The ITO, Ward-2(1)(1), Ahmedabad V. M/s. GPSAR Healthcare Ltd., Ahmedabad

ITA 2905/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5098 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 08-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Speculation loss; Deemed dividend
• Section: 2(22)(e); 43(5); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER GPSAR HEALTH CARE LTD. SAGAR , OPP. STOCK EXCHANGE, NEAR SAHAJANAND COLLEGE, AHMEDABAD PAN: AABCG0509J (APPELLANT) VS THE D CIT, CIRCLE - 4 , AHMEDABAD (RESPONDENT) THE ITO, WARD - 2(1)(1), AHMEDABAD (APPELLANT) VS GPSAR HEALTH CARE LTD. SAGAR , OPP. STOCK EXCHANGE, NEAR SAHAJANAND COLLEGE, AHMEDABAD PAN: AABCG0509J (RESPONDENT) REVENUE BY : S H RI KAMLESH MAKWANA , SR. D . R. ASSESSEE BY: SHRI S.N. SOPARKAR, A.R. DATE OF HEARING : 03 - 12 - 2 018 DATE OF PRONOUNCEMENT : 18 - 01 - 2 019 I T A NO . 2894 & 2895 / A HD/20 16 A SS ESS MENT YEAR 2011 - 12 TO 2012 - 13 ITA NO. 2905 & 2906 /AHD/20 16 ASS ESSMENT YEAR 20 11 - 12 TO 2012 - 13 I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 2 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE FOUR APPEALS TWO APPEALS FILED BY THE ASSESSE E AND TWO BY THE REVENUE FOR ASSESSMENT YEAR 2011 - 12 TO 2012 - 13 PERTAINED TO SAME ASSESSEE AGAINST THE ORDER OF CIT(A) THEREFORE ALL THE APPEALS A RE ADJUDICATED BY THIS COMMON ORDER. ITA NO. 2894/AHD/2016 FILED BY ASSESSEE AND GROUND NO.1 VIDE ITA NO. 290 5 /AHD/2016 FILED BY REVENUE 2. THE ASSESSEE HAS RAISED TWO GROUNDS OF APPEAL AGAINST THE ORDER OF LD. CIT(A) IN TREATING LOSS CALCULATED AFTE R ALLOCATION OF EXPENSES ON PRO - RATA BASIS AS SPECULATIVE LOSS AS PER EXPLANAT ION TO SECTION 73 OF THE INCOME TAX ACT AND THE OT HER GROUND OF APPEAL AGAIN ST THE ORDER OF LD. CIT(A) AGAINST CONSIDE RING ON ADHOC BASIS RS . 78 , 66 , 587/ - I.E. 30% OF OPERATING COST OF RS. 2 , 62 ,2 1 , 957/ - AS EXPENDITURE INCURRED FOR SPECULATIVE BUSINESS THOUGH ASSESSEE HAS NOT INCURRED ANY SEPARATE EXPENDITURE EXCEPT FUND MANAGEMENT FUND IN RE S PE C T OF SHARE TREATING. 3. THE BRIEF FACT IS THAT AT THE TIME OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED LOSS ON ACCOUNT OF SHARE TRADING. AFTER TAKING INTO CONSIDERATION THE NATURE OF BUSINESS OF THE ASSESSEE COMPANY THE ASSESSING OFFICER OBSERVED THAT AS PER EXPLANATION OF SECTION 73 OF THE INCOM E TAX ACT, THE LOSS ASSESSED FROM SHARE TRADING BUSINESS OF ANY COMPANY, THE INCOME OF WHICH IS NOT FROM HOUSE PROPERTY, I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 3 CAPITAL GAIN , INTE REST OF SECURITY AND INCOME FRO M OTHER SOURCES IS DEEMED TO BE SPECULATIVE LOSS, THEREFORE, T H E ASSESSING OFFICER HAS ISSUED A NOTICE DATED 19 TH DECEMBER, 2013 TO THE ASSESSEE TO SHOW CAUSE AS TO WHY LOSS INCURRED DUE TO SHARE TRADING ACTIVITIES SHOULD NOT BE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE RESPONDED VIDE LETTER DATED 1 ST JAN, 2014 STATI NG THAT ACTUALLY THE LOSS FROM SECURITY BUSINESS WAS ONLY RS. 14,316/ - AS AGAINST SPECULATIVE LOSSES OF RS. 47 , 73 , 197/ - CALCULATED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE HOLDING THAT THE ASSESSE E HAS INCURRED LOSS FROM SHARE TRADING AND CLAIMED IT AS A BUSINESS LOSS OF RS. 67 , 377/ - AND THE LOSS SO INCURRED WAS NOT TO BE ALLOWED AS BUSINESS LOSS BUT ALLOWABLE AS SPECULATION LOSS AGAINST SPECULATION PROFIT ONLY. T HE ASSESSING OFFICER ALSO NOTICED THAT DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAS INCURRED OPERATING EXPENSES OF RS. 3 , 37 , 78 , 723/ - AND HAVING TOTAL TURN - OVER OF RS. 24 , 81 , 46 , 689/ - OUT OF WHICH T RADING TURNOVER OF SHARES WAS RS . 10 , 01 , 89 , 6 38/ - WH ICH COMES TO 40.38% OF THE TURNOVER . ON QUERY, T HE ASSESSE E EXPLAINED THAT IT HAS NOT INCURRED ANY SEPARATE EXPENSES FOR BUSINESS OF TRADING AND SECURITIES EXCE PT FUND MANAGEMENT EXPENSES OF RS . 1 , 24 , 888/ - . IT WAS ALSO EXPLAINED TH A T BUSI N ES S OF T RADING OF SECURITIES WAS MANAGED B Y PORTFO LIO MANAGEMENT I.E. ALM ODZ GLOB L E SECURITIES LTD. , ANAND RATHI S HARE AND BROKING LTD AND MOTILAL OSWAL SECURITIES LTD. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT 30% OF THE OPERATING COST I.E. RS. 1 ,0 1, 33 ,617/ - ( 30% OF RS. 3 , 37 , 78 , 723) TO BE ALLOCATE D TO WARDS SPECULATION BUSINESS. CONSEQUENTLY, THE TOTAL LOSS FROM SPECULATION BUSINESS OF RS. 1 , 02 , 00 , 994/ - (LOSS OF SHARE 67 , 377+ PROPORTIONATE EXPENSES OF RS I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 4 1 , 01 , 33 , 617) WERE TREATED AS SPECULATION LOSS AND CAN BE SET OFF AGAINST PROFIT FROM SPECULATION ACTIVITIES ONLY. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 3.6. DECISION: - I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER, REMAND REPORT AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE OF THE LOSS ON SHARES OF RS.67,377/ - + PROPORTIONATE EXPENSES CALCULATED IN THE ASSESSMENT ORDER AT RS.L,01,33,617/ - TOTALL ING TO RS. 1,02,00,994/ - TREATING THE SAME AS SPECULATION LOSSES IN VIEW OF EXPLANATION TO SECTION 73 OF THE I. T. ACT. THE AO OBSERVED THAT DURING THE YEAR THE APPELLANT HAS MADE THE SHARE TRADI NG AND ON WHICH LOSS OF RS.67,377/ - HAVE BEEN CAUSED, ALTHOUGH THIS WAS NOT THE LOSS BUT THE PROFIT AS PER THE DETAILS SUBMITTED BY THE APPELLANT AS UNDER: - PARTICULARS RUPEES RUPEES SALES 10,01,89,638 LESS: DECREASE IN INVENTORY OPENING STOCK CLO SING STOCK 1 ,37,09,829 89,36,632 47,73,197 LESS: PURCHASES 9,53,49,064 PROFIT IN SHARE TRADING 67,377 3.7. EVEN IN THE REMAND PROCEEDINGS, THE ABOVE FACT OF EARNING THE PROFIT IN SHARE TRADING OF RS.67,377/ - WAS REFERRED TO THE AO BY FORWARDI NG THE COPY OF THE WRITTEN SUBMISSION OF THE APPELLANT. HOWEVER, IN THE REMAND PROCEEDINGS THIS FACTUAL ASPECT OF HAVING THE SHARE PROFITS AND NOT THE LOSSES HAVE NOT BEEN REBUTTED BY THE AO. THUS PRIMA FACIE THE APPELLANT'S CONTENTION WITH REGARD TO PROFI T IN SHARE TRADING OF RS.67,377/ - IS FOUND CORRECT. 3.8. THE AO HAS ALSO PROPORTIONATELY WORKED OUT THE EXPENDITURE WITH REGARD TO THE SHARE TRADING BUSINESS IN PARA NO. 3.5 AND 3.7 OF THE ASSESSMENT ORDER. IN OTHER WORDS, IT HAS BEEN NOTICED THAT THE AP PELLANT HAS INCURRED VARIOUS OPERATING EXPENSES OF RS.3,37,78,723/ - . FURTHER, THE APPELLANT HAD THE TO TAL TURNOVER OF RS.24,81,46,689/ - INCLUDING SHARE TRAD ING TURNOVER OF RS.10,01,89,638/ - . THUS, THE SHARE TRADING TURNOVER WAS 40.38% OF THE TOTAL TURNOVER , BUT APPLYING THIS RATIO AT 30% ONLY THE PROPORTIONATE OPERATING EXPENDITURES WER E WORKED OUT AT RS. 1,01,33,617/ - TOWARDS THE SHARE TRADING BUSINESS BY THE AO. 3.9. AS PER THE LEGAL POSITION, THE EXPLANATION TO SECTION 73 IS UNDISPUTEDLY APPLICABLE OVER T HE APPELLANT COMPANY AS THE SHARE TRADING BUSINESS WAS TO BE HELD AS SPECULATION BUSINESS AS THE APPELLANT DID NOT HAVE ANY INCOME FROM HOUSE PROPERTY, CAPITAL GAIN, INTEREST ON SECURITY AND ANY OTHER SOURCES BUT INCOME FROM OTHER BUSINESS ACTIVITIES. NOW, WITH REGARD TO THE ALLOCATION OF THE EXPENDITURES, THE APPELLANT HAS SIMPLY CONTENDED THAT ON THE SHARE TRADING BUSINESS, IT HAD ONLY INCURRED THE FUND MANAGEMENT EXPENSES OF RS.1,24,488/ - AND NO OTHER EXPENSES HAVE BEEN INCURRED IS FOUND NOT CORRECT FOR THE REASON THAT THE APPELLANT COMPANY HAD THE TOTAL TURNOVER OF RS.24.81 CRORES WHICH INCLUDES THE SHARE TRADING BUSINESS TURNOVER OF RS. 10.01 CRORES ALSO. THUS, THE SHARE TRADING TURNOVER WAS SUBSTANTIAL IN THE CASE OF APPELLANT AND INCURRING OF VARIOUS I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 5 EXPENDITURES TOWARDS VARIOUS HEADS I.E. OFFICE EXPENSES, SALARY AND EMPLOYEES, TELEPHONE AND OTHER EXPENSES ETC. CANNOT BE DENIED AND RULED OUT. IT HAS BEEN NOTICED THAT THE APPELLANT HAS CLAIMED VARIOUS OPERATING EXPENDITURES OF WHICH DETAILS SUBMITTED BY THE APPELLANT ARE' NOTED AS UNDER: - OPERAT1NG EXPEN D IT URE FY 201 0 - 11 EXPLANATION A BANK COMMISSION 457,555 IT IS RELATED TO BUSINESS OF HEALTH CARE B COMMISSION EXPENSES 408,438 IT IS RELATED TO BUSINESS OF HEALTH CARE C ELEC TRICITY EXPENSES 3,017,328 IT IS RELATED TO ELECTRICITY BILL OF SHOPS WHERE HEALTH CARE BUSINESS CARRIED OUT D FREIGHT 545,931 IT IS RELATED TO TRANSPORTATION OF MEDICINE E FUND MANAGEMENT EXP. 124,488 IT IS RELATED TO BUSINESS OF TRADING OF S ECURITIES F INTEREST - G LEAVE & LICENCE FEES 4,707,220 IT IS RELATED TO PAYMENT OF RENT OF SHOPS WHERE HEALTH CARE BUSINESS CARRIED OUT H LEGAL & PROFESSIONAL FEES 963,676 IT IS RELATED TO BUSINESS OF HEALTH CARE I LOSS ON SALES OF F. & . O. 20,226 IT S BUSINESS LOSS AS PER SECTION 43(5) (D) OF INCOME TAX ACT J OFFICE / ADMINISTRATION / MIS. EXPENSES 1,589,135 IT IS RELATED TO BUSINESS OF HEALTH CARE K PACKING EXPENSES 341,178 PACKING COST OF MEDICINES L PAYMENT TO & PROVIS ION FOR EMPLOYEES. 13,460,860 IT IS RELATED TO BUSINESS OF HEALTH CARE M POSTAGES TELEPHONE 905,999 IT IS RELATED TO BUSINESS OF HEALTH CARE N DAMAGE / EXPIRY LOSS 243,894 DAMAGE OF MEDICINES I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 6 0 PRINTING &. STATIONERY 387,246 IT IS RELATED TO BUSINESS OF HEALTH CARE P RATES & TAXES 146,527 IT IS RELATED TO SHOPS WHERE BUSINESS OF HEALTH CARE IS CARRIED OUT P REPAIRS TO ASSETS 1,675,994 IT IS RELATED TO BUSINESS OF HEALTH CARE R ROYALTY 2,525,070 IT IS RELATED TO LOGO USED FOR BUSINESS OF HEALTH CARE S SELLING & DISTRIBUTION EXPENSES 1 ,523,069 SELLING AND DISTRIBUTION COST OF MEDICINE T SUNDRY BALANCES WRITTEN OFF 1,952 IT IS RELATED TO BUSINESS OF HEALTH CARE U TRAVELLING & CONVEYANCE 728,982 IT IS RELATED TO BU SINESS OF HEALTH CARE V VEHICLE EXP. 3,956 IT IS RELATED TO BUSINESS OF HEALTH CARE 33,778,723 3.10. IT IS TO BE NOTED THAT THE APPELLANT'S BUSINESS WAS IN HEALTHCARE AS WELL AS IN TRADING OF SHARES AND THE FOLLOWING EXPENDITURES HAVING INCUR RED FOR BOTH THE BUSINESS ACTIVITIES SUCH AS HEALTHCARE AND SHARE TRADING CANNOT BE DENIED AND RULED OUT. IN FACT THE APPELLANT H?S NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR BOTH THE BUSINESS AND THE VARIOUS EXPENDITURES INCURRED HAVE BEEN COMMONLY DE BITED UNDER THE SINGLE HEAD OF EXPENDITURES. THEREFORE, IN ABSENCE OF MAINTENANCE OF SPECIFIC DETAILS OF EXPENDITURE TO EACH OF THE BUSINESS ACTIVITIES BY THE APPELLANT, IT WOULD BE FAIR AND REASONABLE TO ALLOCATE THE COMMON EXPENDITURE IN BOTH THE BUSINES S ACTIVITIES AS PER THE TURNOVER OF THE RESPECTIVE BUSINESS AS UNDER. THE EXPENDITURES WHICH APPEARED TO BE IN RELATION TO HEAL THCARE BUSINESS HAVE NOT BEEN INCLUDED IN THE BELOW TABLE AND ACCORDINGLY THOSE HAVE NOT BEEN ALLOCATED BETWEEN TWO. OPERATING EX PENDITURE FY 201 0 - 11 A BANK COMMISSION 457,555 C ELECTRICITY EXPENSES 3,017,328 G LEAVE & LICENCE FEES 4,707,220 H LEGAL & PROFESSIONAL FEES 963,676 J OFFICE / ADMINISTRATION / MIS. EXPENSES 1,589,135 I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 7 L PAYMENT TO & PROVISION F OR EMPLOYEES. 13,460,860 M POSTAGE & TELEPHONE 905,999 O PRINTINGS, STATIONERY 387,246 U TRAVELLING & CONVEYANCE 728,982 V VEHICLE EXP. 3,956 TOTAL 2,62,21,957/ - 3.11. THUS, THE APPELLANT'S CONTENTION THAT IT HAS INCURRED THE EXPEN DITURES WITH REGARD TO THE FUND MANAGEMENT EXPENSES ON LY OF RS. 1,24,488/ - AND NO OTHER EXPENDITURES FOR SHARE TRADING ACTIVITY IS INCURRED IS WITHOUT ANY BASIS. TAKING THE ALLOCATION @ - 0% OF THE COMMON EXPENDITURE OF RS. 2,62,21,957/ - , RELATING TO SHARE T RADING BUSINESS COMES TO RS.78,66,587/ - . FURTHER, THE APPELLANT HAS EXCLUSIVELY INCURRED THE FUND MAN AGEMENT EXPENSES OF RS.1,24,488/ - OVER AND ABOVE TO THE COMMON EXPENDITURES NOTED ABOVE AND THIS WAY THE TOTAL EXPENDITURES WITH REGARD TO SHARE TRADING BU SINESS COMES TO RS.79,91,075/ - (RS.78,66,587/ - + RS. 1,24,488/ - ). THUS, THE ALLOCATION OF THE EXPENSES AT RS. 1,01,33,6177 - MADE BY THE AO @ 30% OF THE - TOTAL OPERATING EXPENSES AT RS.3,37,78,723/ - IS MODIFIED TO WORK OUT THE COMMON EXPENSES RELATING TO SHAR E TRADING AT RS.79,91,075/ - I.E. 30% OF THE COMMON OPERATING EXPENDITURES AS PER THE TABLE PREPARED ABOVE AT RS.2,62,21,957/ - BESIDES EXCLUSIVE FUND MANAGEMENT EXPENSES AT RS.1,24,488/ - . 3.12. SINCE THE EXPLANATION TO SECTION 73 IS SQUARELY APPLICABLE OVE R THE FACTS OF THE CASE AND THEREFORE, TAKING INTO ACCOUNT 'THE SHA RE TRADING PROFIT AT RS. 67,377/ - AND THE PROPORTIONATE EXPENDITU RES WORKED OUT AT RS. 79,91,075/ - , THE SPECULATION LOSSES IN SHARE TRADING ACTI VITY WORKS OUT TO RS. 79,23,698/ - AND THE SAM E IS DISALLOWED OUT OF THE INCOME DERIVED BY THE APPELLANT FROM HEALTHCARE AND OTHER ACTIVITIES. IN OTHER WORDS, NO SET OFF OF S PECULATION LOSS OF RS.79,23,698/ - COULD BE ALLOWED TO THE APPELLANT AGAINST THE BUSINESS ACTIVITIES OTHER THAN SHARE TRADING ACT IVITIES. IN RESULT, THE SPECULATION LOSSES WORKED O UT BY THE AO AT RS. 1,02,00,994/ - IS RESTRICTED TO RS.79,23,698/ - . THUS, THE DISALLOWANC E TO THE EXTENT OF RS.79,23,698/ - IS CONFIRMED AS AGAINST DISALLOWANCE OF RS. 1,02,00,994/ - MADE BY THE AO. THUS, THE GROUND OF APPEAL IS PARTLY ALLOWED. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. COUNSEL HAS SUBMITTED PAPER BOOK CONTAINING DETAILS AND SUBMISSION MADE BEFORE THE ASSESSING OFFICER AND LD. CIT(A) DURING THE COURSE OF ASSES SMENT AND APPE LLATE PROCEEDINGS . THE LD. COUNSEL VEHEMENTLY CONTENDED THAT EXPENSES ATTRIBUTABLE TOWARDS BUSIN ESS OF TRADING OF SECURITIES WERE ONLY THE FUND MANAGEMENT EXPENSES PAID TO MANAGERS. I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 8 ALL THE EXPENSES OTHER THAN THE FUND MANAGEMENT EXPENSES WERE INCURRE D FOR BUSINESS OF HEALTH CARE WHICH WAS OPERATED THROUGH A NUMBER OF STORES IN THE CITY . ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF ASSESSING OFFICER AND CONTENDED THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACT IN RESTR ICTING THE DISAL LOWANCE OF SPECULATION LOSS TO R S. 79 , 23 , 698/ - AS AGAINST RS. 1 , 02 , 00 , 994/ - MADE BY THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IN THE ASSESSMENT ORDER, THE ASSESSING OFFI CER MADE ADDITION OF RS. 1 , 02 , 00 , 99 4/ - BY INVOKING EXPLANATION TO SECTION 73 OF T H E INCOME TAX ACT BY CONSIDERING LOSS FROM SHARE TRADING AS SPECULATION BUSINESS AND ALLOCATED 30% OF THE OPERATING EXPENDITURE ON ADHOC BASIS AS INCURRED FOR BUSINESS OF S HARE TRADING. HOWEVER, THE LD. CIT(A) HELD THAT ASSESSEE HAS EARNED PROFIT IN SHARE TRADING OF RS. 67 , 377/ - A ND THESE FAC T S WERE NOT REBUTTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . REGARDING THE ALLOCAT ION OF 30% O F O PERATING EXPENSES AMOUNT ING OF RS. 1 , 01 , 33 , 617/ - TOWARDS SHARE TRADING BUSINESS ON THE BASIS SHARE TRADING TURN OVER , THE LD. CIT (A) OBSERVED THAT THERE WERE A NUMBER OF EXPENSES WHICH WERE EXCLUSIVELY PERTAINED TO THE BUSINESS OF HEALTH CARE WHICH WERE INCLUDED IN THE AFORESAID OPERATING EXPENSES. THEREFORE, AFTER ESTIMATING THE EXPENSES PERTAINING TO HEALTH CARE BUSINESS H E HAS DETERMINED TOTAL OPERATING EXPENSES TO THE AMOUNT OF RS. 2 , 62 , 21 , 957/ - EXPENSES AND ALLOCATED 30% THESE EXPENSES TO THE AMOUNT OF RS. 79 , 91 , 075/ - TOWARDS SHARE TRADING BUSINESS . A FTER REDUCING THE SHARE TRADING PROFIT OF RS. 67 , 377/ - HE HAS WORKED OUT SPEC ULATION LOSS IN SHARE TRADING TO THE AMOUNT I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 9 OF RS. 79 , 23 , 698/ - AND RESTRICTED THE DISALLOWED TO THE SAME AS AGAINST THE DISALLOWANCE O F RS. 1 , 02 , 00 , 994/ - MADE BY THE ASSESSING OFFICER. WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND NOTICED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF HEALTH CARE AS WELL AS IN TRADING OF SHARES DURING THE YEAR UNDER CONSIDERATIO N. IN THE LIGHT OF THE ABOVE FACT WE OBSERVE IT IS REQUIRED TO INCUR MORE OPERATING EXPENSES IN THE BUSINESS OF HEALTH CARE THROUGH OPERATING A NUMBER OF STORES COMPARED TO THE BUSINESS OF TRADING IN SHARES. IN VIEW OF THE ABOVE FACTS AN D CIRCUMSTAN CES, WE ARE OF THE VIEW THAT IT WILL BE APPROPRIATE TO ALLOCATE REASONABLE AMOUNT OF OPERATING EXPENSES FOR SHARE TRADING ACTIVITY .THEREFORE WE CONSIDER THAT ALLOCATION OF 10% OF O PER A TING EXPENSES OF RS. 2 , 62 , 21 , 957/ - AS APPORTIONED BY THE LD. CIT(A) W ILL BE REASONABLE TO ALLOCATE TOWARDS SHARE TRADING AS AGAINST THE EXPENDITURE OF RS. 79 , 9 1, 0 7 5/ - ALLOCATED BY THE LD. CIT(A). ACCORDINGLY THE DISALLOWANCE OF SPECULATION LOSS IS RESTRICTED TO RS. 25,54,818 ( RS. 26 , 22 , 195 67 , 377 ) AS AGAINST DISALLOWA NCE OF RS. 79,23,698 MADE BY THE LD.CIT(A). THEREFORE , THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . IN THE LIGHT OF THE ABOVE FACT WE DO NOT FIND ANY MERIT IN THE GROUND NO.1 VIDE ITA NO. 290 5 /AHD/2016 FILED BY THE REVENUE T HEREFORE THE SAME IS DISMISSE D. ITA NO. 2895/AHD/201 6 ASSESSMENT YEAR 2012 - 13 FILED BY ASSESSEE A ND GROUND NO. 1 VIDE ITA NO. 2906 /AHD/2016 FILED BY REVENUE 7. DURING THE YEAR UNDER CONSIDERATION THE TOTAL TURNOVER O F SHARE BUSINESS OF THE ASSESSEE WAS ONLY RS. 5 , 82 , 927/ - AS AGAINST THE TOTAL TURNOVER OF SHARE BUSINESS OF THE ASSESSEE IN ASSESSMENT YEAR 2011 - 12 OF RS. 10 , 01 , 89 , 638/ - . T HE PER CENTAGE OF SHARE BUSINESS TURN - OVER OF THE TOTAL I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 10 TURNOVER WAS ONLY 0.15% AS AGAINST 40.36% IN THE PRECEDING YEAR. A FTER TAKING INTO CONSIDERA TION THE SMA LL TURNOVER OF THE SHARE BUSINESS DURING THE YEAR UNDER CONSIDERATION , THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE OF OPERATING EXPENSES TOWARDS SHARE BUSINESS TO THE AMOUNT OF RS. 20 , 300/ - AND RE DUCED THE DISALLOWANCE FROM SPECULATION LOSS TO RS. 6,00802/ AS AGAINST SPECULATION LOSS OF RS. 6 , 01 , 086/ - DETERMINED BY THE ASSESSING OFFICER . AFTER TAKING INTO CONSIDERATION THE SMALLNESS OF THE SHARE BUSINESS TURNOVER WE OBSERVE THAT THE ALLOCATION OF OPERATING EXPENSES OF RS. 20 , 300/ - TOWARDS SHARE TRADING AND DETERMINATION OF SPECULATION LOSS AT RS.6,00802/ BY THE CIT(A) TO BE APPROPRIATE AND REASONABLE, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE THE DECISION OF LD. CIT(A) . ACCORDING, THE GROUND OF APPEAL FILED BY ASSESSEE IS DISMISSED AND WE ALSO DO NOT FIND ANY MERIT IN THE GROUND NO. 1 OF THE REVENUE VIDE ITA NO. 2906/AHD/2016 THEREFORE THE SAME ALSO STANDS DISMISSED. ITA NO. 2906 /AHD/2016 FILED BY REVENUE 8. THE REVENUE HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF AP PEAL: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE DISALLOWANCE OF SPECULATION LOSS TO RS.6,00,802/ - AS AGAINST RS.6,01,086 / - MADE BY THE AO WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,63,45,750/ - MADE U/S 2(22)(E) OF THE ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD. 9 . THE GROUND NO. 1 FILED BY THE REVENUE FOR THE A.Y. 20111 - 12 & 2012 - 13 HAVE ALREADY BEEN ADJUDICATED AS SUPRA ALONG WITH THE APPEAL OF THE ASSESSEE THEREFORE WE ARE TAKING UP THE REMAINING GROUND NO. 2 OF THE REVENUE FOR BOTH THE YEARS. SINCE T HE FACT S AND ISSUE S OF THE GROUND NO. 2 OF APPEAL O F THE REVENUE FOR BOTH THE YEAR ARE IDENTICAL, THEREFORE , FOR THE I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 11 CONVENIENCE , WE A RE ADJUDICATING BOTH APPEALS TOG ETHER BY TAKING THE ITA NO . 2906 /AHD/2016 AS LEAD CASE AND ITS FINDINGS WILL BE APPLICABLE TO THE OTHER APPEAL 2905 /AHD/2016 OF REVENUE. 10 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED AS FOLLOW: - DURING THE YEAR UNDER CONSIDERATION IT WAS NOTICED THAT ASSESSEE COMPANY HAS RECEIVED TOTAL SUM OF RS 2,30,80,750 / - FROM ITS GROUP CONCERNS NAMELY, M/S. SAGAR DRUGS & PHARMACEUTICALS PVT LTD. DURING THE YEAR ASSESSEE HAS REPAID THE LOAN OF RS.2,49,38,834/ - . IT IS SEEN THAT SHRI ROHIT J PATEL IS THE MAIN PERSON WHO IS HOLDING AND HAVING TOTAL CONTROL OVER ADMINISTRATION AND MANAGEMENT OF BOTH THESE GROUP COMPANIE S AND ALSO HAVING SUBSTANTIAL INTEREST AS A SHARE HOLDER IN OTHER GROUP COMPANIES I.E. SHRI ROHIT J PATEL, DIRECTOR OF THE ASSESSEE COMPANY IS HOLDING 60% OF SHARES IN JAY INVESTMENT PVT. LTD WHICH IS HOLDING 39.2% SHARES IN MS/ SAGAR DRUGS AND P HARMACEUTI CALS P LTD. FURTHER, SHR I ROHIT PATEL IS ALSO HOLDING 60% SHARES IN SAR INVESTMENT CO. PVT LTD. WHICH IS ALSO HAVING 39% SHARES IN M/S SAGAR DRUGS AND PHARMACEUTICALS P LTD. ROHIT PATEL HIMSELF IS HAVING 15% SHARES IN M/S SAGAR HOLDING PVT LTD. THUS HOLDIN G OF SHRI ROHIT PATEL IN M/S SAGAR DRUGS AND PHARMACEUTICALS COMES TO 61.91% (15+23.52 ON ACCOUNT OR JAY INVESTMENT + 23.40 ON ACCOUNT OF SAR INVESTMENT AS DISCUSSED ABOVE, IN THE CASE OF ASSESSEE COMPANY, THE HOLDING OF ROHIT PATEL COMES TO 44% (12 + 52% OF 61.91 OF SAGAR DRUGS). IT IS PERTINENT TO MENTION HERE THAT M/S SAGAR DRUGS AND PHARMACEUTICALS P LTD. DIRECTLY HOLDS 52% OF THE EQUITY CAPITAL OF ASSESSEE COMPANY. HENCE, SHARE HOLDING OF SHRI ROHIT PATEL IN THE ASSESSEE COMPANY DIRECTLY & INDIRECTLY I S IN EXCESS OF 20% AS ENVISAGED UNDER THE EXPLANATION 3 TO THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT .& SQUARELY COVERED UNDER THE DEFINITION OF SUBSTANTIAL INTEREST AS SHARE HOLDER OF THE ASSESSEE COMPANY AND HE IS A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES HAVING MORE THAN 20% VOTING RIGHT IN THE BOTH THE ASSESSEE COMPANY AS WELL AS IN SAGAR DRUGS & PHARMACEUTICALS P LTD. IT WAS ALSO NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS OBTAINED LOAN OF RS.2,30,80,750/ - RECEIVED FROM SAGAR DRUGS & PHARMACEUTICALS P LTD IS REQUIRED TO BE TREATED AS DEEMED DIVIDEND. I THEREFORE THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS VIDE ORDER SHEET WAS ASKED TO SHOW CAUSE AS TO WHY AMOUNT RECEIVED OF RS. 2,30,80,750 / - SHOULD NOT BE TREATED AS D EEMED 6S ADDED TO THE INCOME OF THE ASSESSEE U/S 2(22)(E) OF THE ACT IN VIEW OF THE ABOVE FACTS, ASSESSING OFFICER WAS OF THE VIEW THAT ROHI T J. PATEL WAS IN FULL CONTROL O F AFFAIRS OF THE GROUP COMPANIES AND HIS HOLDING WAS 44% IN GPSAR HEALTH CARE L TD AND 61.92% IN SAGAR DRUGS AND PHARMACEUTICAL PVT. LTD WHICH HA D ALLOCATED ADVANCE AMOUNT TO THE ASSESSEE COMPANY OF RS. 2 , 30 , 80 , 750/ - DURING THE YEAR. HE ALSO OBSERVED THAT M/S. SAGAR DRUGS AND PHARMACEUTICAL WAS HAVING SUBSTANTIVE RESERVES AND SURPLU S DURING THE YEAR AND T HE ASSESSEE HA D MADE REPAYMENT OF LOAN OF I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 12 RS. 2 , 49 , 38 , 834/ - TO M/S. SAGAR DRUGS AND PHARMACEUTICAL PVT. LTD. THEREFORE, AN AMOUNT OF RS. 1 , 63 , 45 , 750/ - WAS ADDED TO THE ASSESEE S TOTAL INCOME U/S. 2(22)(E) OF THE ACT. 11. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. RELEVANT PART OF DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. IT IS SEEN FROM THE FACTS OF THE CASE, THAT IDENTICAL ISSUE HAS BEEN DECIDED BY MY PREDECESSOR CIT(A) - VLLI , AHMEDABAD FOR A. Y. 2009 - 10 IN APPELLATE ORDER NO.CIT(A) - VIII/ACIT, CIR. 4/239/11 - 12 DATED 22/03/2013, WHERE BY THE ID.CIT(A) HAS DELETED THE DEEMED DIVIDEND. THE RELEVANT FINDINGS OF THE SAID APPELLATE ORDER ARE REPRODUCED HEREUNDER: - '4.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE ON BEHALF OF THE APPELLANT. ON GOING THROUGH THE DEFI NITION OF DEEMED DIVIDEND AND ON THE CASE LAWS RELIED BY THE LEARNED AR. I AM OF THE OPINION THAT DEEMED DIVIDEND IS TO BE TAXED IN THE HANDS OF THE SHAREHOLDER IN THE SITUATION SPECIFIED IN SECTION 2(22) (E) OF THE ACT. IT IS SEEN THAT THE APPELLANT COMPA NY IS NEITHER A REGISTERED SHAREHOLDER NOR A BENEFICIAL SHAREHOLDER OF THE LENDER COMPANY. THEREFORE, THE DEEMED DIVIDEND CANNOT BE TAXED IN THE HANDS OF THE APPELLANT NOT BEING SHAREHOLDER OF THE LENDER COMPANY I.E. SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. THE LOAN IS GIVEN BY HOLDING COMPANY FOR MEETING DAY TO DAY WORKING CAPITAL REQUIREMENT OF THE APPELLANT COMPANY BEING SUBSIDIARY. BEING A SUBSIDIARY COMPANY THE APPELLANT COMPANY IS NOT ABLE TO RAISE FINANCE FROM THE MARKET ON HIS OWN STRENGTH AND DEPEND ED UPON THE HOLDING COMPANY FOR ITS DAY TO DAY WORKING CAPITAL REQUIREMENTS. THE PERSON WHO IS SHAREHOLDER IN THE COMPANY IS ENTITLED TO RECEIVE DIVIDEND. IN THE ABSENCE OF SHAREHOLDING OF THE APPELLANT COMPANY IN LENDING COMPANY, THE APPELLANT COMPANY IS NOT ENTITLED TO - ANY DIVIDEND FROM THE LENDING COMPANY. WHEN THE PERSON IS NOT ENTITLED TO DIVIDEND DECLARED, HE IS ALSO NOT ENTITLED TO ANY DIVIDEND FROM LENDING COMPANY. FURTHER, FOR ESTABLISHING THAT APPELLANT COMPANY IS CONCERN IN WHICH SHAREHOLDER (HO LDING 10% OR MORE SHARES) OF THE LENDING COMPANY HAVE SUBSTANTIAL INTEREST, THE AO HAS CONSIDERED HIS INDIRECT HOLDING IN THE APPELLANT COMPANY DUE TO HIS HOLDING IN OTHER COMPANIES AND OTHER COMPANIES HOLDING IN LENDING COMPANY AND CONSEQUENTIAL HOLDING O F THE LENDING COMPANY IN APPELLANT COMPANY. IN THE INCOME TAX ACT, DEFINITION OF 'PERSON WHO WAS SUBSTANTIAL INTEREST IN THE COMPANY' IS GIVEN IN SECTION 2(31). ACCORDINGLY, THE PERSON WHO IS THE BENEFICIAL OWNER OF SHARES CARRYING NOT LESS THAN TWENTY PER CENT (20%) OF VOTING POWER CAN BE CONSIDERED AS A PERSON WHO HAS SUBSTANTIAL INTEREST I THE COMPANY. THERE IS NO REQUIREMENT OF LAW TO COMPUTE THE SHAREHOLDING FOR THIS PURPOSE AS COMPUTED BY THE AO IN THE ASSESSMENT ORDER. THEREFORE, IT IS HELD THAT SHRI ROHIT J. PATEL IS NOT HOLDING MORE THAN 20% OF THE VOTING POWER IN THE APPELLANT COMPANY AND THE APPELLANT COMPANY IS NOT CONCERN IN WHICH THE SHARE HOLDER, HOLDING MORE THAN 10% SHARES OF LENDING COMPANY, HAS A SUBSTANTIAL INTEREST. THEREFORE, THE ADDITIO N OF RS.4,76,42,391/ - DEEMED DIVIDEND IS DELETED. SINCE THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND IS DELETED, THERE IS NO NEED TO DETERMINE THE QUANTUM OF DEEMED DIVIDEND.' 4.4. IN VIEW OF THE ABOVE FACTS OF THE CASE, AND THE FACT THAT THE ISSUE IS IDENTIC ALLY INVOLVED IN THE YEAR UNDER CONSIDERATION AND THE \ SAME IS COVERED BY THE DECISION GIVEN BY ERSTWHILE CIT(A) - VIII, AHMEDABAD FOR A. Y.'2009 - 10 IN FAVOUR OF THE APPELLANT. THUS, THE ADDITION MADE BY THE AO IS DELETED AND THE GROUND OF APPEAL FOR THIS YEAR IS ALSO ALLOWED. 4.4. IN VIEW OF THE ABOVE FACTS OF THE CASE, AND THE FACT THAT THE ISSUE IS IDENTICALLY INVOLVED IN THE YEAR UNDER CONSIDERATION AND THE SAME IS COVERED BY THE DECISION GIVEN BY THIS OFFICE IN A. Y. I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 13 2011 - 12 AS REPRODUCED IN THE PRECE DING PARAS IN FAVOUR OF THE APPELLANT. THUS, THE ADDITION MADE BY THE AO IS DELETED AND THE GROUND OF APPEAL FOR THIS YEAR IS ALSO ALLOWED. 12. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE OR DER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING DETAIL AND SUBMISSION MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS. THE LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF ITAT IN THE CASE OF ASSESSEE ITSELF VIDE ITA NO. 1674/AHD/2013 ASSESSMENT YEAR 2009 - 10 ORDER DATED 26 - 09 - 2016. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS NOTICED THAT CO - ORDINATE BE NCH OF THE IT AT AS REFERRED ABOVE IN THE CASE OF ASSESSEE ITSELF IN ASSESSMENT YEAR 2009 - 10 HAS ADJUDICATED THE SIMILAR ISSUE ON IDENTICAL FA CTS IN FAVOUR OF THE ASSESSEE. RELEVANT PART OF DEC ISION OF CO - ORDINATE BENCH OF IT AT IS REPRODUCED AS UNDER: - 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE SHAREHOLDING OF SHRI ROHIT J. PATEL HAS BEEN WORKED OUT BY THE A.O. AS UNDER: - PARTICULARS SHAREHOLDING % REMARKS SHARES IN ASSESSEE COMPANY 12 DIRECTLY HELD SHARES IN ASSESSEE COMPANY DUE TO HOLDING OF RJP IN JAY INVESTMENT AND DUE TO HOLDING OF JAY INVESTMENT IN SAGAR DRUGS AND DUE TO HOLDING OF SAGAR DRUGS IN ASSESSEE COMPANY 12.23 39.20% * 60% * 52% DUE TO HOLDING IN JAY INVESTMENT SHARES IN ASSESSEE COMPANY DUE TO HOLDING OF RJP IN JAY INVESTMENT AND DUE TO HOLDING OF JAY INVESTMENT IN SAGAR DRUGS AND DUE TO HOLDING OF SAGAR DRUGS IN ASSESSEE COMPANY 12.16 39% * 60% * 52% DUE TO HOLDING IN SAGAR INVESTMENTS SHARES IN ASSESSEE COMPANY DUE TO HOLDING OF RJP IN SAGAR DRUGS AND DUE TO HOLDING OF SAGAR DRUGS IN ASSESSEE COMPANY 7.8 15% * 52% DUE TO HOLDING IN SAGAR DRUGS TOTAL 44.19 I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 14 10.A PERUSAL OF THE AFOREMENTIONED CHART CLEARLY SHOWS THAT THE A.O. HAS WORKED OU T THE HOLDING OF SHRI ROHIT J. PATEL IN THE ASSESSEE - COMPANY BY INCLUDING INDIRECT HOLDING IN THE ASSESSEE - COMPANY DUE TO HOLDING IN OTHER COMPANIES AND HOLDING OF THOSE OTHER COMPANIES IN SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. WHICH IS THE HOLDING COMPAN Y OF THE ASSESSEE - COMPANY AND DUE TO HIS HOLDING IN SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. ACCORDINGLY, THE A.O. CAME TO THE CONCLUSION THAT THIS IS A FIT CASE OF DEEMED DIVIDEND. 11.IN OUR UNDERSTANDING OF THE FACTS, THE ASSESSEE IS NOT A SHAREHOLDER, T HE INDIRECT SHAREHOLDING CONSIDERED BY THE A.O. FOR THE APPLICABILITY OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS ERRONEOUS AND LASTLY THERE APPEARS TO BE A DIRECT BUSINESS NEXUS BETWEEN THE AMOUNT OF LOAN TRANSACTED. 12.IT IS A SETTLED PROPOSITI ON OF LAW THAT IF THE RECIPIENT IS NOT THE SHAREHOLDER PROVISIONS OF SECTION 2(22)(E) OF THE ACT WOULD NOT APPLY AS HELD BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHAUMIK COLOUR PVT. LTD. 120 TTJ 865 WHICH WAS CONFIRMED BY THE HON BLE HIGH COURT OF BOMBAY IN THE CASE OF UNIVERSAL MEDICARE PVT. LTD. 324 ITR 263 WHEREIN THE HON BLE HIGH COURT HAS LAID DOWN THE RATIO THAT DEEMED DIVIDEND HAVE TO BE TAXED IN THE HANDS OF THE SHAREHOLDER AND NOT IN THE HANDS OF THE ASSESSEE COMPANY. A SIMILAR VIEW WAS TAKEN BY THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF HOTEL HILLTOP 313 ITR 116 AND ALSO BY THE HON BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF DAISY PACKERS PVT. LTD. 220 TAXMAN 331. 14. RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THE ITAT AS SUPRA ON SIMILAR FACTS AND ISSUE IN THE CASE OF THE ASSESSEE ITSELF , WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF LD. CIT(A). THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ON THIS ISSUE FOR A.Y. 20111 - 12 & 2012 - 13 ARE DISMISSED. 15. IN THE RESULT, APPEAL ITA NO. 2894/AHD/2016 FILED BY ASSESSEE IS PARTLY ALLOWED AND APPEAL ITA 2895/AHD/2016 FILED BY ASSESSEE IS DISMISSED. APPEAL ITA NOS. 2905 & 2906 /AHD/2016 FILED BY REVENUE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 18 - 01 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 18 /01/2019 I.T.A NOS. 2894, 2895, 2905 & 2906/AHD/20 16 A.Y. 2011 - 12 & 2012 - 13 PAGE NO GPSAR HEALTH CARE LTD. VS. D CIT /ITO 15 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,