ACIT, Bhubaneswar V. M/s Maa Bhuasuni Industires Pvt. Ltd., Bhubaneswar

ITA 432/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4490 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2010
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: MAHAVIR MANDRA
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 432/CTK/2010 / ASSESSMENT YEAR 2006 - 07 ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BHUBANESWAR. - - - VERSUS - M/S.MAA BHUASUNI INDUSTRIES PVT. LTD., STATION ROAD, BHUBA NESWAR PAN: AABCM 5898 E ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.C.MOHANTY, DR / FOR THE RESPONDENT: / SHRI MAHAVIR MANDRA, AR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE DEPARTMENT HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.22.9.2010 FOR THE ASSESSMENT YEAR 2006 - 07 IN CASE OF THE ASSESSEE, RAISING THE FOLLO WING ISSUES : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF 6,45,600 MADE BY THE AO U/S.2(22)(E) OF THE LT. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CI T(A) IS NOT JUSTIFIED IN IGNORING THE FACTS OF BENEFICIAL SHARE HOLDING IN BOTH THE CONCERNS BY ONE OF THE SHARE HOLDER/PARTNER WHICH ATTRACTS THE PROVISION OF SECTION 2(22)(E) OF THE LT. ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, L D. CIT(A) IS NOT JUSTIFIED IN DEL ETING THE ADDITION BY CITING A REASON THAT THE PERSON IN WHOSE HANDS DEEMED DIVIDEND IS ASSESSED SHOULD BE A BENEFICIAL AS WELL AS REGISTERED SHARE HOL.DER WHILE NO SUCH CONDITION IS PRESCRIBED U/S.2(22)(E) OF THE I.T. ACT, 1961. 2. BOTH PARTIES WERE HEARD REGARDING THE ISSUES AND THEIR LEGAL IMPLICATIONS. 3. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND THEY FILED RETURN FOR THE PERIOD UNDER CONSIDERATION DECLARING TOTAL I.T.A.NO. 432/CTK/2010 2 INCOME AT 3,88,143. THE CASE WAS SELECTED FOR SCRUTINY AND AFTER HEARING, THE ASSESSING OFFICER HAS PASSED ORDER U/S.143(3) DETERMINING THE INCOME TAXABLE IN THE HANDS OF THE ASSESSEE AT 10,33,740 AS AGAINST THE RETURNED INCOME OFRS.3,88,143. THE ALLEGATION MADE B Y THE ASSESSING OFFICER IS THATRS.6,45,000 REPRESENTS THE AMOUNT RECEIVED FROM M/S.PREMIER CABLES & CONDUCTORS PVT. LTD., FOR SALE OF LAND BY THE ASSESSEE. THE ASSESSING OFFICER HAS CONSIDERED UP THIS AMOUNT AS DEEMED DIVIDEND U/S.2(22)(E) OF THE INCOME - TA X ACT,1961. AGGRIEVED BY THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND IS SUCCESSFUL AND HENCE, THIS APPEAL IS FILED BY THE DEPARTMENT BEFORE THE TRIBUNAL. 4. THE LEARNED DR HAS ARGUED DURING THE COURSE OF HEARING THAT THE LEARNED CIT(A) HAS ERRO NEOUSLY PASSED THE IMPUGNED ORDER WITHOUT PROPERLY CONSIDERING THE STAND TAKEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSEES RELIANCE THAT THE AMOUNT IN DISPUTE IS RECEIVED BY IT AS CONSIDERATION FOR SALE OF LAND IS NOT ESTABLISHED AS TH E CONCERNED SALE DEED ITSELF STATES THAT THE CONSIDERATION THEREIN IS LESSER THAN THE AMOUNT THAT WAS UNDER DISPUTE. THEREFORE, IN THAT VIEW OF THE MATTER, THE STANDS TAKEN BY THE LEARNED CIT(A) THAT THE CONSIDERATION FOR SALE OF LAND BY THE ASSESSEE IS NO T AT ALL ACCEPTABLE. THEREFORE, HE SOUGHT TO ALLOW OF THE APPEAL OF THE DEPARTMENT BY SETTING ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A). 5. CONTRARY TO THIS, THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT EVEN ASSUMED BUT NOT ADMITTING THAT THE AMO UNT IN DISPUTE IS NOT THE SALE CONSIDERATION OF LAND AS CONTENDED BY THE DEPARTMENT, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS INVALID FOR THE REASON THAT BY THE DATE OF RECEIPT OF THE AMOUNT, THE ASSESSEE IS NOT A SHARE HOLDER AS ON31.3.20 05 AND 31.3.2006. THEREFORE, EVEN ON THAT SCORE ITSELF THE AMOUNT IN QUESTION CANNOT BE TREATED AS DEEMED DIVIDEND U/S.2(22)(E) OF THE I.T.ACT. THEREFORE, IN ANY VIEW OF THE MATER, THE IMPUGNED ORDER IS VALID AND REASONED ONE AND NOT SUFFERING FROM ANY INF IRMITY REQUIRING INTERFERENCE. THEREFORE, HE SOUGHT FOR DISMISSAL OF THE APPEAL OF THE REVENUE BY UPHOLDING THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A). I.T.A.NO. 432/CTK/2010 3 6. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDERS IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES, WE FIND THAT THE ASSESSEE HAS SOLD LAND TO M/S. PREMIER CABLES & CONDUCTORS PVT. LTD., FOR A SUM OF 6,33,600. THE DEPARTMENT IS NOT ABLE TO SHOW THAT ON THIS DATE THE ASSESSEE IS A SHARE HOLDER OF THE SAID COMPANY M/S. PREMIER CABLES & CONDUCTORS PV T. LTD. AS PER THE PROVISIONS CONTAINED IN SECTION 2(22)(E) OF THE I.T.ACT, THE PAYMENT WAS TO BE MADE TO A PERSON WHO IS HAVING SHARES IN THE COMPANY FROM WHICH THE PAYMENT IS RECEIVED. TO THAT EFFECT, THERE ARE DECISIONS OF THE ITAT, MUMBAI SPECIAL BENCH IN THE CASE OF ACIT V.BHAUMIK COLOUR (P) LTD (120 TTJ 865)(MUM)(SB), AS WELL AS THE DECISION OF ITAT, CUTTACK BENCH IN THE CASE OF FALCON FINANCE LTD IN ITA NO.184/CTK/2009 FOR THE ASSESSMENT YEAR 2005 - 06 DT.31.3.2010 AND IN THE CASE OF HINDUSTAN AGENCIES (ITA NO.95/CTK/2009 DT.31.3.2010). THE LEARNED CIT(A) WHILE PASSING THE IMPUGNED ORDER HAS THREADBARE EXAMINED THE ISSUES ON HAND WITH REFERENCE TO THE PROVISIONS CONTAINED IN SECTION 2(22)(E) OF THE ACT AND BY FOLLOWING THE DECISIONS OF THE SPEC IAL BENCH OF THE ITAT, MUMBAI AND THE DECISIONS OF ITAT,CUTTACK BENCH (SUPRA), HAS HELD THAT THE MONEY PAYMENT IN QUESTION DOES NOT FALL UNDER SCOPE OF SECTION 2(22)(E) OF THE ACT. PERUSAL OF THE ORDER OF THE LEARNED CIT(A) CLEARLY SHOWS THAT IT IS A VALID AND REASONED ONE AND PASSED ON THE BASIS OF THE ORDERS OF ITAT, SPECIAL BENCH AND ALSO CUTTACK BENCH IN THE CASES REFERRED TO ABOVE . THEREFORE, WE FIND THAT THE IMPUGNED ORDER IS NOT INFIRM IN ANY WAY REQUIRING INTERFERENCE AND THEREFORE, THE SAME IS HE REBY UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 4 TH APRIL, 2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DAT E: ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 432/CTK/2010 4 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BH UBANESWAR. 2 / THE RESPONDENT: M/S.MAA BHUASUNI INDUSTRIES PVT. LTD., STATION ROAD, BHUBANESWAR 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY