SEA BIRD SURVEYS PVT. LTD , Mumbai V. ITO 8(1)(4), Mumbai

ITA 475/MUM/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5529 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 30-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Deemed dividend; Tax effect; TDS; Set aside
• Section: 2(22)(e); 234B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri Shamim Yahya (AM) I.T.A. No. 475/Mum/2019 (Assessment Year 2013-14) Seabird Surveys Pvt. Ltd. D-205, 2 nd Floor, CBD Belapur Railway Station Belapur, Navi Mumbai 400 614. PAN : AAFCS9390B Vs. ITO-8(2)(4) Aayakar Bhavan M.K. Road Churchgate Mumbai-400 020. (Appellant) (Respondent) Assessee by Shri Jitendra Singh Department by Shri Prashant Mane Date of Hearing 20.10.2021 Date of Pronouncement 27.12.2021 O R D E R This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] dated 29.8.2018 pertaining to assessment year 2013-14. 2. The issue raised is that learned CIT(A) erred in confirming the assessment order treating inter corporate deposits as deemed dividend. 3. Brief facts of the case are that the Assessing Officer in this case invoked provisions of section 2(22)(e) of the I.T. Act and treated a sum of Rs. 9,76,515/- as deemed dividend being advance received from Marine Electronics Systems Pvt. Ltd. . 4. Upon assessee’s appeal learned CIT(A) ignored the decision of Hon'ble Jurisdictional High Court and referred the decision of Hon'ble Supreme Court wherein the issue was referred to the Larger Bench of the Supreme Court and held as under :- Seabird Surveys Pvt. Ltd. 2 “In his submission before the undersigned, the AR of the appellant has relied on the decision of special bench of the 1TAT, Mumbai in the case of ACIT Central Circle Vs. M/s. Bhaumik Color Pvt. Ltd., the judgment of Rajasthan High Court in the case of Hotel Hilltop 217 CTR 527 and the judgment of Allahabad High Court in the case of CIT Vs. Rajkumar Singh & Co., 295 ITR 9. I have considered the submission made by the appellant and the reasons recorded by the AO. In the case of Gopal & Sons (HUF) vs CIT (2017) 391 ITR l(SC) HonTDk: Supreme Court has overruled the ITAT Special Bench decision in Bhaumik Color Pvt Ltd and the Bombay HC decision in CIT vs Universal Medicare Lid 324 ITR 263. Therefore the decisions cited by the appellant are not good law any more. Following the decision of Hon'ble Supreme Court in the case of Gopal & Sons (HUF) Vs. CIT (2017) 391 ITR 1 (SC), Hon'ble ITAT, Mumbai has, vide its decision dated 21/08/2018 in the case of M/s Sunjewels International P. Ltd. in ITA No 5549 8s 5971/Mum/2014, held that deemed dividend is taxable in the hands of a company even if it is not itself a shareholder in the company giving loan but a shareholder of the company has substantial interest in both the companies. Since the appellant has received loans from Marine Electronics Systems Pvt. Ltd. amounting to Rs.9,76,515/-during the year and both the companies have common shareholders, action of the AO in taxing amount of Rs. 9,76,515/- as deemed dividend in the hands of the appellant, in view of the provisions of section 2(22)(e) of the I.T. Act, is upheld and the only ground of appeal is dismissed.” 5. Against this order in the grounds of appeal the assessee has urged as under :- On the facts and in the circumstances of the case the Hon'ble CIT (A) (CIT) has erred in passing an order upholding the contention/order of the learned Income tax Officer (A.O) for treating inter corporate deposits as deemed dividend by placing reliance on the decision of the Hon'ble Supreme Court in the case of Gopal & Sons HUF vs. CIT 391ITR without giving an opportunity to the Appellant to distinguish the same with the case laws relied upon by the Appellant and his intention to use the said case law against the Appellant and the same was never discussed during the personal hearing given by the CIT. An analysis of the judgment the decision reveals that it has no bearing in the case as both the parties involved in the case are limited companies and not HUF wherein the parties involved were the karta of HUF and the HUF. Further the advances are in the nature of trade and business and not loans as has been held in various case law decided by the judiciary. Statement of tax effect Total income filed by the Appellant 9,89,127 Tax paid by Appellant 3,05,641 Less : TDS 4,64,119 Refund Due A 1,58.478 Seabird Surveys Pvt. Ltd. 3 Income assessed by AO 19,65,640 Tax payable by Appellant after income assessed 6,07,383 Less : TDS 4,64,119 1,43,264 Add : Interest u/s. 234B 51,588 Tax payable B 1,94,852 Additional tax payable by the Appellant (difference between A-B) 3,53,330 6. Having heard both the parties and perused the records I note that learned CIT(A) has erred in placing reliance upon the aforesaid decision referred by him. In the said case Hon'ble Apex Court has referred the issue to the larger Bench of Hon'ble Supreme Court. By no stretch of imagination such reference can be said to have overruled of Hon'ble Apex Court decision and Hon'ble Bombay High Court decision which were existing. Hence, I find that the assessee company in this case is not a registered share holder of the company from whom advances have been received. Hence, the ratio from Special Bench in M/s. Bhaumik Color Pvt. Ltd.(supra) and Hon'ble Jurisdictional High Court in the case of Universal Medicare Ltd. (supra) are squarely applicable. Hence, I set aside the orders of the authorities below and decide the issue in favour of the assessee. 7. In the result, this appeal by the assessee stands allowed. Pronounced in the open court on 27.12.2021 Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : 27/12/2021 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. Seabird Surveys Pvt. Ltd. 4 BY ORDER, //True Copy// ( (( (Assistant Registrar) PS ITAT, Mumbai