Dr. Suman Yadav, Gurgaon V. ACIT, Gurgaon

ITA 3678/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9993 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Delhi
• Next Hearing Date: 10-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHA RANI SINHA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Share purchase agreement; Deemed dividend; Set aside
• Section: 2(22)(e)

Judgement Text

ITA NO. 3678/DEL/08 A.Y. 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G NEW DELHI BEFORE HONBLE JUDICIAL MEMBER, SHRI D.R. SINGH AND HONBLE ACCOUNTANT MEMBER, SHRI B.C. MEENA ITA NO. 3678/DEL/ 2008 ASSESSMENT YEAR : 2005-06 PAN NO. AACPY 8056 A DR. SUMAN YADAV VS. ASSTT. CIT, GURGAON D/O MAJOR NAVAL SINGH YADAV, HARYANA 48, HOPE APARTMENT, SECTOR-15, PHASE-II, GURGAON (HARYANA) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, ADVOCATE RESPONDENT BY : MS. ABHA RANI SINHA, SR. DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), PANCHKULA DATED 3.10.2008 PASSED IN APPEAL NO. 118/ GGN/07-08 FOR ASSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL READS AS UNDER :- 1. ASSESSMENT ORDER/APPELLATE ORDER MADE BY THE LO WER AUTHORITIES ARE ERRONEOUS, BAD IN LAW AND ARE AGAINST THE FACT AND CIRCUMSTANCES OF THE CASE. 2. LD. CIT (APPEALS) PANCHKULA HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 6,50,000/- (RUPEES SIX LAC FIFTY THOUSAND ONLY) UNDER SECTION 2(22)(E) OF INCOME TAX ACT WITHOUT APPRECIATING THE FACT AND CIRCUMSTANCES OF THE CASE. ITA NO. 3678/DEL/08 A.Y. 2005-06 2 3. LD. CIT(APPEAL) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 1,33,826/- (ONE LAC THIRTY THREE THOUSAND EIGHT HUND RED TWENTY SIX ONLY) BEING THE INTEREST PAID BY THE ASSESSEE DURING THE YEAR. 4. THE APPELLANT RESERVES THE RIGHT TO MAKE ANY AMEN DMENT ADDITION OR DELETION IN THE GROUND OF APPEAL BEFORE ITS DISPOSA L. 2. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LD. AR SUBMITTED THAT THE ISSUE INVOLVED IN GROUND NO. 2 IS REGARDING THE CONFIRMAT ION OF THE ADDITION OF RS. 6,50,000/- UNDER SECTION 2(22)(E) OF THE IT AC T. AT THE OUTSET OF THE PLEADING HE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE ITAT, MUMBAI E SPECIAL BENCH IN THE CASE OF A CIT VS. BHAUMIK COLOUR (P) LTD. WHERE THE HONBLE ITAT, SPECIAL BENCH HELD AS UNDER :- 41. IN THE LIGHT OF THE ABOVE DISCUSSION, THE QUE STIONS REFERRED TO THE SPECIAL BENCH ARE ANSWERED AS FOLLOWS:- ON THE FIRST QUESTION : DEEMED DIVIDEND CAN BE ASSE SSEE ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER. ON THE SECOND QUESTION : THE EXPRESSION SHAREHOLDE R REFERRED TO IN S. 2(22)(E) REFERS TO BOTH A REGISTERED SHAREHOLDER AN D BENEFICIAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT THE BENEFICIAL SHAREHOLDER THEN THE PROVISIONS OF S. 2(22)(E) WILL NOT APPLY. SIMILARLY, IF A PERSON IS A BENEFICIAL SHAREHOLDER BUT NOT A REGISTERED SHAREHO LDER THEN ALSO THE PROVISIONS OF S.2(22)(E) WILL NOT APPLY. 2.1 HE FURTHER SUBMITTED THAT IT IS AN ADMITTED FAC T THAT CIT(A), PANCHKULA HIMSELF HAS MENTIONED IN HIS ORDER DATED 3.10.2008 IN PARA 3.1 THAT THE ASSESSEE WAS NOT REGISTERED SHARE HOLDER ON THE DAY ON WHICH THE LOAN WAS ADVANCED TO ITA NO. 3678/DEL/08 A.Y. 2005-06 3 HER BY M/S PUSPANJALI MEDICARE PVT. LTD. THE FACTS STATED BY THE CIT(A) IN PARA 3.1 READS AS UNDER:- 3.1 IT IS NATURAL THAT WHEN THE CONSIDERATION FOR ACQUISITION OF SHARES WAS PAID ON 1.6.2004 TO THE TRANSFEROR OF THE SHARES, T HE SHARE CERTIFICATES WOULD HAVE BEEN TAKEN FROM HIM ALONGWITH THE DULY SIGNED TRANSFER DEED. THE DATE OF 26.5.2004 ON THE SHARE TRANSFER FROM CLEARLY SHOWS THAT THE FORMS WERE ACQUIRED BEFORE THE TRAN SACTION WAS ENTERED INTO. SINCE M/S PUSPANJALI MEDICARE PVT. LT D. IS A CLOSELY HELD COMPANY, THE APPELLANT DID NOT GET THE SHARES TRAN SFERRED IN HER NAME AS IT WOULD HAVE ATTRACTED THE PROVISIONS OF S ECTION 2(22)(E) OF THE ACT. THERE IS NO REASON WHY THE SHARE WAS TR ANSFERRED AFTER A GAP OF ONE YEAR. IT IS NOT A CASE WHERE THE ASSESS EE HAS MADE PAYMENT TOWARDS APPLICATION MONEY TO THE COMPANY AN D THE MONEY WAS LYING AS SHARE APPLICATION MONEY PENDING ALLOTM ENT. HERE THE AMOUNT WAS PAID DIRECTLY TO THE SELLER OF THE SHAR ES. IT IS FOR THE ASSESSEE TO EXPLAIN THE UNREASONABLE DELAY IN GETTI NG THE SHARE TRANSFERRED AFTER HAVING RECEIVED THE SHARES CERTIF ICATES, DULY SIGNED TRANSFER APPLICATION FORM AND HAVING MADE THE PAYME NT. AS THE ASSESSEE HAS FAILED TO EXPLAIN THE UNREASONABLE DEL AY, I TREAT THE ASSESSEE IS A BENEFICIAL SHARE HOLDER AND ACCORDING LY HOLD THAT THE ASSESSING OFFICER IS JUSTIFIED IN MAKING THE ADDITIO N OF RS. 6.5 LAKHS. IT MAY ALSO BE MENTIONED HERE THAT THE ASSESSING OFFIC ER HAS OBSERVED VARIOUS CUTTINGS IN THE COPY OF THE DOCUMENTS SUBMI TTED, EVEN BEFORE ITA NO. 3678/DEL/08 A.Y. 2005-06 4 ME THE ORIGINAL OF THESE DOCUMENTS HAVE NOT BEEN PR ODUCED. KEEPING IN VIEW THESE FACTS, THE ADDITION MADE BY THE ASSESSING OFFICER IS SUSTAINED AND THE GROUND IS DISMISSED. 2.2 HE FURTHER SUBMITTED THAT THE ORDER OF THE ITAT , SPECIAL BENCH HAS BEEN FOLLOWED IN MANY OTHER ORDERS BY THE HONBLE ITAT AND HE ALSO RELIED ON THE FOLLOWING DECISIONS OF THE ITAT. I) ITO VS. SAGAR SAHIL INVESTMENT (P) LTD., ITAT, M UMBAI C BENCH IN ITA NO. 2111/MUM/2004; ASSTT. YEAR 2004-05, REPORTED IN (2009) 120 TTJ (MUMBAI) 925, II) HK MITTAL VS. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, DELHI B BENCH IN ITA NO. 6567/DEL/1992 A.Y. 1989-90 REPORT ED IN (1994) 49 ITD (DEL) 653. 3. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RE LIED ON THE ORDER OF THE AUTHORITIES BELOW. 4. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIE W THAT ON THE FACTS THE ADVANCE RECEIVED BY THE ASSESSEE WAS PRIOR TO THE D ATE ON WHICH SHE BECAME THE REGISTERED SHAREHOLDER. THEREFORE, THE CASE IS COV ERED BY THE DECISION OF THE ITAT, SPECIAL BENCH (SUPRA), WHERE THE HONBLE ITAT BENCH HELD AS UNDER:- ON THE SECOND QUESTION : THE EXPRESSION SHAREHOLDE R REFERRED TO IN S. 2(22)(E) REFERS TO BOTH A REGISTERED SHAREHOLDER AN D BENEFICIAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT THE BENEFICIAL SHAREHOLDER THEN THE PROVISIONS OF S. 2(22)(E) WILL NOT APPLY. SIMILARLY, IF A PERSON IS A ITA NO. 3678/DEL/08 A.Y. 2005-06 5 BENEFICIAL SHAREHOLDER BUT NOT A REGISTERED SHAREHO LDER THEN ALSO THE PROVISIONS OF S.2(22)(E) WILL NOT APPLY. 5. KEEPING THIS FACT IN VIEW AND OTHER DECISIONS OF THE ITAT RELIED UPON, WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THIS IS SUE AND DIRECT TO DELETE THE ADDITION MADE. 6. DURING THE COURSE OF HEARING THE LD. AR DID N OT ADVANCE ANY ARGUMENT ON THE ISSUE INVOLVED IN GROUND NO. 3 AND SO THE SAME DEEMED AS NOT PRESSED AND ACCORDINGLY THE GROUND NO. 3 IS REJECTED. 7. GROUND NO. 1 AND 4 OF THE APPEAL ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 8. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2009 IMMEDIATELY AFTER CONCLUSION OF THE HEARING. (D.R. SINGH) (B.C. MEENA) JUDICIAL MEMBER ACOUNTANT MEMBER SRB COPY OF THE ORDER IS FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT. 3. CIT(A) -I, NEW DELHI 4. CIT 5. THE DR, ITAT, NEW DELHI BY ORDER DY. REGISTRAR,ITAT // T RUE COPY //