SHRI D. BALASUNDHARAM, COIMBATORE V. ITO, CORPORATE WARD - 3, COIMBATORE

ITA 2419/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4324 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 25-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 143(3); 2(22)(e)

Judgement Text

आयकर अपीलीय अिधकरण ‘ए’ Ɋायपीठ चेɄई मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI माननीय ŵी वी. द ु गाŊ राव, Ɋाियक सद˟ एवं माननीय ŵी मनोज कु मार अŤवाल ,लेखा सद˟ के समƗ। BEFORE HON’BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No.2419/Chny/2019 (िनधाŊरणवषŊ / Assessment Year: 2012-13) D. Balasundhram No. 15, G.D. Street, Race Course, Coimbatore – 641 018. बनाम/ Vs. ITO Corporate ward -3, Coimbatore. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AKLPB-0311-J (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri R. Venkataraman (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Shri ARV Sreenivasan (Addl. CIT) – Ld. DR सुनवाईकीतारीख/ Date of Hearing : 19-04-2022 घोषणाकीतारीख / Date of Pronouncement : 20-04-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Coimbatore [CIT(A)] dated 03.07.2019 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 147 of the Act on 28.12.2018. Thought the assessee has raised multiple grounds, however, Ld. AR made arguments on merits of the case. The legal grounds which challenge the reopening have not been pressed. ITA No. 2419/Chny/2019 - 2 - The sole issue under the appeal is addition made by Ld. AO u/s 2(22)(e) for Rs.100 Lacs. 2. The Ld. AR submitted that the assessee was not the beneficial owner of the shares rather the shares were held in the name of HUF entity. To support the same, the Ld. AR placed on record assessment framed by revenue in the name of HUF wherein similar additions have been made & accepted. The Ld. Sr. DR submitted that the assessee failed to establish the aforesaid fact before lower authorities. Having heard rival submissions and after due consideration of material facts, our adjudication would be as under. 3. During assessment proceedings, it transpired that the assessee received unsecured loan of Rs.100 Lacs from a corporate entity namely M/s Srevari Alloy Steels Private Ltd. (SASPL). Since SASPL had accumulated profits and the assessee was holding 50% shares of that entity, the provisions of Sec.2(22)(e) were held applicable. The assessee defended its stand and submitted that the shares were not held in individual capacity but only the HUF entity of the assessee was the stakeholder. However, in the absence of any satisfactory documentary evidences forthcoming from assessee in this regard, Ld. AO invoked the provisions of Sec.2(22)(e) and added the loan to the income of the assessee as deemed dividend. The stand of Ld. AO, upon confirmation by Ld. CIT(A), is in further challenge before us. 4. Upon perusal of documents on record (page nos. 39 & 40 of paper- book), it could be seen that an assessment has been framed for the year in the name of ‘Balasundhram Doraiswamy HUF’ u/s 143(3) r.w.s.147 on 03.12.2019. In the said assessment, Ld. AO has invoked provisions of Sec.2(22)(e) in case of HUF entity by rendering a finding that HUF entity ITA No. 2419/Chny/2019 - 3 - is holding 50% shares in SASPL. M/s SASPL has advanced loan of Rs.8.50 Lacs to HUF entity and since it was having accumulated reserves, the provisions of Sec.2(22)(e) have been held to be applicable. The HUF entity has already offered deemed dividend of Rs.10.50 Lacs under the head ‘income from other sources’ and the same has been accepted by Ld. AO while framing the assessment. This being so, the explanation of Ld. AR that the shares were held in the capacity of HUF was to be accepted and impugned additions would not have any legs to stand. Accordingly, by deleting the same, we allow the grounds on merits. 5. The appeal stands partly allowed in terms of our above order. Order pronounced on 20 th April, 2022. Sd/- (V. DURGA RAO) Ɋाियक सद˟ /JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद˟ /ACCOUNTANT MEMBER चेɄई/ Chennai; िदनांक/ Dated : 20.04.2022 JPV आदेशकीŮितिलिपअŤेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/Appellant2. ᮧ᭜यथᱮ/Respondent 3. आयकरआयुᲦ (अपील)/CIT(A) 4. आयकरआयुᲦ/CIT 5. िवभागीयᮧितिनिध/DR6. गाडᭅफाईल/GF