ASST CIT 8(1)(2), MUMBAI V. SHRINIWAS ANANTRAO PAWAR, MUMBAI

ITA 3997/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9870 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT SOMAIYA
• Assessee Lawyers: PANKAJ A SHAH
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 3997 /MUM/20 1 6 (ASSESSMENT YEAR 20 11 - 12 ) ACIT 8(1)(2) ROOM NO. 651 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. SHRINI WAS ANANTRAO PAWAR PRINTTONE BUSINESS FORMS PVT. LTD., GROUND FLOOR DATTA BHAVAN, VIJAY MANJREKAR LANE, GOKHALE ROAD, OFF FORT CHUR MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) C.O. NO. 316/MUM/2017 (ASSESSMENT YEAR 2011 - 12) SHRINIWAS ANANTRAO PAWAR PR INTTONE BUSINESS FORMS PVT. LTD., GROUND FLOOR DATTA BHAVAN, VIJAY MANJREKAR LANE, GOKHALE ROAD, OFF FORT CHUR MUMBAI - 400 020. VS. ACIT 8(1)(2) ROOM NO. 651 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN : AFWPP3313A ASSESSEE BY SHRI PANKAJ A. SHAH DEPARTMENT BY S HRI NISHANT SOMAIYA DATE OF HEARING 2 6 . 9 . 201 8 DATE OF PRONOUNCEMENT 26 . 9 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASS ESSEE ARE DIRECTED AGAINST THE ORDER DATED 22.3.2016 PASSED BY THE LEARNED CIT(A) - 14, MUMBAI AND IT RELATES TO A.Y. 2011 - 12. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER U/S. 2(22)(E) OF THE I.T. ACT. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS HOLDING 85% SHARES IN CLOSELY H E LD COMPANY NAMED M/S. SAP HOLDING & SHRINIWAS ANANTRAO PAWAR 2 LEASING PRIVATE LIMITED. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED LOAN FROM THE A BOVE SAID COMPANY, WHICH IS LIABLE TO BE ASSESSED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. ACCORDINGLY, HE ASSESSED A SUM OF ` 186.57 LAKHS AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. 3. BEFORE THE LEARNED CIT(A), THE ASSESSEE PLACED HIS RELIANCE ON THE DECISION RENDERED BY THE TRIBUNAL IN ITS OWN CASE FOR A.Y. 2007 - 08 & 2008 - 09, WHEREIN IT WAS HELD THAT CURRENT YEARS PROFIT SHOULD NOT BE INCLUDED IN ACCUMULATED PROFIT. THE ASSESSEE ALSO SUBMITTED BEFORE THE LEARNED CIT(A) THAT HE HAS BEEN ASSESSED U/S. 2(22)(E) OF THE ACT IN THE EARLIER YEARS ALSO AND ACCORDINGLY CONTENDED THAT THE AMOUNT ASSESSED AS DEEMED DIVIDEND IN THE EARLIER YEAR SHOULD BE EXCLUDED . IT WAS SUBMITTED THAT IF ABOVE SAID ITEMS WERE EXCLUDED, DEEMED DIVIDEND WILL BE NIL. IN VIEW OF THE ABOVE, THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE CONTENTION S OF THE ASSESSEE AND FOLLOW THE DECISION RENDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007 - 08 & 2008 - 09. 4. LEARNED DR SUBMITTED THAT RESERVES AND SURPLUS AVAILABLE WITH THE ASSESSEE AS ON 31.3.2010 WAS ` 1559.95 LAKHS AND HENCE ADDITION OF ` 186.57 LAKHS MADE BY THE ASSESSING OFFICER U/S.2(22)(E) OF THE ACT WAS JUSTIFIED. 5. ON THE CONTRARY, LEARNED AR SUBMITTED THAT RESERVES AND SURPLUS BALANCE AS ON 1. 4.2010 CONSISTED OF REVALUATION OF RESERVES OF ` 1076.41 LAKHS, WHICH SHOULD NOT BE INCLUDED IN ACCUMULATED PROFIT FOR THE PURPOSES OF SEC. 2(22)(E) OF THE ACT , AS REVALUATION RESERVES IS AN AMOUNT CREATED BY REV ALUI NG THE VALUE OF FIXED ASSETS AND HENCE IT IS NOT PROF IT ACCUMULATED OUT OF OPERATIVE RESULTS OF THE COMPANY. 6. THE LEARNED DR, IN THE REJOINDER, SUBMITTED THAT THE CONTENTION OF THE ASSESSEE ABOUT REVALUATION RESERVES WAS NOT EXAMINED BY THE ASSESSING OFFICER. SHRINIWAS ANANTRAO PAWAR 3 7. WE HAVE HEARD THE RIVAL CO NTENTIONS AND PERUSED THE RECORD. WE NOTICED THAT THE QUESTION AS TO WHETHER REVALUATION RESERVES WOULD FORM PART OF ACCUMULATED PROFITS OR NOT WAS NOT EXAMINED BY THE ASSESSING OFFICER. FURTHER, THE TRIBUNAL HAS HELD IN ASSESSEES OWN CASE THAT ACCUMU LATED PROFIT SHOULD NOT INCLUDE IN CURRENT YEARS PROFIT. THE ASSESSEE ALSO SUBMITTED THAT HE HAS BEEN ASSESSED U/S. 2(22)(E) OF THE ACT IN EARLIER YEARS ALSO AND IN OUR VIEW THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT SO ASSESSED SHOU LD BE REDUCED FROM ACCUMULATED PROFIT. WE NOTICED THAT THE LEARNED CIT(A) HAS ALREADY RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE CONTENTION OF THE ASSESSEE WITH REGARD TO REDUCTION OF DEEMED DIVIDEND ALREADY ASSESSED IN THE HANDS OF THE ASSESSEE AS WELL AS FOR REDUCTION OF CURRENT YEARS PROFIT. IN ADDITION TO ABOVE, IN OUR VIEW THE ASSESSING OFFICER IS ALSO REQUIRED TO EXAMINE THE CONTENTION OF THE ASSESSEE THAT ACCUMULATED PROFIT SHOULD NOT INCLUDE REVALUATION RESERVE. AS P OINTED OUT BY LEARNED DR, ABOVE SAID CONTENTION OF THE ASSESSEE WAS NOT EXAMINED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. ACCORDINGLY, WE RESTORE ALL THE ISSUES TO THE FILE OF THE ASSESSING OFFICER. 8. SINCE WE HAVE RESTORED APPEAL OF THE REVENUE TO THE FILE OF THE ASSESSING OFFICER, THE CROSS OBJECTION FILED BY THE ASSESSEE DOES NOT REQUIRE ADJUDICATION. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 26 . 9 .201 8 . SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 26 / 9 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) SHRINIWAS ANANTRAO PAWAR 4 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI