ITL EMBELLISHMENT & PROPERTIES P. LTD, MUMBAI V. ACIT (OSD) CIR 7, MUMBAI

ITA 3277/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7385 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Deemed dividend
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER ITA NO.3277/MUM/2009 : ASST.YEAR 2006-2007 M/S.ITL EMBELLISHMENT & PROPERTIES PRIVATE LIMITED, C/O.JAMS CASTINGS P.LTD. 154, B GURU GOBIND SINGH INDL.ESTATE GOREGAON (EAST), MUMBAI 400 063. PA NO.AAACI4802P. VS. THE ASST.COMMISSIONER OF INCOME-TAX (OSD) CIRCLE 7 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARESH SHAPARIA RESPONDENT BY : SHRI S.M.KESHKAMAT O R D E R THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 23.3.2009 I N RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. GROUND NO.2 REGARDING NON-GRANTING OF PROPORTION ATE DEPRECIATION ON BUILDING WAS NOT PRESSED BY THE LEARNED A.R. THE SA ME, THEREFORE, STANDS DISMISSED. 3. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATIO N OF ADDITION MADE BY THE ASSESSING OFFICER U/S.2(22)(E) OF THE ACT AMOUNTIN G TO RS.26,76,00 ON ACCOUNT OF AMOUNT TAKEN FROM M/S.ITL FABRICS PRIVATE LIMITED. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE-COMPANY OBTAINED A LOA N OF THE SAID SUM FROM ITS SISTER CONCERN M/S.ITL FABRICS PRIVATE LIMITED, A C OMPANY IN WHICH SHRI RAJAN K.LAL, DIRECTOR OF THE ASSESSEE-COMPANY WAS HAVING SUBSTANTIAL INTEREST. THE A.O. NOTED THAT SHRI RAJAN K.LAL WAS COMMON SHAREHOLDER BOTH IN THE ASSESSEE- COMPANY AS WELL AS M/S.ITL FABRICS PRIVATE LIMITED. IN VIEW OF THESE FACTS IT WAS ITA NO.3277/MUM/2009 M/S.ITL EMBELLISHMENT & PROPERTIES PVT.LTD. 2 OPINED THAT THE PROVISIONS OF SECTION 2(22)(E) WERE ATTRACTED. THE ADDITION WAS MADE FOR THE SAID SUM. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD I FIND THAT THIS ISSUE NOW STANDS SETTLED BY THE SPECIAL BENCH ORDER PASSED IN ACIT VS. BHOUMIK COLOUR PVT. LTD. [(2009) 27 SOT 27 0 (MUM.) (SB)] IN FAVOUR OF THE ASSESSEE HOLDING THAT LOAN OR ADVANCE TO NON-SH AREHOLDER CANNOT BE TAXED AS DEEMED DIVIDEND IN THE HANDS OF A NON-SHAREHOLDER. FURTHER THE SHAREHOLDER REFERRED TO IN SECTION 2(22)(E) SHOULD BE BOTH REGI STERED SHAREHOLDER AND BENEFICIAL SHAREHOLDER. IT HAS ALSO BEEN HELD THAT IF THE LOAN IS MADE TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS MEMBER OR PARTNER, DIVIDEND IS TAXABLE IN THE HANDS OF THE SHAREHOLDER AND NOT THE NON-SHAREHOLDER. IN VIEW OF THE FACT THAT THE ASSESSEE OBTAINED LOAN FROM ITS SISTER CONCERN M/S.ITL FABRI CS PRIVATE LIMITED WHICH WAS NOT A SHAREHOLDER IN THE ASSESSEE-COMPANY, THE PROV ISIONS OF SECTION 2(22)(E) ARE NOT ATTRACTED. THIS GROUND IS, THEREFORE, ALLOWED. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 5 TH DAY OF MARCH, 2010. SD/- ( R.S.SYAL ) ACCOUNTANT MEMBER MUMBAI : 5 TH MARCH, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) CENTRAL-V, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. ITA NO.3277/MUM/2009 M/S.ITL EMBELLISHMENT & PROPERTIES PVT.LTD. 3 TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.