Dy. C.I.T.-1, Agra V. Sh. Kulbir Singh, Agra

ITA 261/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0757 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 9 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: E PASS ROAD AGRA PAN NO ALKPSG
• Keywords: Depreciation; Business expenditure; Deemed dividend; Commercial expediency
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND D R . MITHA LAL MEENA, ACCOUNTANT MEMBER I.T.A NO. 261 /AGRA/201 3 (ASSESSMENT YEAR 2008 - 09) DY. CIT - 1 AGRA. (REVENUE) V S .. SH. KULBIR SINGH, 7A/8B, DEV NAGAR, BYE PASS ROAD, AGRA. PAN NO. ALKPS5168G (ASSESSEE) REVENUE BY SHRI WASEEM ARSHAD , SR. DR . A SSESSEE BY SHRI DIPENDRA MOHAN, AR ORDER PER , A. D. JAIN, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT ( APPEALS ) - 1 AGRA, DATED 08.03.2013 FOR A.Y. 2008 - 09 . 2. APROPOS GROUND NO.1, THE AO MADE ADDITION OF RS.4,31,369/ - , AFTER MAKING DISALLOWANCE OUT OF DEDUCTION CLAIMED FOR PAYMENT OF INTEREST U/S 36(1)(III) ON DATE OF HEARING 1 9 . 10 .2016 DATE OF PRONOUNCEMENT 29 .1 1 . 201 6 I.T.A NO. 261/AGRA/2013 2 BANK LOAN, SINCE THE AO FOUND CERTAIN LOANS/ADVANCES TO HAVE BEEN GIVEN BY THE ASSESSEE TO HIS FAMILY M EMBERS AND SISTER CONCERNS / COMPANIES, WITHOUT CHARGING INTEREST. THE LD. CIT(A) DELETED THE ADDITION. 3. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THAT THE ASSESSEE MADE PAYMENT OF INTEREST TO BAN K ON LOANS AND AT THE SAME TIME, INTEREST FREE LOANS/ADVANCES WERE GIVEN TO VARIOUS PERSONS. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND HAVE PER USED THE MATERIAL ON RECORD WITH REGARD THERETO. THE AO FOUND THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOANS/ADVANCES TO HIS FAMILY MEMBERS, NAMELY, SHRI DEEPAK BUDHIRAJA, SMT. DALBIR KAUR AND TO SISTER COMPANIES, M/S ROGER INTERNATIONAL PVT. LTD., M/S RO GER CONSTRUCTION PVT. LTD., AND M/S EURO SAFETY FOOTWEAR PVT. LTD., ON WHICH, NO INTEREST HAD BEEN CHARGED, WHEREAS AT THE SAME TIME, THE ASSESSEE, IN ORDER TO MEET HIS BUSINESS EXPENSES, HAD TAKEN LOAN FROM BANK, ON WHICH, HE HAD MADE PAYMENT OF INTEREST. THE AO ASKED THE ASSESSEE TO EXPLAIN THE BUSINESS PURPOSE OF LOANS /ADVANCES AND AS TO WHY, OTHERWISE, THE LOANS/ADVANCES BE NOT DISALLOWED. THE ASSESSEE STATED THAT HE HAD ALSO RECEIVED I.T.A NO. 261/AGRA/2013 3 INTEREST FREE UNSECURED LOAN OF RS. 46,64,290/ - FROM SMT. STELLA BUDHIRAJA AND THAT AGAINST THIS INTEREST FREE LOAN, HE HAD GIVEN INTEREST FREE ADVANCES OF RS.34,81,347.67 / - , I.E. , RS.25,44,951.69/ - TO SHRI DEEPAK BUDHIRAJA AND RS.9,36,395.98/ - TO SMT. DALBIR KAUR; THAT THE ADVANCES TO M/S R OGER INTERNATIONAL PVT. LTD., M/S ROGER CONSTRUCTION PVT. LTD., AND M/S EURO SAFETY FOOTWEAR PVT. LTD., HAD BEEN MADE IN THE NORMAL COURSE OF THE ASSESSEES BUSINESS AND AS SUCH, THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT WERE NOT APPLICABLE. THE EXPL ANATION OFFERED BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO, SINCE HE FOUND THAT THE PROPRIETORSHIP CONCERN OF THE ASSESSEE WAS DISSOLVED ON 15.08.2007 AND FOR THE PERIOD ENDING ON 15.08.2007, IN THE BALANCE SHEET OF THE ASSESSEE, APART FROM THE AMOUNT OF R S.34,81,347.67/ - , THERE WAS DEBIT BALANCE OF RS.88 , 69 , 168/ - IN THE NAME OF M/S ROGER INTERNATIONAL PVT. LTD. AND A DEBIT BALANCE OF RS.17,03,953/ - IN THE NAME OF M/S ROGER CONSTRUCTION PVT. LTD., FOR WHICH, THE AO CONCLUDED THAT THE ASSESSEE HAD GIVEN THES E AMOUNTS WITHOUT ANY BUSINESS PURPOSE. THE AO, COMPUTED THE INTEREST ON THE LOANS/ADVANCES GIVEN BY THE ASSESSEE TO SHRI DEEPAK BUDHIRAJA, SMT. DALBIR KAUR, M/S ROGER INTERNATIONAL PVT. LTD., AND M/S ROGER CONSTRUCTION PVT. LTD., AT RS.4,31,369/ - AND MADE DISALLOWANCE OUT OF INTEREST CLAIMED BY THE ASSESSEE U/S 36(1)(III) OF THE ACT. I.T.A NO. 261/AGRA/2013 4 5. THE LD. CIT(A) DELETED THE ADDITION. 6. THE FACTS ON RECORD ARE THAT AS PER THE ASSESSEE, THE PURPOSE OF LOANS/ADVANCES GIVEN TO EACH OF THE FOUR PARTIES STANDS DULY EXPL AINED. THE LOANS TO M/S ROGER INTERNATIONAL PVT. LTD. AND M/S ROGER CONSTRUCTION PVT. LTD., WERE GIVEN FOR THE PURPOSE OF BUSINESS, I.E., RELATING TO PURCHASE OF LEATHER FROM M/S ROGER INTERNATIONAL RELATING TO CONSTRUCTION WORK IN M/S ROGER CONSTRUCTION. SO FAR AS REGARDS THE ADVANCES GIVEN TO SMT. DALBIR KAUR, THESE PERTAINED TO EARLIER YEAR, WHEREAS DURING THE YEAR UNDER CONSIDERATION, A SUM OF ONLY RS.1,80,000/ - HAD BEEN GIVEN. THESE ADVANCES ALSO RELATED TO THE ASSESSEES BUSINESS DEALING WITH SMT. DAL BIR KAUR . APROPOS THE ADVANCES TO SHRI DEEPAK BUDHIRAJA, AN AMOUNT OF RS.2,25000/ - HAD BEEN GIVEN IN THE YEAR UNDER CONSIDERATION IN THE NORMAL COURSE OF BUSINESS, SINCE SHRI DEEPAK BUDHIRAJA WAS AN EMPLOYEE OF THE ASSESSEE. THE ASSESSEE ALSO MA INTAINS , AS BEFORE THE AUTHORITIES BELOW, THAT HE HAD SUFFICIENT CAPITAL AND RESERVE SURPLUS FROM WHERE SUCH LOANS/ADVANCES WERE GIVEN WITHOUT CHARGING INTEREST. 