ITO, New Delhi V. M/s. Great Indian Tamasha Company (P) Ltd., New Delhi

ITA 4138/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3505 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-04-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 27-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKSHAT JAIN CAS
• Assessee Lawyers: BEDOBANI CHAUDHRI
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

I.T.A .NO.-4138/DEL/2016 ITO VS GREAT INDIA TAMASHA COMPANY P.LTD. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER I.T.A .NO.-4138/DEL/2016 (ASSESSMENT YEAR-2013-14) ITO, WARD-10(3), NEW DELHI. ( APPELLANT) VS GREAT INDIAN TAMASHA COMPANY P.LTD., M-118, CONNAUGHT PLACE, NEW DELHI-110001. PAN-AADCG2014J (RESPONDENT) ASSESSEE BY SMT. BEDOBANI CHAUDHRI, SR. DR REVENUE BY SH.RAJAT JAIN & SH.AKSHAT JAIN, CAS. DATE OF HEARING 03 .04.2017 DATE OF PRONOUNCEMENT 17.04 . 2017 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST TH E ORDER OF CIT(A)-4, NEW DELHI DATED 31.05.2016 FOR A.Y. 2013-14. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. 3. THE REVENUE ON GROUND NO.1 CHALLENGED THE ORDER OF LD.CIT(A) IN DELETING THE PROTECTIVE ADDITION OF RS.35,07,000/- ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T.ACT, 1961 (IN SHORT ACT). 4. THE CIT(A) NOTED THAT THE ASSESSEE COMPANY HAS R ECEIVED LOANS AND ADVANCE OF RS.35,07,000/- FROM M/S APRA AUTO (INDIA) P.LTD., D URING THE YEAR UNDER CONSIDERATION, ON WHICH THE AO HAS MADE ADDITION U/S 2(22)(E) OF THE ACT IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. HOWEVER, THE ASSESSEE COMPANY DO ES NOT HOLD ANY SHARE IN M/S APRA AUTO (INDIA) P.LTD. SH. ANUMOD SHARMA, DIRECTOR OF THE ASSESSEE COMPANY IS HAVING 50% AND ITS 86.67% SHARE HOLDING IN THE ASSESSEE CO MPANY AND M/S APRA AUTO (INDIA) P. LTD. RESPECTFULLY AS ON 31.03.2013. THE CASE OF SH. ANUMOD SHARMA WAS ALSO PAGE 2 OF 4 I.T.A .NO.-4138/DEL/2016 ITO VS GREAT INDIA TAMASHA COMPANY P.LTD. ASSESSED U/S 143(3) OF THE ACT, FOR ASSESSMENT YEAR UNDER CONSIDERATION AND NO ADDITION ON ACCOUNT OF DEEMED DIVIDEND ON THE TRANSACTION OF LOANS AND ADVANCE GIVEN BY M/S APRA AUTO (INDIA) P.LTD. TO THE ASSESSEE COMPANY HA S BEEN MADE ON SUBSTANTIVE BASIS, ALTHOUGH SH. ANUMODH SHARMA IS A REGISTERED/ BENEFI CIAL SHAREHOLDER IN BOTH THE COMPANIES. THE AO ALLEGED THAT SINCE THE TRANSACTI ON OF THE ASSESSEE COMPANY WITH THE GROUP COMPANY IS CLEARLY HIT BY PROVISIONS OF SECTI ON 2(22)(E) OF THE ACT, THEREFORE, THE ADDITION WAS MADE. 5. THE ASSESSEE CONTENDED THAT THE ADDITION U/S 2(2 2)(E) ON ACCOUNT OF DEEMED DIVIDEND COULD BE TAXED IN THE HANDS OF THE SHAREHO LDER ONLY. THEREFORE, THE PROVISIONS OF SECTIONS 2(22)(E) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS ASSESSEE IS NOT REGISTERED/ BENEFICIAL SHAREHOLDERS OF M/S APRA AUT O (INDIA) P. LTD. THE SAME ISSUE HAS BEEN CONSIDERED IN THE CASE OF SH. ANUMOD SHARMA IN WHICH SH. ANUMOD SHARMA REPLIED THAT HE HAS GIVEN LOAN OF RS.6.70 CRORES TO M/S APRA AUTO (INDIA) P. LTD. HAVING CLOSING BALANCE OF RS.1.36 CRORES AS ON 31.03.2013, THEREFORE, NO ADDITION OF RS.35,07,000/- SHOULD BE MADE ON ACCOUNT OF LOAN GI VEN BY M/S APRA AUTO (INDIA) P. LTD. OUT OF THE LOAN RECEIVED FROM SH. ANUMOD SHARMA U/S 2(22)(E) OF THE ACT. IT WAS ALSO SUBMITTED THAT NO SUBSTANTIVE ADDITION HAS BEEN MAD E IN THE HANDS OF SH. ANUMOD SHARMA. THE COPY OF ORDER U/S 143(3) FOR ASSESSMEN T YEAR 2013-14 WAS FILED BEFORE CIT(A). THE CIT(A) ACCEPTED THAT SINCE ASSESSEE IS NOT REGISTERED/BENEFICIAL SHAREHOLDER IN M/S APRA AUTO (INDIA) P. LTD., THE ADDITION ON A CCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) CANNOT SUSTAINED. IT WAS ALSO NOTED THAT NO SUBSTA NTIVE ADDITION HAS BEEN MADE IN THE HANDS OF SH. ANUMOD SHARMA WHO IS REGISTERED/BENEFI CIAL SHAREHOLDER, THEREFORE, NO PROTECTIVE ADDITION COULD BE MADE IN THE HANDS OF T HE ASSESSEE. THE ADDITION WAS DELETED AND THE APPEAL OF THE ASSESSEE WAS ALLOWED. PAGE 3 OF 4 I.T.A .NO.-4138/DEL/2016 ITO VS GREAT INDIA TAMASHA COMPANY P.LTD. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO NO T FIND ANY MERIT IN THIS GROUND OF THE APPEAL OF THE REVENUE. IT IS ADMITTED FACT THAT TH E ASSESSEE IS NOT A REGISTERED/BENEFICIAL SHAREHOLDER IN M/S APRA AUTO (INDIA) P. LTD., THERE FORE, NO ADDITION U/S 2(22)(E) CAN BE MADE IN THE HANDS OF THE ASSESSEE. THE TRANSACTION WAS CONDUCTED BY SH. ANUMOD SHARMA WHO HAD ADVANCED LOAN TO M/S APRA AUTO (INDI A) P. LTD. IN HIS CASE, NO SUBSTANTIVE ADDITION IS MADE IN ASSESSMENT ORDER FO R A.Y. 2013-14 U/S 143(3) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE OR DER OF DIVISION BENCH, ITAT DELHI BENCH IN THE CASE OF DCIT VS YASH PAL NARENDER KUMAR DATED 07.02.2013 IN ITA NO.5340/DEL/2012 AND OTHERS . ETC. IN WHICH IT WAS HELD THAT IT IS WELL-SETTLED POSITION OF LAW THAT WHEN SUBSTANTIVE ADDITION HAS BEEN DELETED BY THE COMPETENT STATUTORY AUTHORITY, THEN THE PROTECTIVE ADDITION MADE THEREU NDER AND RELATED TO THE SUBSTANTIVE ADDITION CANNOT SURVIVE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMST ANCES OF THE CASE, I AM OF THE VIEW THAT THE LD. CIT(A) CORRECTL Y DELETED THE ADDITION. NO INFERENCE IS CALLED FORTH, GROUND NO. 1 OF THE APPEAL OF THE REV ENUE IS DISMISSED. 7. ON GROUND NO.2, THE REVENUE CHALLENGED THE DELET ION OF ADDITION OF RS.64,468/- ON ACCOUNT OF DISALLOWANCE OF LOSS. THE AO NOTED T HAT SINCE BUSINESS ACTIVITY OF THE ASSESSEE COMPANY HAS NOT COMMENCE DURING THE YEAR, LOSS OF RS.64,468/- WAS DISALLOWED. THE ASSESSEE PLEADED BEFORE LD.CIT(A) THAT IT IS INCORPORATED DURING THE F.Y. 2007-08 AND WAS ENGAGED IN BUSINESS OF RUNNING PLAYS, MUSICAL SHOWS AND OTHER ENTERTAINMENT PROGRAMMES FOR WHICH IT HAS PURCHASED A PIECE OF LAND IN KODAGU DISTRICT, KARNATKA IN OCTOBER 2009 AND CONSTRUCTING A THEATRE . IT WAS SUBMITTED THAT EXPENSES WERE INCURRED FOR STATUTORY OBLIGATIONS FOR AUDIT AND OTHER AMORTIZATION OF PRELIMINARY EXPENSES. THE LD.CIT(A) NOTED THAT THESE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS ON GOING CO NCERN BASIS SINCE THE INCORPORATION, LOSS WAS ACCORDINGLY ALLOWED. PAGE 4 OF 4 I.T.A .NO.-4138/DEL/2016 ITO VS GREAT INDIA TAMASHA COMPANY P.LTD. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO NO T FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE FINDING OF FACT IS RECO RDED BY THE LD.CIT(A) AND THE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN REBUTTED BY THE DEPARTMENT THROUGH ANY EVIDENCE OR MATERIAL ON RECORD, THEREFORE, NO INFIR MITY IS POINTED OUT IN THE ORDER OF THE LD.CIT(A). NO INFERENCE IS CALLED FOR ON THIS GROU ND THEREFORE IT STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL 2017. SD/- (BHAVNESH SAINI ) JUDIC IAL MEMBER DATE:-17.04.2017 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASS ISTANT REGISTRAR ITAT NEW DELHI