M/s. Alang Auto & General Engineering Company Pvt. Ltd., Ghaziabad V. JCIT, Ghaziabad

ITA 3574/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5378 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3574/DEL /2014 ASSESSMENT YEAR: 2010-11 ALANG AUTO & GENERAL ENGINEERING COMPANY PVT. LTD., C/O PRADEEP & CO., TAX ADVOCATES, 7, NAVYUG MARKET, GHAZIABAD. (PAN: AABCA9279R) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, GHAZIABAD. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PRATEEK GUPTA, ADVOCATE RESPONDENT BY: SHRI SANJAY KUMAR YADAV, SR. DR DATE OF HEARING: 05.01.2018 DATE OF PRONOUNCEMENT : 03.04.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER PASSED BY THE LD. CIT (APPEALS), GHAZIABAD FO R ASSESSMENT YEAR 2010-11. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS THREE GROUNDS IN THE APPEAL BEFORE US, AT THE TIME OF HEARING, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT GROUND NO. 1 CHALLENGING THE CONFIRMATION OF ADDITION OF RS. 7,500/- OUT OF ROC FEES AND GROUND NO. 2 CHALLENGING CONFIRMATION OF ADDITION O F RS. 31,710/- ITA NO. 3574/DEL/2014 ASSESSMENT YEAR 2010-11 2 ON ACCOUNT OF PRIOR PERIOD INSURANCE EXPENSES WERE NOT BEING PRESSED. ACCORDINGLY, GROUND NO. 1 AND 2 ARE DISMI SSED AS NOT PRESSED. 1.1 GROUND NO. 3 CHALLENGES THE CONFIRMATION OF ADD ITION OF RS. 73,57,649/- AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY AND THIS GROUND IS THE ONLY EFFECTIVE GROUN D BEFORE US. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS.1,22,23, 430/-. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 73,57,649 /- BY APPLYING THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') IN RESP ECT OF DEEMED DIVIDEND. THE ASSESSING OFFICER TOOK THE AMOUNT OF ADVANCE RECEIVED BY THE ASSESSEE COMPANY FROM ANOTHER INCOR PORATED COMPANY M/S DAYAL STEELS PVT. LTD. AND ASSESSED THE AMOUNT OF ADVANCE AS DEEMED DIVIDEND IN THE HANDS OF THE ASSE SSEE COMPANY ON THE GROUND THAT BOTH THE COMPANIES HAD A COMMON SHAREHOLDING PATTERN AND MRS. RANI CHAWDHARI HAD SU BSTANTIAL INTEREST IN BOTH THE COMPANIES. ON APPEAL BY THE A SSESSEE, THE LD. CIT (A) UPHELD THE ADDITION MADE BY THE ASSESSI NG OFFICER. NOW, THE ASSESSEE IS BEFORE THE ITAT AND HAS CHALLE NGED THIS CONFIRMATION OF ADDITION U/S 2(22)(E) OF THE ACT. ITA NO. 3574/DEL/2014 ASSESSMENT YEAR 2010-11 3 3. THE LD. AR SUBMITTED THAT THE ASSESSEE IS NOT A BENEFICIAL SHAREHOLDER OF THE COMPANY WHICH HAD GIVEN ADVANCE TO M/S DAYAL STEELS PVT. LTD. HE DREW OUR ATTENTION TO PA GES 12 AND 13 OF THE PAPER BOOK WHICH CONTAINED LIST OF SHAREHOLD ERS OF M/S DAYAL STEELS PVT. LTD FOR THE YEAR UNDER CONSIDERAT ION AND SUBMITTED THAT THE ASSESSEE WAS NOT A REGISTERED SH AREHOLDER OF M/S DAYAL STEELS PVT. LTD. THE LD. AR ALSO SUBMITT ED THAT THERE WERE TRADE TRANSACTIONS BETWEEN THE ASSESSEE COMPAN Y AND M/S DAYAL STEELS PVT. LTD. OUR ATTENTION WAS DRAWN TO PAGES 14 TO 17 OF THE PAPER BOOK WHICH WERE COPIES OF THE ACCOU NTS OF THE TRADE TRANSACTIONS HELD BETWEEN THE TWO COMPANIES. IT WAS SUBMITTED THAT SINCE THE ASSESSEE COMPANY WAS NOT A SHAREHOLDER OF M/S DAYAL STEELS PVT. LTD., THE IMPU GNED ADDITION COULD NOT HAVE BEEN MADE. RELIANCE WAS PLACED ON T HE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF C IT VS. ANKITECH (P) LTD. REPORTED IN 340 ITR 14 (DEL) WHEREIN THE H ONBLE DELHI HIGH COURT HAD HELD THAT IF A COMPANY WAS NOT THE S HAREHOLDER IN THE COMPANY, NO ADDITION COULD HAVE BEEN MADE ON ACCOUNT OF DEEMED DIVIDEND. ITA NO. 3574/DEL/2014 ASSESSMENT YEAR 2010-11 4 4. THE LD. SR. DR PLACED EXTENSIVE RELIANCE ON THE ORDER OF THE LD. CIT (A) AND VEHEMENTLY ARGUED THAT THE ADDITION HAD BEEN RIGHTLY MADE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE IN COMPLETE AG REEMENT WITH THE AVERMENTS OF THE LD. AR THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WOULD NOT BE ATTRACTED IN THIS CASE AS T HE ASSESSEE COMPANY IS NOT A SHAREHOLDER IN THE COMPANY M/S DAY AL STEELS PVT. LTD WHO HAD GIVEN ADVANCE TO THE ASSESSEE COMP ANY AND WE NOTE THAT THE ASSESSEE COMPANYS NAME DOES NOT FIGU RE IN THE LIST OF THE SHAREHOLDERS. THE LD. CIT (A) AS WELL AS TH E ASSESSING OFFICER HAVE NOT DISPUTED THAT THE ASSESSEE COMPANY WAS NOT A SHAREHOLDER IN M/S DAYAL STEELS PVT. LTD. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANK ITECH (P) LTD. (SUPRA). WE ALSO NOTE THAT THIS JUDGMENT OF THE HO NBLE DELHI HIGH COURT WAS LATER FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. A.R. MAGNETICS PVT. LTD. REPORT ED IN 220 TAXMAN 209 (DEL) WHEREIN THE HONBLE DELHI HIGH COU RT HELD THAT THE PROVISIONS RELATING TO DEEMED DIVIDEND COULD NO T BE INVOKED MERELY BECAUSE THE SHAREHOLDERS WERE COMMON. IN TH IS CASE, IT IS ITA NO. 3574/DEL/2014 ASSESSMENT YEAR 2010-11 5 SEEN THAT THE SOLE GROUND FOR MAKING THE ADDITION W AS THAT MRS RANI CHAWDHARI WAS A COMMON SHAREHOLDER IN BOTH THE COMPANIES. THEREFORE, WE ARE UNABLE TO CONCUR WITH THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AND RESPECTFULLY F OLLOWING THE RATIO OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANKITECH (P) LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THIS ADD ITION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 RD APRIL, 2018. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3RD APRIL, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR