Abhijit Ramanlal Lunkad, Pune V. Income-tax Officer, Ward - 5(5), Pune

ITA 2963/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5548 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 13-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 2(22)(e); 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2963/PUN/2017 / ASSESSMENT YEAR : 2014-15 ABHIJIT RAMANLAL LUNKAD, 39, MITHAPELLI ESTATE, SHANKARSHETH ROAD, GULTEKADI, PUNE 411 037 PAN : AAFPL4922K VS. ITO, WARD-5(5), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29-09-2017 PASSED BY THE COMMISSIONER OF INCOME -TAX (APPEALS)-4, PUNE IN RELATION TO THE ASSESSMENT YEAR 2014-15 . 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.40,51,045/- MADE BY THE ASSESSING OFFICER (AO) U/S.2(22)(E) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO, ON VERIFICATION OF THE UNSECURED LOANS, OBSERVED THAT THE ASSES SEE ASSESSEE BY SHRI VIPIN GUJARATHI REVENUE BY SHRI ACHAL SHARMA DATE OF HEARING 05-10-2020 DATE OF PRONOUNCEMENT 05-10-2020 ITA NO.2963/PUN/2017 ABHIJIT R. LUNKAD 2 HAD TAKEN LOAN FROM A COMPANY, TRICON INFRA BUILDTECH PV T. LTD. (TIBPL) AMOUNTING TO RS.52,11,04,689/-, WHEREIN HE W AS A DIRECTOR, HAVING 50% SHAREHOLDING. ON PERUSAL OF THE COMPANYS BALANCE SHEET, THE AO OBSERVED THAT IT HAD SURPLU S FUNDS AT RS.40,51,045/-. WHEN CONFRONTED AS TO WHY PR OVISIONS OF SECTION 2(22)(E) BE NOT APPLIED, THE ASSESSEE SUBMITTED THAT THROUGH OVERSIGHT THE ASSESSEE INCLUDED THIS AMOUNT IN DETAILS OF UNSECURED LOANS, WHEREAS ACTUALLY NO LOAN WAS TAKEN F ROM THE SAID COMPANY BUT CERTAIN TEMPORARY ACCOMMODATION LOANS WERE GIVEN FROM TIME TO TIME WHEN THE COMPANY REQUIRED. THE AO CALLED FOR INFORMATION FROM TIBPL AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAD TAKEN LOAN FROM TIBPL. HE, THEREFORE, MADE ADDITION U/S.2(22)(E) OF THE ACT AMOUNTING TO RS.40,51,045/-. THE LD. CIT(A) AFFIRMED THE SAME. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND COGITATED OVER THE RELEVANT MATERIAL ON RECORD. A COPY OF ACCOUNT OF THE COMPANY TIBPL IN THE BOOKS OF THE ASSESSEE IS AVAILABLE AT PAGE 10 ONWARDS OF THE PAPER BOO K. THIS ACCOUNT RUNS INTO 8 PAGES WITH 138 TRANSACTIONS OF DEBIT AN D 19 TRANSACTION OF CREDIT. TOTAL OF DEBITS AND CREDITS IS RS.52.11 CRORE EACH WITH NIL CLOSING BALANCE. IT IS THIS TOTAL OF THE ONE ITA NO.2963/PUN/2017 ABHIJIT R. LUNKAD 3 SIDE OF THE ACCOUNT THAT HAS BEEN ADDED BY THE AO AS DEEM ED DIVIDEND U/S.2(22)(E) OF THE ACT. THE FIRST TRANSACTION IS AN ADVANCE GIVEN BY THE ASSESSEE TO TIBPL ON 01 ST APRIL AMOUNTING TO RS.20,50,000/-. THEREAFTER ON 02 ND APRIL, THERE IS A RECEIPT OF RS.17.50 LAKH. ON 3 RD APRIL, THERE IS ONE MORE RECEIPT OF RS.12.50 LAKH. ON 04 TH APRIL, THE ASSESSEE ADVANCED A SUM OF RS.15.50 LAKH. ON 06 TH APRIL, THE ASSESSEE ADVANCED A FURTHER SUM OF RS.38.40 LAKH AND SO ON AND SO FORTH. EVERY MONTH HAS SEVERAL ENTRIES OF THE ASSESSEE ADVANCING MONE Y FOR FULFILLMENT OF REQUIREMENT OF TIBPL AND THEREAFTER RECEIVING THE AMOUNT BACK. FOR MOST OF THE TIME, THE ACCOUNT OF TIBP L IN THE BOOKS OF ASSESSEE HAS DEBIT BALANCE, NAMELY, THE ASSESSEE HAS ADVANCED SUM TO TIBPL WHICH IS MORE THAN THE AMOUNT RECEIVED BACK. OUT OF 43 TRANSACTIONS ON PAGE 1, THE CRE DIT BALANCE IN THE ACCOUNT OF TIBPL IS ONLY ONCE. SIMILARLY ON PAGE 2 WITH ALMOST EQUAL NUMBER OF TRANSACTIONS, THROUGHOU T THERE HAS BEEN NET DEBIT BALANCE. PAGE 3 ALSO WITH ALMOST E QUAL NUMBER OF TRANSACTIONS, HAS THROUGHOUT DEBIT BALANCE. ON P AGE 4, CREDIT BALANCE IS ONLY THRICE AS AGAINST DEBIT BALANCE ON ROUGHLY 40 OCCASIONS. SIMILARLY ON PAGE 5, CREDIT BALANC E IS ONLY ON 6 OCCASIONS WITH ROUGHLY 35 OCCASIONS HAVING DEBIT ITA NO.2963/PUN/2017 ABHIJIT R. LUNKAD 4 BALANCE. ON PAGE 6, CREDIT BALANCE IS ONLY TWICE AS AGAINST DEBIT BALANCE ON ROUGHLY 40 OCCASIONS. ON PAGE 7, CRED IT BALANCE IS ONLY ONCE AS AGAINST THE DEBIT BALANCE ON THE REMAINING ROUGHLY 40 OCCASIONS. SIMILARLY ON LAST PAGE, C REDIT BALANCE IS ONLY ON 6 OCCASIONS WITH DEBIT BALANCE ON THE REMAINING OCCASIONS. THIS SHOWS THAT ALMOST THROUGHOUT THE YEAR, THE ASSESSEE WAS TO RECEIVE MONEY FROM TIBPL AND NOT THE OTHER WAY AROUND. THE AVERAGE BALANCE FOR THE YEAR IS AT DEBIT OF RS.1.35 CRORE. A COPIOUS ENUMERATION FROM THE ACCOUNT OF TIBPL IN THE BOOKS OF THE ASSESSEE MAKES IT ABUNDANTLY MANIFEST THAT IT WAS THE ASSESSEE WHO HAD ADVANCE D MONEY TO TIBPL ON MOST OF THE OCCASIONS AND ONLY ON FEW OCCASIONS THE ASSESSEE HAD RECEIVED MONEY MORE THAN THE AMOUNT DUE. THE AVERAGE NET BALANCE OF RS.1.35 CRORE FAIRLY INDICATES THAT IT WAS TIBPL WHICH WAS STANDING AS DEBTOR IN THE BOOKS OF THE ASSESSEE RATHER THAN A CREDITOR, WHICH IS THE REQUIREMENT FOR INVOKING SECTION 2(22)(E) OF THE ACT. AN OVERVIEW OF THE TRANSACTIONS IN THE ACCOUNT FAIRLY INDICATES TH AT IT WAS A CASE OF THE REGULAR COURSE OF TRANSACTIONS BETWEE N THE ASSESSEE AND TIBPL WHICH WAS FOR THE MUTUAL BENEFIT OF BOTH THE ASSESSEE AND TIBPL, BUT MAINLY WITH AN ADVANTAGE TO ITA NO.2963/PUN/2017 ABHIJIT R. LUNKAD 5 TIBPL. THE HONBLE CALCUTTA HIGH COURT IN CIT VS. GAYATRI CHAKRABORTY (2018) 407 ITR 730 HAS HELD THAT WHERE THE TRANSACTIONS BETWEEN THE SHAREHOLDER AND COMPANY CREATE MUTUAL BENEFITS AND OBLIGATIONS, THEN THE PROVISIONS OF TREATING ANY SUM RECEIVED BY THE SHAREHOLDER DOES NOT CONSTITUTE DEEMED DIVIDEND. IN ANOTHER JUDGMENT IN PRADIP KUMAR MALHOTRA VS. CIT (2011) 338 ITR 538 (CALCUTTA) , THE HONBLE HIGH COURT HAS HELD THAT ONLY THE GRATUITOUS LOAN ADVANCED TO THE SHAREHOLDER CAN BE TREATED AS DEEMED DIVIDEND U/S.2(22 )(E) OF THE ACT. IN ANOTHER UNREPORTED JUDGMENT DATED 21-12-20 15 IN CIT VS. SCHUTZ DISHMAN BIOTECH PVT. LTD. (TAX APPEAL NO.958& 959/2012), THE HONBLE GUJARAT HIGH COURT HAS HELD THAT ACCOMMODATION ADJUSTMENT ENTRIES DO NOT FALL WITHIN THE REALM OF DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. A COP Y OF THIS JUDGMENT HAS BEEN PLACED AT PAGE 69 ONWARDS OF THE P APER BOOK. IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR THAT TH E TRANSACTIONS BETWEEN THE ASSESSEE AND TIBPL, IN THE GIVEN CIRCUMSTANCES, DO NOT CONSTITUTE DEEMED DIVIDEND IN FAVOUR OF THE ASSESSEE SO AS TO FALL WITHIN THE AMBIT OF SECTION 2(22)(E ) OF THE ACT. WE, THEREFORE, OVERTURN THE IMPUGNED ORDER ON THIS SCORE AND ORDER TO DELETE THE ADDITION. ITA NO.2963/PUN/2017 ABHIJIT R. LUNKAD 6 5. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH OCTOBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SYAL ) JUDICIAL MEMBER VICE PR ESIDENT PUNE; DATED : 05 TH OCTOBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-4, PUNE 4. 5. THE PR.CIT-3, PUNE , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.2963/PUN/2017 ABHIJIT R. LUNKAD 7 DATE 1. DRAFT DICTATED ON 05-10-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05-10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *