ITO 10(1)2, MUMBAI V. KAGAL BEARING P.LTD, MUMBAI

ITA 3463/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3490 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V KAMAT
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 3463 / / 2012 A.Y. 2006-07 ITA NO. :3463/MUM/2012 (ASSESSMENT YEAR: 2006-07) INCOME-TAX OFFICER -10(1)(2), ROOM NO. 453, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI -400 020 VS M/S. KAGAL BEARINGS PVT. LTD., B-57/547, GANDHI NAGAR, BANDRA EAST, MUMBAI -400 001 .: PAN: AACCK 6840M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR RESPONDENT BY : SHRI A.V. KAMAT /DATE OF HEARING : 06-06-2013 !' / DATE OF PRONOUNCEMENT : 12-06-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) 21, MUMBAI, DATED 10.02.2012, WHEREIN, THE DEPARTMENT HA S TAKEN THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS . 14 LAKHS RECEIVED AS SHARE APPLICATION MONEY AS DEEMED DIVIDEND IN THE H ANDS OF THE ASSESSEE COMPANY WITHOUT APPRECIATING THAT MONEY HA D BEEN ADVANCED BY A COMPANY IN WHICH ASSESSEES MEMBERS H AD MORE THAN 10% EQUITY. THEREFORE, THE PROVISIONS OF SECTION 2( 22)(E) OF THE ACT WERE ATTRACTED AND THE AMOUNT WAS NOT COVERED BY ANY OF THE FIVE EXEMPTIONS PROVIDED UNDER SECTION 2(22)(E) OF THE A CT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. $ . . . 3463 /%% / 2012 M/S. KAGAL BEARINGS PVT. LTD. ITA NO. 3463/MUM/2012 2 2. AS PER ASSESSMENT ORDER, THE ASSESSEE WAS FOUND TO HAVE RECEIVED RS. 14,00,000/- AS ADVANCE FROM M/S. PRECIMAX BEA RINGS P. LTD., IN WHICH THE SHARE HOLDERS OF THE ASSESSEE COMPANY HELD MORE THEN 20% EQUITY AND VOTING RIGHTS. THIS ADVANCE, THE AO TREATED AS DEEMED DIVIDEND U/S 2(22)(E) AND ADDED THE SAME. 3. IN THE PROCEEDINGS BEFORE THE CIT(A), IT WAS SHOWN THA T THE ASSESSEE COMPANY BEING THE RECIPIENT OF THE SUM OF RS. 1 4,00,000/- WAS NOT A SHAREHOLDER IN M/S. PRECIMAX BEARINGS P. LTD. THE ISSUE HAD BEEN DEALT WITH BY THE CIT(A) IN ASSESSMENT YEAR 2 007-08, WHEREIN, HE HAD HELD THAT THE ASSESSEE COMPANY WAS NOT THE SHAREHOLDER IN THE COMPANY WHO HAD PAID AN ADVANCE, I.E. P RECIMAX BEARINGS P. LTD. HE, THEREFORE, HAD DELETED THE ADDITION. 4. THIS ISSUE WAS AGITATED BY THE DEPARTMENT BEFORE THE ITAT IN THE ASSESSEES OWN CASE IN ITA NO. 7015/MUM/2010, WHEREIN, IT WAS HELD , WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECORD S ARID CONSIDERED THE MATER CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF AMOUNT RECIEVED BY THE ASSESSEE AS DEEMED DIVIDEND UNDER SECTION 2(22)(E). THE ASSESSEE HAD RECEIVED A SUM OF RS.15.00 LACS DURING THE YEAR FRO M M/S. PRCIMEX BEARING P. LTD. IN WHICH THE SHARE HOLDERS OF THE ASSESSEE COM PANY WERE HOLDING SHARES. THE AO HAD TREATED THE AMOUNT AS DEEMED DIVIDEND UN DER SECTION 2(22)(E). HOWEVER, THE PROVISIONS OF SECTION 2(22)(E) ARE APP LICABLE ONLY IN RESPECT OF LOANS/ADVANCES RECEIVED FROM THE COMPANY IN WHICH T HE ASSESSEE IS A SHARE HOLDER. THIS VIEW IS SUPPORTED BY THE DECISION OF T HE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF BHAUMIK COLOURS (P.) LTD. (118 ITR 1). THERE IS NO DISPUTE THAT THE ASSESEE COMPANY WAS NOT A SHARE HOLDER IN M/S. PRECIMEX BEARING P. LTD. FROM WHICH THE IMPUGNED AMOUNT HAD BEEN RECEIV ED. THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) ARE NOT APPLICABLE A ND NO ADDITION CAN BE MADE UNDER THE SAID SECTION. WE, THEREFORE, SEE NO INFIR MITY IN THE ORDER OF CTI(A) IN DELETING THE ADDITION AND THE SAME IS THEREFORE UPH ELD. 5. THE DEPARTMENT, ONCE AGAIN, IS IN CHALLENGE AGAINST TH E SAME ISSUE, WHICH HAD BEEN ADJUDICATED BY THE CIT(A) & ALSO BY THE COORDINATE BENCH IN ASSESSMENT YEAR 2007-08. SINCE THE FACTS OF THE CASE ARE IDENTICAL IN THE INSTANT APPEAL, WE, THEREFORE, RES PECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE, DISMISS THE APPEAL FILED BY THE DEPARTMENT. $ . . . 3463 /%% / 2012 M/S. KAGAL BEARINGS PVT. LTD. ITA NO. 3463/MUM/2012 3 6. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2013. SD/- SD/- ( .. ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 12 TH JUNE, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) $ $ ( ( ) - 21 MUMBAI / THE CIT (A)-21, MUMBAI. 4) $ $ ( M.C.-10, MUMBAI / THE CIT, M.C. -10, MUMBAI, 5) *+, - . , $ - , %/ / THE D.R. A BENCH, MUMBAI. 6) ,0 1 COPY TO GUARD FILE. $23 / BY ORDER / / TRUE COPY / / [ 4 / 5 6 $ - , %/ DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *895 . . * CHAVAN, SR. PS