ITO 8(3)(3), MUMBAI V. TRIDENT TRAVELS & TOURS P. LTD, MUMBAI

ITA 4550/MUM/2010

• Counselvise Citation: 455019914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: S C AGRAWAL
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 4550/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 8(3)(3) M/S. TRIDENT TRAVELS & TOURS P. LTD. ROOM NO. 202, 2ND FLOOR 3, RADHA APARTMENTS, TELLI GULI AAYAKAR BHAVAN VS. ANDHERI (E), MUMBAI 400069 MUMBAI 400020 PAN - AAACT 1809 P APPELLANT RESPONDENT APPELLANT BY: SHRI T.T. JACOB RESPONDENT BY: SHRI S.C. AGRAWAL O R D E R PER B. RAM AKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XVIII, MUMBAI DATED 05.04.2008 DELETING THE ADDITION OF ` 11,41,131/- IN THE HANDS OF THE ASSESSEE BEING DEEMED DIVIDEND UNDER S ECTION 2(22)(E). 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE RECEIVE D UNSECURED LOAN OF ` 11,41.131/- FROM ITS SISTER CONCERN, M/S. TRIDENT E XPRESS P. LTD. WHICH HAD ACCUMULATED PROFITS OF ` 44,06,907/-. THEREFORE THE A.O. TREATED THE LOAN GIVEN BY TRIDENT EXPRESS P. LTD. TO THE ASSESSEE AS DEEMED DIVIDEND UNDER SECTION 2(22)(E). THE LEARNED CIT(A) CONSIDERED THE EXPLANATION OF THE ASSESSEE AND THE FACT THAT ASSESSEE IS NOT A SHAREH OLDER IN THE COMPANY DELETED THE ADDITION. IN DOING SO THE CIT(A) RELIED ON THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF ACIT VS. BHAUMIK COLOU RS PVT. LTD. 317 ITR (AT) 146. THE CIT(A) ALSO CONSIDERED THAT SECTION 2(22)( E) APPLIES TO CERTAIN PAYMENTS AS DEEMED DIVIDENDS BUT IT DOES NOT DEEM A NON-SHAREHOLDER. FOR THESE REASONS, THE CIT(A) DELETED THE ADDITION MADE BY THE A.O. REVENUE HAS COME IN APPEAL. 3. WE HAVE CONSIDERED THE ISSUE AND THE RIVAL ARGUM ENTS. IT IS A FACT THAT ASSESSEE IS NOT A SHAREHOLDER IN THE TRIDENT EXPRES S P. LTD. THEREFORE AS RIGHTLY HELD BY THE HON'BLE ITAT SPECIAL BENCH IN THE CASE OF ACIT VS. BHAUMIK COLOURS PVT. LTD. 317 ITR (AT) 146, PROVISI ONS OF SECTION 2(22)(E) ITA NO. 4550/MUM/2010 M/S. TRIDENT TRAVELS & TOURS P. LTD. 2 CANNOT BE INVOKED IN THE HANDS OF NON-SHAREHOLDERS. THE SAME PRINCIPLE WAS ALSO UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. UNIVERSAL MEDICARE PVT. LTD. 324 ITR 263 (BOM) WHEREIN IT WAS HELD THAT PROVISIONS OF SECTION 2(22)(E) CAN BE INVOKED ONLY IN THE HANDS OF THE SHAREHOLDER. THEREFORE THERE IS NO MERIT IN REVENUE GROUNDS. 3. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15 TH JULY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVIII, MUMBAI 4. THE CIT VIII, MUMBAI CITY 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.