7. A REMAND REPORT HAD BEEN SUMMONED BY THE LD. CIT(A) FROM THE AO. IN THE REMAND REPORT, THE AO DID NOT OFFER ANY COMMENT ON THE SUBMISSION OF THE ASSESSEE AGAINST THE DISALLOWANCE MADE. I.T.A NO. 261/AGRA/2013 5 8. AS OBSERVED BY THE LD. CIT(A) FROM THE RECORD, EARLIER, THE ASSESSEE HAD BEEN RUNNING HIS PROPRIETORSHIP CONCERN IN THE NAME OF M/S ROGER EXPORTS . O N 16.08.2007 , DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CONVERTED THIS CONCERN INTO A PARTNERSHIP FIRM. T HIS PARTNERSHIP FIRM REMAINED INEXISTENCE UPTO 6.11.2007, WHERE - AFTER IT WAS CONVERTED INTO A COMPANY. THE AO PASSED THE ASSESSMENT ORDER IN THE INDIVIDUAL CAPACITY OF THE ASSESSEE FOR THE PERIOD FROM 01.04.2007 TO 15.08.2007 AND IN THE CAPACITY OF FIRM, M/S ROGER EXPORTS, FROM THE PERIOD FROM 16.08.2007 TO 6.11.2007. THE LD.CIT(A) OBSERVED THAT IN THE ASSESSMENT ORDER OF THE FIRM M/S ROGER EXPORTS, LIKE IN T HE CASE OF ASSESSEE, THE AO HAD DISALLOWED INTEREST U/S 36(1)(III) AMOUNTING TO RS.162 094/ - ON ACCOUNT OF LOANS/ADVANCES, GIVEN TO M/S ROGER INTERNATIONAL PVT. LTD., M/S ROGER CONSTRUCTION PVT. LTD., SMT. DALBIR KAUR AND SHRI DEEPAK BUDHIRAJA. VIDE ORDER D ATED 21.2.2013, PASSED IN THE APPEAL OF M/S ROGER EXPORTS, THE NATURE OF THE LOANS AND ADVANCES GIVEN BY THE ASSESSEE TO HIS FAMILY MEMBERS AND SISTER CONCERNS STOOD EXAMINED BY THE LD. CIT(A). IN THAT CASE, THE LD. CIT(A) HAS AFFIRMED THAT THE LOANS AND A DVANCES TO M/S ROGER INTERNATIONAL PVT. LTD. AND M/S ROGER CONSTRUCTION PVT. LTD, WERE RELATED TO THE BUSINESS OF THE ASSESSEE. THE LD. CIT(A) HAD ALSO CONSIDERED THE LOANS/ADVANCES GIVEN BY THE ASSESSEE TO SMT. DALBIR KAUR I.T.A NO. 261/AGRA/2013 6 IN THE ASSESSEES APPEAL FOR A.Y . 2007 - 08, VIDE ORDER DATED 29.03.2011. THEREIN, THE LD. CIT(A) HAD AFFIRMED THAT SUCH LOANS/ ADVANCES HAD BEEN GIVEN BY THE ASSESSEE TO SMT. DALBIR KAUR FOR THE PURPOSE OF CONSTRUCTION BU SINESS. AS SUCH, THE LD. CIT(A) DID NOT FIND ANY INTEREST TO BE DISA LLOWABLE ON THE LOANS/ADVANCES GIVEN TO SMT. DALBIR KAUR. SO FAR AS REGARDS THE LOANS/ADVANCES GIVEN BY THE ASSESSEE TO SHRI DEEPAK BUDHIRAJA, THE LD. CIT(A) OBSERVED THAT IT WAS FOUND THAT THE ASSESSEE HAD ALREADY TAKEN A SUFFICIENT AMOUNT OF INTEREST FRE E LOANS FROM HIS WIFE. ACCORDINGLY, HERE ALSO, NO DISALLOWANCE OF INTEREST WAS SUSTAINED. 9. IN THIS MANNER, THE LD. CIT(A) FOUND THAT THE LOANS AND ADVANCES IN QUESTION STOOD DULY CONSIDERED BY HIM IN THE HANDS OF M/S ROGER EXPORTS, I.E. , THE FIRM OF THE ASSESSEE AND THAT THESE WERE THE SAME LOANS AND ADVANCES WHICH HAD BEEN CONSIDERED BY THE AO IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. FOLLOWING HIS DECISION DATED 21.02.2013 FOR A.Y. 2008 - 09 IN THE CASE OF M/S ROGER EXPORTS, THE LD. CIT(A) HAS DELETED THE ADDITION. 10. THE ABOVE FINDINGS OF THE LD. CIT(A) VIDE HIS ORDER DATED 21.02.2013, PASSED FOR A.Y. 2008 - 09 IN THE CASE OF THE ERSTWHILE FIRM OF THE ASSESSEE, I.E., M/S ROGER EXPORTS HAVE NOT BEEN SHOWN TO HAVE BEEN UPSET ON APPEAL. IT RE MAINS UNDISPUTED THAT LOANS/ADVANCES CONSIDERED BY THE AO IN THE HANDS OF THE I.T.A NO. 261/AGRA/2013 7 ASSESSEE IN HIS INDIVIDUAL CAPACITY ARE THE SAME AS WERE CONSIDERED BY THE AO IN THE HANDS OF M/S ROGER EXPORTS. 11. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON T HIS ISSUE. THE DEPARTMENT HAS NOT BEEN ABLE TO REFUTE TH E CATEGORICAL FINDING OF FACT RECODED BY THE LD. CIT(A) IN THE CASE OF M/S ROGER EXPORTS, TO THE EFFECT THAT THE LOANS AND ADVANCES WERE EXTENDED FOR BUSINESS PURPOSE OF THE ASSESSEE. MORE OVER , IT ALSO REMAINS UNDISPUTED THAT THE ASSESSEE HAD ADEQUATE INTEREST FREE FUNDS AVAILABLE FOR MAKING THE LOANS AND ADVANCES IN QUESTION, AS FOLLOWS: * PROPRIETORS CAPITAL IN ITS BALANCE SHEET 16,31,64,421/ - * INTEREST FRE E LOAN FROM DAUGHTER 46,64,290/ - TOTAL RS. 16,78,28,711/ - 12. IN VIEW OF THE ABOVE , FINDING NO ERROR THEREIN, THE OBSERVATION S OF THE LD. CIT(A) ON THIS ISSUE ARE CONFIRMED. ACCORDINGLY, GROUND NO. 1 IS REJECTED. 13. CONCERNING GROUND NO. 2, THE AO OBSERVED THAT HE HAD RECEIVED A LETTER DATED 30.11.2 010 FROM DY. CIT - 4(1), AGRA, INFORMING THAT IN THE COURSE OF ASSESSMENT PROCEEDING IN THE CASE OF M/S ROGER INDUSTRIES LTD., FOR A.Y. 2008 - 09 IT WAS LEARNT THAT THE ASSESSEE COMPANY HAD RECEIVED AN AMOUNT OF RS.1 CRORE FROM ITS SISTER C ONCERN, M/S EURO SAFETY FOOTWEAR PVT. LTD.; THAT THE SISTER CONCERN, I.E., M/S EURO SAFETY FOOTWEAR PVT. LTD HAD OPENING RESERVES AND SURPLUS I.T.A NO. 261/AGRA/2013 8 NIL A S ON 31.03.2007 AND HAD RESERVES AND SURPLUS OF RS.69,91,127/ - AS ON 13.12.2007; THAT THE SAID COMPANY WAS A COMPANY WHERE THE PUBLIC WAS NOT SUBSTANTIALLY INTERESTED AND, THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) HAD BEEN INVOKED IN THE CASE OF M/S ROGER INDUSTRIES LTD. AND IN THE ASSESSMENT, THE AMOUNT OF RS.69,91,127/ - HAD BEEN ADDED, ON A SUBSTANTIVE BA SIS; THAT THE ASSESSEE WAS SHAREHOLDER TO THE EXTENT OF 71.87% IN M/S ROGER INDUSTRIES LTD; AND THAT AS SUCH, THE PROVISIONS OF SECTION 2(22)(E) BE INVOKED IN THE CASE OF THE ASSESEE, SHRI KULBIR SINGH ON A PROTECTIVE BASIS. ON THE RECEIPT OF THIS INFORMAT ION, THE AO ISSUED A SHOW CAUSE TO THE ASSESSEE AS TO WHY THE AMOUNT OF RS.69,91,127/ - RECEIVED FROM M/S EURO SAFETY FOOTWEAR PVT. LTD. AS LOAN IN THE BOOKS OF M/S ROGER INDUSTRIES LTD. BE NOT CONSIDERED AS PER THE PROVISIONS OF SECTION 2(22)(E) AND NECESS ARY ADDITION BE NOT MADE TO THE ASSESSEES INCOME. THE ASSESSEE RESPONDE D BY STATING THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT APPLICABLE IN RESPECT OF THE ADVANCE RECEIVED FROM M/S EURO SAFETY FOOTWEAR PVT. LTD., SINCE THE SAME WAS ON AC COUNT OF COMMERCIAL TRADE TRANSACTION BETWEEN BOTH THE PARTIES; THAT THE PURCHASE OF SHOES HAD BEEN MADE FROM M/S EURO SAFETY FOOTWEAR PVT. LTD. IN F.YS. 2006 - 07 AND 2007 - 08 AND A COPY OF THE ACCOUNT OF M/S EURO SAFETY FOOTWEAR PVT. LTD. AS APPEARING IN TH E BOOKS OF I.T.A NO. 261/AGRA/2013 9 ACCOUNT OF THE COMPANY, M/S ROGER INDUSTRIES LTD., HAD BEEN PROVIDED. THE AO TOOK INTO ACCOUNT THE INFORMATION PROVIDED BY THE DCIT - 4 (1) AGRA, IN THE CASE OF M/S ROGER INDUSTRIES PVT. LTD., WHEREIN, VIDE ORDER DATED 30.11.2010, THE LOAN TAKEN B Y THE COMPANY HAD BEEN HELD TO BE DEEMED DIVIDEND. THE AO REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND CONSIDERED THE AMOUNT OF RS.69,91,127/ - AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE ALSO, ON A PROTECTIVE BASIS UNDER THE PROVISIONS OF SECTI ON 2(22)(E) OF THE ACT AND MADE THE ADDITION. 14. IN APPEAL, THE LD. CIT(A) ASKED FOR A REMAND REPORT FROM THE AO. HAVING CONSIDERED THE REMAND REPORT OF THE AO AND THE ASSESSEES REJOINDER THERETO, THE LD. CIT(A) DELETED THE ADDITION. 15. BEFORE US, THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE BY THE AO ON A PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE, AS DEEMED DIVIDEND , ERRONEOUSLY HOLDING THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT CAN BE INVO KED ONLY IN THE HANDS OF A REGISTER ED SHAREHOLDER. 16. THE LD. COUNSEL FOR THE ASSESSEE HAS, AGAIN, RELIED ON THE ORDER UNDER APPEAL. I.T.A NO. 261/AGRA/2013 10 17. IT IS SEEN THAT IN THE REMAND REPORT, AS OBSERV ED BY THE LD. CIT(A), THE AO HAD MENTIONED THAT THE LOAN/ADVANCE RECEIVED BY M/S ROGER INDUSTRIES LTD. WAS FOR THE INDIVIDUAL BENEFIT OF THE ASSESSEE. HOWEVER, THE AO DID NOT PROVIDE ANY EVIDENCE AS TO HOW THIS WAS SO. HE MERELY RELIED ON THE DECISION OF THE DCIT - 4(1) A GRA. THE DCIT - 4(1), AGRA, HAD HELD THE SAME AMOUNT AS DEEMED DIVIDEND IN THE HANDS OF M/S ROGER INDUSTRIES LTD., TO WHOM, THE AMOUNT HAD BEEN DIRECTLY PAID. BUT THE DCIT TOO HAD NOT ELABORATED AS TO HOW THE AMOUNT RECEIVED BY M/S ROGER INDUSTR IES LTD. HAD BEEN USED FOR THE INDIVIDUAL BENEFIT OF SHRI KULBIR SINGH ASSESSEE. SO FAR AS REGARDS THE TRANSACTION BETWEEN M/S ROGER INDUSTRIES LTD. AND M/S EURO SAFETY FOOTWEAR PVT. LTD., THE AO STATED THAT THE TRANSACTION OF PREVIOUS YEAR DID NOT HAVE AN Y RELEVANCE , SINCE EACH YEAR IS AN INDEPENDENT YEAR. CONCERNING THE RECEIPT OF RS.1 CRORE BY M/S ROGER INDUSTRIES LTD. ON 13.12.2007, THE AO STATED THAT NO PURCHASES OR SALE HAD BEEN MADE BY THE COMPANY, WHICH MADE IT A CLEAR - CUT CASE OF LOAN AND ADVANCE F ROM SISTER CONCERN, BECAUSE THE AMOUNT WAS REPAID ON SUBSEQUENT DATES. APROPOS THE UTILIZATION OF THE AMOUNT OF RS.1 CRORE, THE AO STATED THAT ON THE DATE O N WHICH THE AMOUNT HAD BEEN RECEIVED, CERTAIN PAYMENTS WERE MADE BY THE ASSESSEE COMPANY AND THAT AL L THESE PAYMENTS HA D BEEN MADE TO CATER TO THE NEED OF THE ASSESSEE COMPANY, FOR I.T.A NO. 261/AGRA/2013 11 PURCHASE OF GOODS. THE AO CONCLUDED BY STATING THAT IT WAS THUS CLEAR THAT M/S ROGER INDUSTRIES LTD, WAS IN THE NEED OF MONEY, WHICH WAS GIVEN TO IT BY ITS SISTER CONCERN, M/ S EURO SAFETY FOOTWEAR PVT. LTD, WHICH WAS NOT A COMMERCIAL TRANSACTION AND THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT MIGHT BE INVOLVED. 18. THE ASSESSEE, IN HIS REJOINDER TO THE REMAND REPORT, STATED, INTER ALIA, THAT WHILE CALCULATING THE ACCUMULATED PROFITS, THE AO HAD IGNORED THE FACT THAT THE ACCUMULATED PROFITS INCLUDED RESERVE AND SURPLUS, AS WELL AS CURRENT YEAR PROFITS AND, AS SUCH, THEY WOULD ALSO INCLUDE ACCUMULATED LOSSES; THAT THE ACCUMULATED LOSSES OF M/S EURO SAFETY FOOTWEAR PVT. LTD., AS ON 31.3.2007 WERE OF RS.46,86,013.07/ - AND THIS WAS WITHOUT INCLUDING THE BROUGHT FORWARD DEPRECIATION LOSSES OF RS.2978934/ - ; THAT WHILE C ALCULATING THE ACCUMULATED PROFITS , IT WAS DEPRECIATION AT THE RATE OF MENTION ED IN THE A CT THAT WAS TAKEN INTO ACCO UNT AND NOT DEPRECIATION AS PROVIDED IN THE BOOKS OF ACCOUNT; THAT THEREFORE, THE TOTAL ACCUMULATED PROFITS AS ON 13.12.2007 STOOD AT RS.21,24,721/ - ; THAT HENCE, EVEN IF THE ADVANCES RECEIVED FROM THE SISTER CONCERN WERE TO BE TREATED AS DEEMED DIVIDEND, T HE SAME COULD ONLY BE TO THE EXTENT OF THE ACCUMULATED PROFITS OF RS.21,24,721/ - ; THAT THE AO HAVING NOT MADE ANY COMMENT IN THIS REGARD IN THE REMAND R EPORT, HE APPEARED TO HAVE AGREED WITH THE ASSESSEES I.T.A NO. 261/AGRA/2013 12 CONTENTION. THE ASSESSEE FURTHER STATED THAT THE A O HAD PLACED RELIANCE ON THE DECISION IN CIT VS. NATIONAL TRAVEL SERVICE, 347 ITR 305 (DEL); THAT HOWEVER, THE SAID DECISION HAD BEEN CONSIDERED BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF M/S INDIA CASTING CO. , IN ITA NO.55/AGR/2012, HOLDING THAT IN CIT VS. ANKITECH (P) LTD, 199 TAXMAN 341 (DEL), THE HONBLE DELHI HIGH COURT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, AFFIRMING THE ORDER OF THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF BAUMIK COLOUR , AND THAT THE TRIBUNAL, IN T HE CASE OF NATIONAL TRAVEL SERVICE (SUPRA) HELD THAT SINCE THERE WERE T W O POSSIBLE VIEWS IN THE MATTER, THE ONE IN FAVOUR OF THE ASSESSEE WAS TO BE FOLLOWED, WHICH HAD RIGHTLY BEEN DONE BY THE LD. CIT(A). THE ASSESSEE FURTHER STATED THAT M/S ROGER INDUSTRIES LTD. WAS NEITHER A REGISTER ED SHAREHOLDER, NOR A BENEFICIAL SHAREHOLDER IN M/S EURO SAFETY FOOTWEAR PVT. LTD; THAT NO ADVANCE HAD BEEN MADE TO SHRI KULBIR SINGH, (ASSESSEE) BY M/S EURO SAFE TY FOOTWEAR PVT. LTD; AND THAT THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT WERE NOT APPLICABLE. THE ASSESSEE FURTHER CONTENDED THAT THE TRANSACTIONS BETWEEN THE TWO COMPANIES WERE ON ACCOUNT OF COMMERCIAL EXPEDIENCY , SINCE M/S ROGER INDUS TRIES LTD HAD PURCHASED SHOES FROM M/S EURO SAFETY FOOTWEAR PVT. LTD. IN F.YS. 2006 - 07 AND 2007 - 08; THAT THE ASSESSEE HAS SUBSTANTIAL INTEREST IN BOTH THE I.T.A NO. 261/AGRA/2013 13 COMPANIES; THAT M/S EURO SAFETY FOOTWEAR HAD GIVEN ADVANCE TO M/S ROGER INDUSTRIES LTD. AGAINST THE P URCHASES OF SHOES; THAT THE PROVISIONS OF SECTION 2(22)(E) ARE NOT A PPLICABLE IN RESPECT OF ADVANCE RECEIVED FROM M/ S EURO SAFETY FOOTWEAR PVT. LTD., AS THE SAME WAS ON ACCOUNT OF COMMERCIAL TRANSACTION BETWEEN THE TWO COMPANIES; THAT M/S EURO SAFETY FOOTW EAR PVT. LTD. HAD GIVEN AN ADVANCE OF RS.1 CRORE ON 13.12.2007 TO M/S ROGER INDUSTRIES LTD. AS MOBILIZATION ADVANCE AGAINST PURCHASE OF SHOES; THAT HOWEVER, TH E SAME WAS REFUNDED, AS THE DEAL COULD NOT MATERIALIZE; THAT THERE ARE REGULAR BUSINESS TRANSACTI ONS BETWEEN BOTH THE COMPANIES; THAT A COPY OF THE ACCOUNTS OF M/S EURO SAFETY FOOTWEAR PVT. LTD. , AS APPEARING IN THE BOOKS OF ACCOUNT OF M/S ROGER INDUSTRIES LTD., FOR BOTH THE YEARS, STOOD ALREADY SUBMITTED; THAT THERE - FROM, IT WAS EVIDENT THAT THE TRAN SACTIONS BETWEEN BOTH THE CONCERNS WERE ENTERED INTO IN THE REGULAR COURSE OF BUSINESS, FALLING OUTSIDE THE AMBIT OF SECTION 2(22)(E) OF THE ACT. 19. ALL THE ABOVE FACTS WERE DULY TAKEN INTO ACCOUNT BY THE LD. CIT(A) WHILE DELETING THE ADDITION MADE BY TH E AO. NOW, IT REMAINS UNDISPUTED , AS CORRECTLY TAKEN INTO ACCOUNT BY LD. CIT(A), THAT NO AMOUNT WAS RECEIVED DIRECTLY BY THE ASSESSEE FROM M/S EURO SAFETY FOOTWEAR PVT. LTD. , WHEREIN, THE ASSESSEE WAS I.T.A NO. 261/AGRA/2013 14 HAVING MORE THAN 10% OF SHAREHOLDING. ON THE DATE OF PA YMENT OF RS.1 CRORE TO M/S ROGER INDUSTRIES LTD., I.E., 13.12.2007, THE PROPRIETORSHIP CONCERN STOOD ALREADY TAKEN OVER BY M/S ROGER INDUSTRIES LTD. THE LD. CIT(A) HAD SPECIFICALLY INQUIRED OF THE AO , TO SHOW THAT THE AMOUNT OF RS.1 CRORE HAD BEEN PAID FOR THE INDIVIDUAL BENEFIT OF OR ON BEHALF OF THE ASSESSEE. HOWEVER, NOTHING TO THIS EFFECT WAS BROUGHT ON RECORD BY THE AO AND THE REMAND REPORT OF THE AO IS TOTALL Y SILENT IN THIS REGARD, BUT FOR MAKING A BALD ASSERTION THAT THE AMOUNT WAS PAID TO M/S ROGER INDUSTRIES LTD. FOR THE INDIVIDUAL BENEFIT OF THE ASSESSEE. RATHER , THE LD. CIT(A) HAS OBSERVED AT PAGE 35 OF THE IMPUGNED ORDER THAT LATER ON IN THE REMAND REPORT, THE AO HAD HIMSELF STATED THAT THE AMOUNT TAKEN BY M/S ROGER INDUSTRIES LTD. WAS UTILIZED FOR PAYMENTS MADE TO CATER FOR THE NEED OF M/S ROGER INDUSTRIES LTD., I.E., FOR PURCHASE OF GOODS. 20. ON THE BASIS OF THE ABOVE, IT IS SEEN THAT THE LD. CIT(A) WAS WELL JUSTIFIED IN HOLDING THAT DEEMED DIVIDEND CAN BE TAXED ONLY IN THE HANDS OF THE RECIP IENT , EITHER BEING INDIVIDUAL SHAREHOLDER, OR THE CONCERN IN WHICH THE INDIVIDUAL HAS A SUBSTANTIAL INTEREST, OR IF ANY PAYMENT IS MADE ON BEHALF OF, OR FOR THE INDIVIDUAL BENEFIT OF THE INDIVIDUAL SHAREHOLDER, WHICH IS NOT THE CASE HE REI N. I.T.A NO. 261/AGRA/2013 15 21. FOR THE AB OVE DISCUSSION, FINDING NO ERROR IN THE ORDER UNDER APPEAL QUA THIS ISSUE ALSO , THE SAME IS HEREBY CONFIRM ED . GROUND NO. 2 IS ALSO REJECTED. 22. IN THE RESULT, THE APPEAL IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 29 /1 1 / 2016. SD/ - SD/ - ( D R . MITHA LAL MEENA) (A. D. JAIN) ACCOU N TANT MEMBER JU DICIAL MEMBER DATED: 29 /1 1 /2016 * AKV * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A NO. 261/AGRA/2013 16 DATE 1. DRAFT DICTATED (DNS) 1 9 .10 .201 6 PS 2. DRAFT PLACED BEFORE AUTHOR 21 .10. 201 6 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 29.11.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 29.11.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.