ACIT, New Delhi V. M/s. Indian Summer, New Delhi

ITA 380/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3906 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI R.C.SHARMA, AM ITA NO.380/DEL/2010 ASSESSMENT YEAR : 2006-07 ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE-22(1), NEW DELHI. VS. M/S INDIAN SUMMER, F-24/4, OKHLA INDUSTRIAL AREA, PHASE-II, NEW DELHI. PAN NO.AAAFI7501C. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.MONA MOHANTY, SR.DR. RESPONDENT BY : NONE. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 19.11.2009 FOR THE AY 2006-07. 2. THE ONLY GRIEVANCE OF THE REVENUE RELATES TO DEL ETION OF ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE IT ACT. 3. WE HAVE HEARD THE LEARNED DR AND FOUND FROM THE RECORD THAT AO HAS MADE AN ADDITION U/S 2(22)(E) BY OBSERVING THAT PAR TNERS OF THE ASSESSEE FIRM ARE DIRECTORS AND SHAREHOLDERS IN M/S DIGIT EXPORTS PVT .LTD. WHO HAS ADVANCED LOANS TO ASSESSEE FIRM. ACCORDINGLY, THE LOAN GIVEN BY T HE SAID COMPANY AMOUNTING TO RS.35 LAKHS ON 4.1.2006 AND RS.35,28,266/- ON 6.12. 2005 WAS ADDED IN THE HANDS OF THE ASSESSEE FIRM U/S 2(22)(E). BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE ITAT SPEC IAL BENCH IN THE CASE OF BHAUMIK COLOUR (P) LTD. 313 ITR 146 (AT), WHEREIN IT WAS HELD THAT FOR ATTRACTING PROVISIONS OF SECTION 2(22)(E), THE ASSE SSEE SHOULD NOT ONLY BE BENEFICIAL BUT ALSO REGISTERED SHAREHOLDER OF THE COMPANY FROM WHOM AMOUNT OF LOAN WAS RECEIVED. ITA-380/DEL/2010 2 4. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF B HAUMIK COLOUR (P) LTD. (SUPRA). AFTER CONSIDERING A NUMBER OF DECISIONS, AS WELL AS CIRCULAR NO.495, DATED 22.9.1987, THE HONBLE SPECIAL BENCH AT PAGES 167 & 168 HAS HELD AS UNDER:- IN THE LIGHT OF THE ABOVE DISCUSSION, THE QUESTION S REFERRED TO THE SPECIAL BENCH ARE ANSWERED AS FOLLOWS: ON THE FIRST QUESTION : DEEMED DIVIDEND CAN BE ASSE SSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDE R COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLD ER. ON THE SECOND QUESTION : THE EXPRESSION SHAREHOLDER REFERRED TO IN SECTION 2(22)(E) REFERS TO BOTH A REGISTERED SHAREH OLDER AND BENEFICIAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLD ER BUT NOT THE BENEFICIAL SHAREHOLDER THEN THE PROVISIONS OF SECTI ON 2(22)(E) WILL NOT APPLY. SIMILARLY IF A PERSON IS A BENEFICIAL S HAREHOLDER BUT NOT A REGISTERED SHAREHOLDER THEN ALSO THE PROVISIONS OF SECTION 2(22)(E) WILL NOT APPLY. 5. SINCE THE ASSESSEE FIRM WAS NOT REGISTERED SHARE HOLDER OF M/S DIGIT EXPORTS PVT.LTD., WE DO NOT FIND ANY MERIT IN THE ADDITION MADE IN VIEW OF THE DECISION OF THE ITAT SPECIAL BENCH REFERRED ABOVE. RESPECTFULL Y FOLLOWING THE PROPOSITION LAID DOWN BY THE ITAT SPECIAL BENCH, WE CONFIRM THE ACTION OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2010. SD/- SD/- (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.06.2010. VK. ITA-380/DEL/2010 3 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR