ACIT, Bangalore V. Ms. Vaishnavi Tekumalla, Bangalore

ITA 448/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63849 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend

Judgement Text

PAGE 1 OF 5 ITA NO.4 48/BANG/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SMT. P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.448/BANG/2012 (ASST. YEAR 2006-07) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE- 12(1), BANGALORE. VS MS. VAISHNAVI TEKUMALLA, REPRESENTED BY GPA HOLDER SMT. SOUNDARYA RAGHU, NO.795, 12 TH B CROSS, 23 RD MAIN, J P NAGAR, 2 ND PHASE, BANGALORE-560 071. PA NO. ABPPV 3746 C (APPELLANT) (RESPONDENT) DATE OF HEARING : 04.12.2012 DATE OF PRONOUNCEMENT : 14.12.2012 APPELLANT BY : SMT. SUSAN THOMAS JOSE, JCIT RESPONDENT BY : SHRI C RAMESH, C.A. OR DER PER JASON P BOAZ : THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIR ECTED AGAINST THE ORDER OF THE CIT(A)-III, BANGALORE DATED 16.01. 2012. THE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- 2.1 THE ASSESSEE, AN INDIVIDUAL, IS DIRECTOR OF M/ S MC CREADE SOFTWARE (ASIA) PVT. LTD. DURING THE PREVIOUS YEAR RELEVANT TO THE CONCERNED ASSESSMENT YEAR, M/S MC CREADE SOFTWARE (A SIA) PVT. LTD. PAGE 2 OF 5 ITA NO.4 48/BANG/2012 2 ADVANCED A SUM OF RS.55 LAKHS TO THE ASSESSEE FOR P URCHASING A PROPERTY BELONGING TO THE ASSESSEE LOCATED AT NO.811, 23 RD MAIN, J P NAGAR, BANGALORE-560078. THE SAID TRANSACTION WAS EVIDEN CED BY A SALE AGREEMENT DATED 13/12/2005. THE ASSESSING OFFICER HAD INVOKE D THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND DETERMINED THE DEEM ED DIVIDEND OF RS. 55 LAKHS, 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE FIRST APPELLATE AUTHORITY ALLOWED THE APPEA L OF THE ASSESSEE BY FOLLOWING HIS PREDECESSORS ORDER IN ASSESSEES O WN CASE FOR THE ASSESSMENT YEAR 2007-08. THE RELEVANT FINDING OF TH E CIT(A) READ AS FOLLOWS:- ON AN IDENTICAL ISSUE FOR THE AY: 2007-08 ITA NO.150/C-12(1)/CIT(A)-III/BNG/09-10 IN THE APPELLAN TS CASE, I FIND THAT MY PREDECESSOR CIT(A) HAS FOUND T HE SAME TYPE OF TRANSACTION IN THAT YEAR TO BE A BUSINES S TRANSACTION. CONSIDERING THE FACTS AND CIRCUMSTANC ES OF THE CASE AND FOLLOWING THE RATIONALE OF THE ABOVE DECISIONS, I AM OF THE OPINION THAT THE ADVANCE OF RS.55,00,000/- MADE TO THE APPELLANT BY THE COMPANY I S FOR THE PURPOSE OF PURCHASE OF PROPERTY AND DURING T HE COURSE OF BUSINESS ACTIVITY OF THE COMPANY. CONSIDER ING THE FACTS OF THE CASE, THIS ADVANCE IS NOT HIT BY TH E PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE ADD ITION OF RS.55,00,000/- MADE TO THE INCOME AS DEEMED DIVIDEND AS PER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS ACCORDINGLY DELETED. PAGE 3 OF 5 ITA NO.4 48/BANG/2012 3 5. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS :- I) THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW A ND FACTS OF THE CASE. II) THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.55 LAKHS UNDER SECTION 2(22)(E) BY NOT CONSIDERIN G THE CIRCUMSTANCES AND DEFICIENCIES IN THE AGREEMENT PURPORTED TO BE ENTERED BY THE ASSESSEE AND THE COMPANY FOR PURCHASE OF PROPERTY FROM THE ASSESSEE WHICH PROVE THAT THE AGREEMENT IS NOT GENUINE. III) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE TRANSACTION OF SALE OF PROPERTY IS NOT YET CONSUMMAT ED AND THE AGREEMENT MADE ON UNSTAMPED PAPER WITHOUT COMPLYING WITH THE PROVISIONS OF INDIAN CONTRACT ACT / INDIAN REGISTRATION ACT AS PRODUCED BY THE ASSESSEE WAS ONLY TO CIRCUMVENT THE PROVISIONS OF SEC.2(22)(E). IV) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. V) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 6. THE LEARNED DR PRESENT WAS DULY HEARD. 7. THE LEARNED AR SUBMITTED THAT THE CIT(A)S ORDE R IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 WAS CONFIRM ED BY THE TRIBUNAL IN ITA NO.493/BANG/2011 VIDE ORDER DATED 13 TH JUNE, 2012, A COPY OF WHICH WAS PLACED ON RECORD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR PAGE 4 OF 5 ITA NO.4 48/BANG/2012 4 2007-08 ON IDENTICAL FACTS HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ADVANCE OF MONEY IS NOT HIT BY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT BUT WAS A GENUINE BUSINESS TRAN SACTION. THE RELEVANT FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 READS AS FOLLOWS:- WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE HELD 97.83% SHARES IN THE COMPANY FROM WHIC H ADVANCE OF RS.1 CRORE WAS RECEIVED BY THE ASSESSEE AGAINST THE SALE OF PROPERTY BELONGING TO HER. THE ASSESSEE FURNISHED A COPY OF AGREEMENT TO SELL BEFOR E THE ASSESSING OFFICER, WHO DID NOT ACCEPT THAT AGREEMENT AS GENUINE FOR THE REASON THAT IT WAS NOT REGISTERED AND WAS ALSO NOT ON THE STAMP PAPER, HOW EVER, NOTHING WAS BROUGHT ON RECORD TO SUBSTANTIATE THAT THERE WAS NOT AN AGREEMENT BETWEEN THE ASSESSEE AND THE COMPANY M/S MC CREADE SOFTWARE (ASIA) PVT. LTD. FOR THE SALE OF PROPERTY BELONGING TO THE ASSESSEE. WH EN THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND THE COMPANY FOR SALE OF PROPERTY BELONGING TO THE ASSESSE E, IT CANNOT BE SAID THAT THE AGREEMENT WAS NOT GENUIN E ONLY FOR THE REASON THAT IT WAS NOT REGISTERED, PARTICUL ARLY WHEN THE AO DID NOT BRING ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE SAID AGREEMENT WAS NOT A GENU INE AGREEMENT. IN THE INSTANT CASE, THE ASSESSEE RECEI VED THE ADVANCE AGAINST THE SALE OF PROPERTY LOCATED AT NO.795, 12 TH B CROSS, 23 RD MAIN, J P NAGAR 2 ND PHASE, BANGALORE AND THE AGREED PRICE FOR SALE WAS RS.1,20,00,000 AGAINST WHICH THE ASSESSEE RECEIVED AN ADVANCE OF RS. 1 CRORE. IN OUR OPINION, WHEN THE A DVANCE RECEIVED BY THE ASSESSEE FROM THE COMPANY IN WHICH SH E IS A SUBSTANTIAL SHAREHOLDER, WAS FOR A TRANSACTION RELATING TO SALE OF PROPERTY, THE DEEMING PROVISIONS OF PAGE 5 OF 5 ITA NO.4 48/BANG/2012 5 SECTION 2(22)(E) OF THE ACT WERE NOT APPLICABLE. I F THE ADVANCE WAS NOT IN THE NATURE OF LENDING MONEY, IT C ANNOT BE HELD AS DIVIDEND. IN THE PRESENT CASE, THE ASSE SSEE RECEIVED THE ADVANCE AGAINST SALE OF PROPERTY BELONG ING TO HER, THEREFORE, THE TRANSACTION COULD NOT BE BRO UGHT UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT . WE THEREFORE DO NOT SEE ANY INFIRMITY IN THE ORDER OF TH E LEARNED CIT(A) ON THIS ISSUE. ACCORDINGLY WE DO NOT SEE ANY MERIT IN THE APPEAL BY THE DEPARTMENT. 8.1 IN VIEW OF THE ABOVE ORDER OF THE COORDINATE B ENCH OF THE TRIBUNAL, WE HOLD THAT THE REVENUES GROUND ARE DEV OID OF MERITS AND IS DISMISSED ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF DECEMBER, 2012 SD/- SD/- (P MADHAVI DEVI) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNT ANT MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.