Gross Holdings Pvt. LTd, V. ITO Ward 12 (2),

ITA 3852/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1238 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-11-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 14-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR GUPTA
• Assessee Lawyers: ASHU TANDO N
• Keywords: Reopening of assessment; Set aside
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI C.L.SETHI AND SHRI K.D.RANJAN ITA NO.3852/DEL/2007 ASSESSMENT YEAR : 2003-04 GROSS HOLDINGS PVT. LTD. 4 TH FLOOR, VARDHMAN PLAZA CORNER, INDER ENCLAVE, PASCHIM VIHAR, NEW DELHI110087. VS. ITO WARD 12(2), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHU TANDON, A.R. RESPONDENT BY : SHRI RAJESH KUMAR GUPTA, D.R. ORDER PER K.D.RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 200 3-04 ARISES OUT OF ORDER OF CIT(A)-XV, NEW DELHI. 2. THE FIRST ISSUE CONTAINED IN GROUNDS OF APPEAL R ELATES TO REOPENING OF ASSESSMENT UNDER SEC. 147. DURING THE COURSE OF HEA RING, THE GROUND RELATING TO REOPENING OF ASSESSMENT WAS NOT ARGUED AND, THEREFO RE, GROUND OF APPEAL RELATING TO REOPENING OF ASSESSMENT IS DISMISSED AS NOT PRES SED. 3. THE NEXT ISSUE FOR CONSIDERATION RELATES TO BRIN GING AN AMOUNT OF RS. 11,26,080/- ON ACCOUNT OF DIVIDEND RECEIVED WHICH W AS CLAIMED AS EXEMPT U/S 10(33) READ WITH SEC. 115O OF THE ACT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT RETURN OF INCOME WAS FILED ON 31/3/2004 BELATEDLY W HEREIN INCOME OF RS.8,05,049/- SHOWN AS DIVIDEND INCOME WHICH WAS CL AIMED EXEMPT U/S 10(33) OF THE ACT. BEFORE THE ASSESSING OFFICER, IT WAS SUBMI TTED THAT INTERIM DIVIDEND FOR THE FINANCIAL YEAR 2001-02 WAS RECEIVED BY THE ASSE SSEE IN ASSESSMENT YEAR 2003- 2 04 AND THE DIVIDEND INCOME WAS EXEMPT IN THE HANDS OF RECIPIENTS U/S 10(33) READ WITH SEC. 115-O OF THE ACT. ON FURTHER QUERY, THE A SSESSEE FILED COPY OF CHALLAN IN ITNS 269 FOR ASSESSMENT YEAR 2002-03 IN RESPECT OF DIVIDEND TAX OF RS.2,14,200/- DEPOSITED BY SB PACKAGINGS LTD. FROM WHOM ASSESSEE RECEIVED SAID DIVIDEND INCOME. THE ASSESSING OFFICER CONSIDERED T HE SUBMISSIONS MADE BY ASSESSEE. THE DIVIDEND WAS RECEIVED DURING THE PREV IOUS YEAR 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04. THE ASSESSING OFFICER OBSE RVED THAT SEC. 10(33) OF THE INCOME-TAX ACT, 1961 STOOD OMITTED BY THE FINANCE A CT, 2002 WITH EFFECT FROM 01-4-2003 AND, THEREFORE, THE CLAIM OF ASSESSEE TH AT DIVIDEND INCOME WAS EXEMPT COULD NOT BE ACCEPTED. HE FURTHER NOTED THAT THE CO NTENTION OF ASSESSEE THAT THE DIVIDEND TAX U/S 115-O WAS PAID BY THE COMPANY BUT THE DOCUMENTARY EVIDENCE FURNISHED BY ASSESSEE DID NOT SHOW ANY NEXUS OF THE DIVIDEND TAX PAID BY THE COMPANY WITH THE DIVIDEND RECEIVED BY THE ASSESSEE. THE PERUSAL OF THE CHALLAN SUBMITTED BY THE ASSESSEE IN RESPECT OF PAYMENT OF DIVIDEND TAX BY THE COMPANY WHICH DECLARED THE DIVIDEND DID NOT REVEAL IN ANY W AY, THAT THE DIVIDEND TAX SO DEPOSITED PERTAINED TO THE DIVIDEND RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED THAT EVEN IF THE DIVIDEND TAX ON DIVIDEND WAS PAID U/S 115-O BY THE COMPANY BUT THERE WAS NO SECTION/CLAUSE APPL ICABLE FOR ASSESSMENT YEAR 2003-04 WHICH ENTITLED THE ASSESSEE TO CLAIM SUCH E XEMPTION. THEREFORE, THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF ASSESSEE THAT THE DIVIDEND INCOME WAS EXEMPT FROM TAX. ACCORDINGLY, THE ASSESS ING OFFICER ADDED THE AMOUNT OF RS.11,26,078/-. 