ACIT, Coimbatore V. Sri Lakshmi Mills, Coimbatore

ITA 342/CHNY/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8945 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARI GOVIND
• Assessee Lawyers: T BANUSEKAR
• Keywords: Deemed dividend
• Section: 2(22)(e)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !', $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.342/CHNY/2017 ' (' / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 2, COIMBATORE. V. M/S SRI LAKSHMI MILLS , 223, ROYAL CASTLE APARTMENT, EAST SAMBANDAM ROAD, COIMBATORE 641 002. PAN : ABVFS 3780 P (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI HARI GOVIND, JCIT ,-*+ . / / RESPONDENT BY : SH. T. BANUSEKAR, CA 0 . 1$ / DATE OF HEARING : 04.12.2018 23( . 1$ / DATE OF PRONOUNCEMENT : 19.12.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -2, COIMBATORE , DATED 28.10.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDIT ION MADE BY THE ASSESSING OFFICER UNDER SECTION 2(22)(E) OF THE INC OME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.342/CHNY/17 3. SHRI HARI GOVIND, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE CIT(APPEALS) FOUND THAT THE ASSESSEE IS NO T A REGISTERED SHAREHOLDER OF THE COMPANY WHICH HAS ADVANCED LOAN TO THE PARTNERSHIP FIRM. ACCORDING TO THE LD. D.R., THE PARTNERS OF T HE ASSESSEE-FIRM ARE HOLDING MORE THAN 20%. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 4. WE HEARD SH. T. BANUSEKAR, THE LD. REPRESENTATIV E FOR THE ASSESSEE ALSO. EVEN THOUGH PARTNERSHIP FIRM CANNOT HOLD SHARES OF THE COMPANY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IF THE PARTNERS ARE HOLDING THE SHARES FOR THE BENEFIT OF THE PARTN ERSHIP FIRM, THEN NATURALLY THE ADVANCE MADE TO THE PARTNERSHIP FIRM HAS TO BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. TO DETERMINE WHETHER THE PARTNERSHIP FIRM IS A BENEFICIAL SHAREH OLDER OR NOT, IT HAS TO BE EXAMINED WHETHER THE PARTNERSHIP FIRMS FUNDS WE RE INVESTED IN THE SHARES OF THE COMPANY SO AS TO ENABLE THE COMPANY T O ISSUE SHARES IN THE NAME OF THE PARTNERS FOR THE BENEFIT OF THE PAR TNERSHIP FIRM. THE DETAILS OF INVESTMENT AND OTHER PARTICULARS ARE NOT AVAILABLE BEFORE THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL IS UNABLE TO UP HOLD THE ORDER OF THE LOWER AUTHORITY. 3 I.T.A. NO.342/CHNY/17 5. HOWEVER, IN THE INTEREST OF JUSTICE, THE MATTER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, OR DERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSU E IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL RE-EXAMINE THE MATTER IN THE LIGHT OF THE DETAILS THAT MAY BE FILED BY THE ASSESSEE AND BRING ON RECORD WHETHER THE INVESTMENT IN THE SHARE OF THE COMPANY WAS MADE BY THE PARTNERS FROM THEIR INDIVIDUAL FUNDS OR FROM THE FIRMS FUNDS. THEREAFTER, THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 19 TH DECEMBER, 2018 AT CHENNAI. SD/- SD/- (. !') ( . . . ) (S. JAYARAMAN) (N.R.S. GANESA N) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 19 TH DECEMBER, 2018. KRI. . ,167 87(1 /COPY TO: 1. *+/ APPELLANT 2. ,-*+/ RESPONDENT 3. 0 91 () /CIT(A)-2, COIMBATORE 4. PRINCIPAL CIT- 1, COIMBATORE 5. 7: ,1 /DR 6. ;' < /GF.