DCIT, CHENNAI V. Arjun Chemicals Pvt. Ltd., CHENNAI

ITA 2530/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8563 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: MOHAMMED SHAFFIQ

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.2530/MDS/2014 * +* / ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), CHENNAI - 600 034. V. M/S ARJUN CHEMICALS PVT. LTD., PARK VIEW, II FLOOR, NEW NO.94, OLD NO.85, G.N. CHETTY ROAD, T. NAGAR, CHENNAI - 600 017. PAN : AAACA 5195 M (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /0-. 1 2 / RESPONDENT BY : SHRI MOHAMMED SHAFFIQ, ADVOCAT E ' 1 3& / DATE OF HEARING : 28.07.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 15.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I, CHENNA I, DATED 24.06.2014 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2 I.T.A. NO.2530/MDS/14 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 2(22)(E) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI SHIVA SRINIVAS, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE-COMPANY HAS A COMMON SH AREHOLDER ALONG WITH M/S ARJUN TECHNOLOGIES (INDIA) LTD. M/S ARJUN TECHNOLOGIES (INDIA) LTD. WAS HAVING ACCUMULATED PR OFITS FOR DISTRIBUTION AS DIVIDEND TO THE EXTENT OF ` 87,75,665/- AS ON 31.03.2004 AND ` 1,49,09,446/- AS ON 31.03.2005. THE LD. D.R. FURTHER POINTED OUT THAT M/S ARJUN GLOBAL HOLDINGS (MAURITIUS) LIMITED IS A COMMON SHAREHOLDER IN ASSESSEE-COMPANY AS WELL AS IN M/S ARJUN TECHNOLOGIES (INDIA) LTD., HOLDING MOR E THAN 20% OF THE SHARES. THEREFORE, ACCORDING TO THE LD. D.R., THE MONEY RECEIVED BY THE ASSESSEE FROM M/S ARJUN TECHNOLOGIES (INDIA) LTD. FROM ITS ACCUMULATED PROFIT HAS TO BE TREATED AS DIVIDEND UN DER SECTION 2(22)(E) OF THE ACT. HOWEVER, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) DELETED THE ADDITION MADE BY THE ASSES SING OFFICER ON THE GROUND THAT THE ADDITION, IF ANY, HAS TO BE MAD E ONLY IN THE HANDS OF M/S ARJUN GLOBAL HOLDINGS (MAURITIUS) LIMI TED AND NOT IN THE HANDS OF THE ASSESSEE-COMPANY. ACCORDING TO TH E LD. D.R., THE 3 I.T.A. NO.2530/MDS/14 CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDIT ION MADE BY THE ASSESSING OFFICER. 4. ON THE CONTRARY, SHRI MOHAMMED SHAFFIQ, THE LD.C OUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY I S NOT A SHAREHOLDER IN M/S ARJUN TECHNOLOGIES (INDIA) LTD. M/S ARJUN GLOBAL HOLDINGS (MAURITIUS) LIMITED WAS HOLDING MORE THAN 20% SHARES IN M/S ARJUN TECHNOLOGIES (INDIA) LTD. AS WELL AS IN T HE ASSESSEE- COMPANY. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ADDITION, IF ANY TO BE MADE, IT HAS TO BE MADE ONLY IN THE HANDS OF M/S ARJUN GLOBAL HOLDINGS (MAURITIUS) LIMITED AND DEFINITELY NOT IN THE HANDS OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS NOT A SHAREHOLDER IN M /S ARJUN TECHNOLOGIES (INDIA) LTD. THE ASSESSEE-COMPANY REC EIVED A SUM OF ` 18,00,000/- FROM M/S ARJUN TECHNOLOGIES (INDIA) LTD . THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSES SEE-COMPANY IS NOT A SHAREHOLDER IN M/S ARJUN TECHNOLOGIES (INDIA) LTD., WHETHER THE RECEIPT OF ` 18,00,000/- CAN BE TREATED AS DIVIDEND UNDER SECTIO N 2(22)(E) OF THE ACT? THE CLAIM OF THE REVENUE APPE ARS TO BE THAT 4 I.T.A. NO.2530/MDS/14 M/S ARJUN GLOBAL HOLDINGS (MAURITIUS) LIMITED IS HO LDING 20% SHARES IN M/S ARJUN TECHNOLOGIES (INDIA) LTD. AS WELL AS I N THE ASSESSEE- COMPANY, THEREFORE, THE AMOUNT OF ` 18,00,000/- RECEIVED BY THE ASSESSEE-COMPANY CAN BE ASSESSED AS DIVIDEND. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DIVIDEND HAS TO BE ASSESSED ONLY IN THE HANDS OF THE SHAREHOLDER, FOR WHOSE BENEFIT THE MONEY WAS ADVANCED. IN THIS CASE, THE ASSESSEE-COMPANY RECEI VED THE MONEY AND IT IS NOT A SHAREHOLDER IN M/S ARJUN TECHNOLOGI ES (INDIA) LTD. AT THE BEST, WE MAY SAY THAT THE MONEY WAS ADVANCED BY M/S ARJUN TECHNOLOGIES (INDIA) LTD. FOR THE BENEFIT OF ITS SH AREHOLDER, NAMELY, M/S ARJUN GLOBAL HOLDINGS (MAURITIUS) LIMITED. IF AT ALL ANY ADDITION HAS TO BE MADE UNDER SECTION 2(22)(E) OF THE ACT, I T HAS TO BE MADE ONLY IN THE HANDS OF M/S ARJUN GLOBAL HOLDINGS (MAU RITIUS) LIMITED AND DEFINITELY NOT IN THE HANDS OF THE ASSESSEE. T HEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 5 I.T.A. NO.2530/MDS/14 ORDER PRONOUNCED ON 15 TH SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 15 TH SEPTEMBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-I, CHENNAI 4. ' :3 /CIT, CHENNAI-I, CHENNAI 5. 8; /3 /DR 6. * < /GF.