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE RECEIVED INTERIM DIVIDEND FOR THE FINANCIAL YEAR 2001-02 OF RS.7,65, 000/- FROM SB PACKAGINGS LTD. THE ASSESSEE WAS HOLDING 1581530 EQUITY SHARES OF S B PACKAGINGS LTD. DIVIDEND WAS DECLARED ON 26/3/2002 AND DIVIDEND TAX U/S 11 5O WAS DULY PAID BY THE SAID COMPANY. THE ASSESSEE ALSO STATED THAT IT HAD ALSO RECEIVED AN AMOUNT OF RS.3,60,000/- AS PREFERENCE DIVIDEND DECLARED BY SB PACKAGINGS LTD. THIS DIVIDEND WAS ALSO RECEIVED ON 26/3/2002. THE ASSES SEE RELIED ON CIRCULAR NO.8 OF 3 2002 DATED 27/8/2002 ACCORDING TO WHICH THE TAX PAI D U/S 155O BY THE COMPANY WAS TO BE TREATED AS FINAL PAYMENT OF TAX IN RESPEC T OF THE AMOUNT DECLARED, DISTRIBUTED OR PAID BY WAY OF DIVIDENDS. THAT SUCH DIVIDEND REFERRED TO SEC. 115-O WAS EXEMPT IN THE HANDS OF SHAREHOLDERS U/S 10(33) OF THE ACT. THAT THE INCIDENCE OF TAX WAS ON THE PAYER COMPANY AND NOT ON THE RECI PIENT. THEREFORE, IT WAS SUBMITTED THAT IF DIVIDEND WAS DECLARED ON OR BEFOR E 31/3/2002 AND HAD SUFFERED TAX U/S 115O, IT COULD NOT BE AGAIN SUBJECTED TO TA X IN THE HANDS OF THE PAYEE AS THE TAX PAID U/S 115O WAS FINALLY LEVY OF TAX ON SUCH D IVIDEND AND AS SUCH DIVIDEND INCOME WAS EXEMPT IN THE HANDS OF SHAREHOLDERS. THE LD. CIT(A) CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE. HE EXAMINED THE I SSUE IN DETAIL. HE WAS OF THE OPINION THAT THE DIVIDEND WAS RECEIVED BY ASSESSEE IN ITS ACCOUNTS ONLY ON 19/6/2002 AND SINCE THE DIVIDEND FOR THE RELEVANT A SSESSMENT YEAR 2003-04 WAS NOT EXEMPT FROM TAX, ASSESSING OFFICER WAS JUSTIFIE D GIVING HIS FINDING WITH REFERENCE TO STATUTORY PROVISIONS. THE DIVIDEND WAS TAXABLE UNDER THE PROVISIONS OF THE ACT NOTWITHSTANDING THAT THE PAYER COMPANY HAD APPARENTLY PAID TAX U/S 115O OF THE ACT IN RESPECT OF SUCH PAYMENT. THE LD. CIT( A) ALSO DISCUSSED THE ISSUE THAT THERE WAS NO DOUBLE TAXATION OF THE AMOUNT AS PAYER AND PAYEE WERE DIFFERENT PERSONS. HE ALSO HELD THAT TAX PAYABLE U/S 115-O WA S NOT TAX ON DIVIDEND OF VARIOUS SHAREHOLDERS BUT IT WAS TAX ON THE COMPANY AND WAS IN THE NATURE OF ADDITIONAL INCOME TAX ON THE AMOUNT OF INCOME DISTR IBUTED BY THE ASSESSEE. ACCORDINGLY, THE LD. CIT(A) UPHELD THE ORDER PASSED BY THE ASSESSING OFFICER. 5. BEFORE US, THE LD. A.R. OF THE ASSESSEE SUBMITTE D THAT THE DIVIDEND WAS INTERIM DECLARED ON 26/3/2002 AND THE AMOUNT OF DIV IDEND WAS RECEIVED BY THE ASSESSEE VIDE CHEQUE NO.359014 FOR RS.7,65,765/- AN D ANOTHER AMOUNT OF RS.3,60,000/- WAS RECEIVED BY CHEQUE NO.491057 ON T HE SAME DATE. THEREFORE, THE DIVIDEND RECEIVED BY THE ASSESSEE WAS EXEMPT UNDER SEC. 10(33) OF THE ACT. IT WAS ALSO SUBMITTED THAT WITH EFFECT FROM 01-4-2003, THE DIVIDEND RECEIVED BY THE ASSESSEE WAS NOT EXEMPT. IT WAS ALSO SUBMITTED THAT THE PAYER-COMPANY HAD PAID DIVIDEND TAX OF RS.2,14,200/-. THEREFORE, AS PER TH E CIRCULAR NO.8 OF 2002 DATED 4 27/8/2002, THE TAX PAID UNDER SEC. 115-O BY THE COM PANY WAS TO BE TREATED AS FINAL PAYMENT OF TAX IN RESPECT OF AMOUNT DECLARED, DISTRIBUTED OR PAID BY WAY OF DIVIDEND. THEREFORE, ONCE THE AMOUNT OF DIVIDEND TA X HAS BEEN PAID BY THE PAYEE- COMPANY, THE SAME CANNOT BE BROUGHT TO TAX IN THE H ANDS OF SHAREHOLDERS. HE FURTHER SUBMITTED THAT CIRCULAR NO.8 OF 2002 WAS NO T UNDERSTOOD OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) IN THE RIGHT PERS PECTIVE. THE DIVIDEND INCOME BEING EXEMPT UNDER SEC. 10(33) COULD NOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AS TAX HAS BEEN PAID UNDER SE.115-O BY THE PAYER-COMPANY. 6. ON THE OTHER HAND, THE LD. SR. D.R. SUPPORTED TH E ORDER OF ASSESSING OFFICER. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. AS PER THE INFORMATION FILED BY THE ASSESSE E, THE DIVIDEND WAS PAID ON 26/3/2002 BY CHEQUE NO.359014 FOR RS.7,65,765/- AND ANOTHER CHEQUE BEARING NO.00591057 FOR RS.3,60,000/-. THE CHEQUES WERE ENC ASHED BY THE ASSESSEE IN THE MONTH OF JUNE, 2002. THE ASSESSEE HAD ALSO FILED PH OTOCOY OF CHALLAN IN RESPECT OF DIVIDEND TAX PAID BY SB PACKAGINGS LTD. THE PAYMENT OF TAX WAS MADE ON 28/6/2002. FROM THESE FACTS, IT IS APPARENT THAT TH E ASSESSEE HAD ACCOUNTED FOR DIVIDEND INCOME IN ITS BOOKS OF ACCOUNTS ON 19/6/20 02. THE LD. CIT(A) HAS RECORDED A FINDING THAT THE DATE OF RECEIPT OF INTE RIM DIVIDEND WAS 19/6/2002. THIS WAS THE DATE ON WHICH THE PAYMENT HAS BEEN UNCONDIT IONALLY MADE AVAILABLE BY SB PACKAGINGS LTD. THE PAYER-COMPANY HAS DEPOSITED THE DIVIDEND TAX VIDE CHALLAN DATED 28/6/2002 WHICH INCLUDES THE PAYMENT OF INTEREST. SINCE THE TAX HAS BEEN PAID IN THE MONTH OF JUNE,2006 AND ASSESSEE HA D ALSO DEPOSITED THE CHEQUES IN JUNE,2002 IN ITS ACCOUNT, IT IS NECESSARY TO EXA MINE THE CASE AS TO WHETHER ANY DIVIDEND WAS PAID ON 26/3/2002. NEITHER THE ASSESSI NG OFFICER NOR THE LD. CIT(A) HAS EXAMINED AS TO WHETHER CHEQUE NO.359014 AND CHE QUE NO.491057 WERE ISSUED IN MARCH, 2002 OR IN THE MONTH OF JUNE,2002. FOR THIS PURPOSE, ENQUIRY HAS TO BE MADE WHETHER CHEQUE NOS. PRIOR TO AND AFTER T HE SAID CHEQUES WERE 5 USED/ISSUED IN THE MONTH OF MARCH OR IN SUBSEQUENT MONTHS. IN OTHER WORDS, CHEQUE NO.351013 AND 359015; AND 491056 AND 491058 WERE ISSUED IN THE MONTH OF MARCH,2006 OR IN SUBSEQUENT MONTHS. THE ASSESSIN G OFFICER IS DIRECTED TO VERIFY THE DATES OF ISSUE OF CHEQUES WHETHER THEY H AVE BEEN ANTE DATED SO AS TO MAKE A CLAIM THAT INCOME INCOME WAS EXEMPT U/S 10( 33) OF THE ACT. WE, THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF ASSES SING OFFICER WITH THE DIRECTIONS TO EXAMINE THE DATE OF PAYMENT OF DIVIDENDS BY EXAMINI NG THE DATES ON WHICH THE CHEQUES PRIOR TO AND AFTER THE IMPUGNED CHEQUES WER E ISSUED BY SB PACKAGINGS PVT. LTD. THE ASSESSING OFFICER WILL EXAMINE THESE FACTS FROM THE CONCERNED BANK ACCOUNT OF SB PACKAGINGS PVT. LTD. WE, THEREFORE, S ET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTIONS THAT HE WILL EXAMINE THE MATTER IN THE LIGHT OF ABOVE DIRECTIONS AND DECIDE THE ISSUE AS PER LAW.. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 27 NOVEMB ER, 2009. SD/- (C.L.SETHI) SD/- (K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27.11.2009. PSP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR