Troikaa Pharamaceuticlas Ltd., Ahmedabad V. The ACIT, Circle--8, Ahmedabad

ITA 371/AHD/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9579 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHAVESH SHAH
• Keywords: Depreciation; Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD .. , ( . ) , BEFORE SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDEN T (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.371/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) TROIKAA PHARMACEUTICALS LTD. 301, COMMRCE HOUSE NO.1 OPP. RAJVANSH APARTMENTS JUDGES BUNGALOW ROAD AHMEDABAD-380 054 / VS. THE ASST.CIT CIRCLE-8 AHMEDABAD $ % ./ ./ PAN/GIR NO. : AABCT 0228 K ( $' / APPELLANT ) .. ( ()$' / RESPONDENT ) $'* / APPELLANT BY : SHRI BHAVESH SHAH, AR ()$'+* / RESPONDENT BY : SHRI NIMESH YADAV, SR.DR , -+ .% / DATE OF HEARING 26/05/2015 /012 + .% / DATE OF PRONOUNCEMENT 29/05/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XIV, AHMEDAB AD (CIT(A) IN SHORT) DATED 01/12/2011 PERTAINING TO ASSESSMEN T YEAR (AY) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1. THE LD.CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN PARTLY ALLOWING THE APPEAL. HE OUGHT TO HAVE ALLOWED THE APPEAL FULLY IN ITA NO.371/AHD/ 2012 TROIKAA PHARMACEUTICALS LTD. VS. ACIT ASST.YEAR 2008-09 - 2 - ACCORDANCE WITH THE GROUNDS OF APPEAL RAISED BY THE APPELLANT BEFORE HIM. 1. ADDITION U/S.2(22)(E) ON ACCOUNT OF DEEMED DIVIDEN D RS.56,671/-. 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONF IRMING THE ADDITION OF RS.56,671/- ON ACCOUNT OF DEEMED DIVIDE ND U/S.2(22)(E) OF THE ACT. 2. THE APPELLANT SUBMITS THAT THE PROVISIONS OF SECTIO N 2(22)(E) OF THE ACT, I.E. DEEMED DIVIDEND ARE APPLICABLE/ATTRACTED WHEN A COMPANY (NOT BEING A COMPANY IN WHICH PUBLIC ARE SUBSTANTIA LLY INTERESTED) MAKES PAYMENT OF ANY SUM BY WAY OF LOANS OR ADVANCE S TO A SHAREHOLDER WHO IS THE BENEFICIAL OWNER OF THE SHAR ES HOLDING NOT LESS THAN 10% OF THE VOTING POWER. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, ALT ER OR MODIFY ANY OF THE GROUNDS STATED HEREINABOVE EITHER BEFORE OR AT THE TIME OF HEARING. PRAYER THE APPELLANT THEREFORE RESPECTFULLY PRAYS THAT:- 1. THE ADDITION U/S.2(22)(E) OF THE ACT ON ACCOUNT OF DEEMED DIVIDEND OF RS.56,671/- CONFIRMED BY THE LD.CIT(A) MAY KINDL Y BE DELETED. 2. SUCH AND FURTHER RELIEF AS THE NATURE AND CIRCUMSTA NCES OF THE CASE MAY JUSTIFY. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 27/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE VARIOUS DISALLOWANCES, NAMELY DISALLOWANCE OF GARDE N EXPENDITURE OF RS.1,09,797/-, DISALLOWANCE OF DEPRECIATION ON TUBE -WELL OF RS.2,194/-, ITA NO.371/AHD/ 2012 TROIKAA PHARMACEUTICALS LTD. VS. ACIT ASST.YEAR 2008-09 - 3 - DISALLOWANCE OF DEPRECIATION ON ELECTRIC INSTALLATI ON OF RS.35,313/- AND ALSO MADE ADDITION U/S.2(22)(E) OF THE ACT AMOUNTIN G TO RS.56,671/-. AGAINST THE SAID ASSESSMENT ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE UPHELD THE ADDITION MADE U/S.2(22)(E) OF THE ACT BY THE AO. NOW, THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. THE ONLY EFFECTIVE GROUND IN THIS ASSESSEES APP EAL IS AGAINST DELETION OF ADDITION OF RS.57,671/- MADE U/S.2(22)( E) OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT B BENCH AHMEDABAD RENDERED IN ASSESSEES OWN CASE BEARING ITA NO.922/ AHD/2010 FOR AY 2006-07, DATED 22/06/2012. 3.1. ON THE CONTRARY, THE LD.SR.DR SUPPORTED THE OR DER OF THE AO. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) DISMISSED THE GROUND OF APPEAL BY OBSERVING AS UNDER:- 4.3. DECISION :- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AN D THE SUBMISSION FILED BY THE APPELLANT. IT IS NOTED THA T SIMILAR ADDITION WAS MADE IN THE CASE OF THE APPELLANT FOR A.Y. 2006 -07. THE ITA NO.371/AHD/ 2012 TROIKAA PHARMACEUTICALS LTD. VS. ACIT ASST.YEAR 2008-09 - 4 - ADDITION MADE BY THE A.O. HAS BEEN UPHELD BY MY LD. PREDECESSOR IN APPEAL NO.CIT(A)-XIV/CIR.8/240/08-09 DATED 16/12 /2009. THE ISSUE IS PENDING BEFORE HONBLE ITAT FOR ADJUDICATI ON. THE APPELLANT HAS ALSO NOT POINTED OUT ANY DIFFERENT FA CTS FOR THE CURRENT YEAR. RESPECTFULLY FOLLOWING THE DECISION OF MY LD.PREDECESSOR, THE ADDITION MADE BY THE A.O. IS UP HELD AND THE GROUND OF APPEAL IS DISMISSED. 4.1. THE COORDINATE BENCH IN ASSESSEES OWN CASE FO R AY 2006-07 IN ITA NO.922/AHD/2010 VIDE ORDER DATED 22/06/2012 HAS HELD AS UNDER:- 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THE LATEST DECISION OF ANKITECH (P) LTD. 242 CTR 129 (DEL.) HAS HELD THAT, REPRODUCED FROM THE CONCLUSIO N. 'IT IS THE DEFINITION OF DIVIDEND WHICH IS ENLARGED BY THE DEEMING PROVISION OF S.2(22)(E) AND NOT THAT OF 'SHAREHOLDER' AND, THEREFORE, A CONCERN WHICH IS GI VEN LOAN OR ADVANCE BY A COMPANY CANNOT BE TREATED AS SHAREHOLDER/MEMBER OF THE LATTER SIMPLY BECAUSE A SHAREHOLDER OF THE LENDER COMPANY HOLDING VOTING .. . POWER OF 10 PER CENT OR MORE THEREIN HAS SUBSTANTIA L INTEREST IN SUCH CONCERN, AND SUCH LOAN OR ADVANCE CANNOT BE TREATED AS DEEMED DIVIDEND UNDER S.2(22)(E) AT THE HANDS OF SUCH A CONCERN. 7.1. IT WAS FURTHER HELD THAT A PAYMENT MADE BY AN ANOTHER COMPANY TO THE ASSESSEE-COMPANY, BEING A BUSINESS T RANSACTION, WHICH HAS BENEFITED BOTH THE COMPANIES, THEN THE PR OVISIONS OF SECTION 2(22)(E) DO NOT APPLY. IT IS WORTH TO MENTI ON THAT THE DECISION OR BHAUMIK COLOUR PVT.LTD. REPORTED AT (20 09) 120 TTJ 865 (MUM.)[SB] WAS APPROVED. FURTHER, IN THE CASE O F DCIT VS. ITA NO.371/AHD/ 2012 TROIKAA PHARMACEUTICALS LTD. VS. ACIT ASST.YEAR 2008-09 - 5 - ATUL ENGG.UDYOG REPORTED AT (2011) 57 DTK 433(AGRA) (TRIB) HELD AS UNDER:- 'PARTNERS OF THE ASSESSEE FIRM AND NOT THE ASSESSEE -FIRM BEING A SHAREHOLDER OF THE COMPANY AG LTD., AMOUNT RECEIVED BY THE ASSESSEE FROM THE COMPANY AS SECURI TY DEPOSIT CANNOT BE REGARDED AS DEEMED DIVIDEND WITHI N THE MEANING OF S.2(22)(E); EVEN OTHERWISE, THE AMOUNT R ECEIVED BY ASSESSEE FROM AG LTD. BEING SECURITY DEPOSITS UN DER AN AGREEMENT BETWEEN THE PARTIES COUPLED WITH CERTAIN OBLIGATIONS, IT CANNOT BE REGARDED TO BE PAYMENT BY THE COMPANY BY WAY OF ADVANCE OR LOAN AND HENCE, IT CAN NOT BE ASSESSED TO TAX UNDER S.2(22)(E). 7.2. WE HAVE ALSO PERUSED THE SPECIAL BENCH DECISIO N OF BHAUMIK COLOURS (P) LTD. REPORTED AT 118 ITD 1 AND THE CONC LUSION WAS THAT FOR THE PURPOSE OF INVOKING SECTION 2(22)(E), 'SUCH SHAREHOLDER' IN THE CONCERN TO WHICH LOAN IS ADVANC ED MUST BOTH BE A REGISTERED SHAREHOLDER AS ALSO A BENEFICIAL SH AREHOLDER. IT WAS HELD THAT THE LOAN OBTAINED BY ASSESSEE-COMPANY IN THE 'N' TRUST HAD 20% SHARE HOLDING FROM A COMPANY IN WHICH 'N' TRUST HAD 10% SHARE HOLDING, COULD NOT BE TAXED AS DEEMED DIVIDEND U/S.2(22)(E) SINCE 'N' TRUST WAS ONLY A REGISTERED SHAREHOLDER AND NOT A BENEFICIAL SHAREHOLDER. FOLLOWING THESE DECIS IONS, WE ARE OF THE CONSIDERED OPINION THAT THE CRITERIA IN WHICH D EEMED DIVIDEND INCOME IS TO BE TAXED IN THE HANDS OF THE ASSESSEE DID NOT QUALIFY, HENCE THE VIEW TAKEN BY THE REVENUE IS HEREBY REVER SED AND THE ADDITION THUS STANDS DELETED. 4.2. THE FACTS ARE IDENTICAL TO THE FACTS OF ASSESS EES OWN CASE FOR AY 2006-07 AND NO CHANGE INTO THE FACTS AND CIRCUMSTAN CES ARE POINTED OUT BY THE LD.SR.DR, THEREFORE RESPECTFULLY FOLLOWING T HE DECISION OF THE ITA NO.371/AHD/ 2012 TROIKAA PHARMACEUTICALS LTD. VS. ACIT ASST.YEAR 2008-09 - 6 - COORDINATE BENCH PASSED IN AY 2006-07 IN ITA NO.922 /AHD/2010 (ASSESSEES OWN CASE), THIS YEAR ALSO, WE HEREBY DI RECT THE AO TO DELETE THE ADDITION. ACCORDINGLY, THE GROUND RAISED BY TH E ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 29 TH DAY OF MAY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 29/ 05 /2015 6..., , .,../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ()$' / THE RESPONDENT. 3. 789 : / CONCERNED CIT 4. : ( ) / THE CIT(A)-XIV, AHMEDABAD 5. ; <(,89 , .892 , 7 / DR, ITAT, AHMEDABAD 6. < => - / GUARD FILE. ! / BY ORDER, ) ;( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 26.5.15 (DICTATION-PAD 4+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..26.5.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.29.5.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.5.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER