBUNAL FOR THE SUBSEQUENT AY.,ALLOWED THE APPEAL FILED BY THE ASSE SSEE. 3. IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE W AS DELIBERATED UPON BY THE TRIBUNAL IN ITS ORDER DATED 26.09.2012(ITA/5635/MUM/2010-AY.2007-08 ).WE FIND THAT WHILE DECIDING THE APPEAL FOR THE AY. 2007-08 THE TRIBUNAL HAD DEALT T HE IDENTICAL ISSUE AS UNDER: 8. BEFORE US, THE DR RELIED HEAVILY ON THE OBSERVA TION OF THE AO AND PLEADED STRENUOUSLY TO SUSTAIN THE ADDITION MADE BY THE AO. 9. ON THE OTHER HAND, THE AR PLEADED THAT THE CASE IS SQUARELY COVERED BY THE DECISIONS MENTIONED IN THE SUBMISSIONS MADE AND SPECIALLY CIT ED THE CASE OF ITO VS S.S. BARODAWALA, REPORTED IN 4 ITD 186 (BOM) WHEREIN IDENTICAL CIRCU MSTANCE WAS DECIDED AND ALSO PLACED RELIANCE ON THE SPECIAL BENCH DECISION IN THE CASE OF ACIT VS BHAUMIK COLOUR (P) LTD. THE AR, THUS, PLEADED THAT THE DECISION TAKEN BY THE CI T (A) IS WELL FOUNDED AND IN ACCORDANCE WITH LAW. 2352/MUM/15-XERXES - 2 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PE RUSED THE ORDERS OF THE REVENUE AUTHORITIES. IT IS IMPERATIVE THAT WE LOOK INTO THE EXACT WORDS USED IN THE PROVISION, WHICH ARE, SECTION 2(22)(E): ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN W HICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS REPRESENTING A P ART OF THE ASSETS OF THE COMPANY OR OTHERWISE MADE AFTER THE 31ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARE S (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PART ICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY O N BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS. 11. FROM THE PLAIN READING OF THE RELEVANT SECTION, IT IS ABUNDANTLY CLEAR THAT THE PROVISION SHALL GET TRIGGERED ONLY IF: A) RECIPIENT IS A REGISTERED AND BENEFICIAL OWNER OF SHARES; (BOTH INCLUSIVE) B) HOLDING NOT LESS THEN 10% OF THE VOTING RIGHTS . (WE ARE NOT CONCERNED WITH OTHER CONDITIONS AT PRE SENT) IN THE CIRCUMSTANCES AT HAND, WE FIND THAT THE ASSE SSEE IS NEITHER THE BENEFICIAL OWNER NOR HOLDING 10% OF THE VOTING RIGHTS, THEREFORE, ON THE FACE OF CIRCUMSTANCES, THE PROVISIONS OF SECTION 2(22)(E) CANNOT BE TRIGGERED ON THE ASSESSE E. 12. WE HAVE ALSO REFERRED TO THE CASE LAWS RELIED U PON BY THE ASSESSEE AND THE CIT(A), TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 13. READING THE CASE LAWS CONJOINTLY, WITH THE RELE VANT SECTION, WE ARE OF THE CONSIDERED OPINION, THAT PROVISIONS CANNOT BE TRIGGERED IN THE PRESENT SET OF CIRCUMSTANCES, AND WE, THEREFORE, SUSTAIN THE DECISION OF THE CIT(A). 14. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL ,WE DECIDE THE EFFECTIVE GROUNDS OF APPEAL AGAINST THE AO, AS THE FACTS ARE IDENTICAL T O THE FACTS OF SUBSEQUENT YEAR AND THE ONLY DIFFERENCE IS OF THE AMOUNT INVOLVED. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY,2017. 3 , 2017 SD/- SD/- ( / PAWANSINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 2352/MUM/15-XERXES - 3 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.