DCIT, Calicut V. M/s.Kerala Transport Co., Calicut

ITA 373/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81387 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Keywords: Deemed dividend

Judgement Text

1 ITA NO.373/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 373/COCH/2014 (ASSESSMENT YEAR 2009-10) DY.CIT, CIR.1(1) VS M/S KERALA TRANSPORT CO KOZHIKODE YMCA ROAD, CALICUT PAN : AADFK0173H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. JOHN RESPONDENT BY : SMT. DIVYA RAVINDRAN DATE OF HEARING : 18-11-2014 DATE OF PRONOUNCEMENT : 21-11-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 27-05-2014 AND PERTAINS TO ASSESSMENT YEAR 20 09-10. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF RS. 49,21,445 U/S 2(22)(E) OF THE ACT. 3. WE HEARD SHRI K.K. JOHN, THE LD.DR AND SMT. DIVY A RAVINDRAN, THE LD.COUNSEL FOR THE ASSESSEE. 2 ITA NO.373/COCH/2014 4. IT IS BROUGHT TO THE NOTICE OF THIS BENCH THAT I N THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 I N ITA NO.352 & 353/COCH/2013 ORDER DATED 30-08-2013, THIS TRIBUNAL HAD AN OCCASION TO CONSIDER AN IDENTICAL ISSUE. THIS TRIBUNAL FOUND T HAT THE ASSESSEE FIRM IS NOT A SHAREHOLDER IN THE LENDING COMPANY AND ONLY T HE PARTNERS OF THE FIRM ARE THE SHAREHOLDERS. THE FUNDS WERE ADVANCED ONLY TO THE PARTNERSHIP FIRM TO THE BENEFIT OF PARTNERS. THEREFORE, IF AT ALL THERE IS ANY DEEMED DIVIDEND IT HAS TO BE CONSIDERED ONLY IN THE HANDS OF THE RESPECTIVE PARTNERS AND CERTAINLY NOT IN THE HANDS OF THE FIRM . IN FACT, THIS TRIBUNAL HAS OBSERVED AT PARAGRAPH 4 OF THIS ORDER AS FOLLOWS: 4. IT IS NOT IN DISPUTE THAT THE BENEFICIAL SHAREH OLDERS OF KTC AUTOMOBILES PVT LTD ARE PARTNERS IN THE ASSESSE E FIRM. THEREFORE, WHEN THE MONEY WAS RECEIVED BY THE FIRM ON BEHALF OR THE PARTNERS, THE DEEMED DIVIDEND HAS TO BE ASSE SSED ONLY IN THE HANDS OF THE PARTNERS AND NOT IN THE HANDS O F THE FIRM. THIS IS FOR THE SIMPLE REASON THAT THE FIRM IS NOT A SHAREHOLDER IN THE LENDING COMPANY. SINCE THE PARTNERS ARE SHA REHOLDERS AND FUNDS WERE GIVEN TO THE PARTNERSHIP FIRM FOR TH E BENEFIT OF THE PARTNERS, THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE DEEMED DIVIDEND U/S 2(22)(E) HAS TO BE ASSESSED ONL Y IN THE HANDS OF THE RESPECTIVE PARTNERS AND NOT IN THE HAN DS OF THE FIRM. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION IN THE HANDS OF THE FIRM BY FOLLOWING THE ORDER OF THIS TRIBUNAL. THIS TRIBUNAL DO 3 ITA NO.373/COCH/2014 NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED. 5. IN VIEW OF THE ABOVE ORDER OF THIS TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAM E IS CONFIRMED. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST NOVEMBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 21 ST NOVEMBER, 2014 PK/- COPY TO: 1. DCIT, CIR.1(1), KOZHIKKODE 2. M/S KERALA TRANSPORT CO., YMCA ROD, CALICUT 3. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE 4. THE COMMISSIONER OF INCOME-TAX(A), KOZHIKODE 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH