ACIT 4(2), MUMBAI V. KOGTA GLOBAL P. LTD, MUMBAI

ITA 4852/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55133 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA NAIR
• Assessee Lawyers: PRADEEP KAPASI
• Keywords: Deemed dividend
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 4852/MUM/2010 ASSESSMENT YEAR 2006-2007 ACIT 4 (2) MUMBAI 400020 VS. M/S. KOGTA GLOBAL PVT. LTD. MUMBAI 400 002 PAN AAACK4755H (APPELLANT) (RESPONDENT) FOR APPELLANT : SMT. USHA NAIR FOR RESPONDENT : SHRI PRADEEP KAPASI DATE OF HEARING : 15-09-2011 DATE OF PRONOUNCEMENT : 15-09-2011 ORDER PER D. MANMOHAN, V.P. 1. THIS APPEAL IS FILED AT THE INSTANCE OF THE REV ENUE FOR THE ASSESSMENT YEAR 2006-2007. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS AS FOLLOWS : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,57,93,320/- BEING DEEMED DIVIDEND U/S. 2 (22) (E) OF THE I.T. ACT FOLLOWING THE DECISION OF THE SPECIAL BENCH OF MUMBAI ITAT IN THE CASE OF BHAUMIK COLOURS P. LTD. (2009) 27 SOT 270 (MUM.) (SB) / 220 TTJ 865. 2. FACTS OF THE CASE ARE STATED IN BRIEF. DURING T HE PREVIOUS YEAR ASSESSEE RECEIVED LOAN FROM ITS RELATED ENTERP RISE. ASSESSING OFFICER WAS OF THE OPINION THAT TRANSACTIONS BETWEE N RELATED ENTERPRISE WOULD INVITE THE PROVISIONS OF SECTION 2 (22) (E) O F THE ACT. CASE OF THE ASSESSEE WAS THAT IN THE COURSE OF ITS BUSINESS OF IMPORT AND EXPORT OF PULSES, DAL ETC., THE GOODS ARE IMPORTED BY ONE OF THE GROUP CONCERNS AND SUCH GOODS, BASED ON THE CUSTOMER NEEDS, ARE PU RCHASED BY THE RESPECTIVE GROUP COMPANIES FROM THE IMPORTING COMPA NY. THE 2 COMPANIES HAVE MAINTAINED RECORDS IN PROOF THEREOF. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE CREDITS SHOULD BE TREATED AS LOANS AND ADVANCES COVERED UNDER SECTION 2 (22) (E) OF TH E ACT. 3. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT (A) OBSERVED THAT PROVISIONS OF SECTION 2 (22) (E) COME S INTO OPERATION IN RESPECT OF LOANS AND ADVANCES BY A COMPANY TO A CON CERN IN WHICH ITS SHAREHOLDER HAS SUBSTANTIAL INTEREST AND IF A PERSO N IS NEITHER A REGISTERED SHAREHOLDER NOR A BENEFICIAL SHAREHOLDER IN THE OTHER COMPANIES, PROVISIONS OF SECTION 2 (22) (E) CANNOT BE APPLIED IN THE LIGHT OF DECISION OF THE SPECIAL BENCH OF ITAT, MUM BAI IN THE CASE OF BHAUMIK COLOUR CHEMICALS P. LTD. (2009) 27 SOT 280 (MUM.) (SB). 4. LEARNED CIT(A) FURTHER OBSERVED THAT THE COMPAN Y IS ENGAGED IN THE BUSINESS OF MANUFACTURE/IMPORT AND E XPORT OF PULSES ALONG WITH THREE SISTER CONCERNS. PULSES IMPORTED B Y ONE OF THE GROUP CONCERNS ARE MADE AVAILABLE TO OTHER GROUP COMPANIE S ON PAYMENT OF ADVANCES AGAINST THE INTENDED PURCHASES TO THE IMPO RTING COMPANY WHICH IS ADJUSTED AGAINST THE SALE MADE SUBSEQUENTL Y AND ADVANCES ARE REFUNDED IF THE GOODS IMPORTED DID NOT MATCH TH E QUALITY ORDERED BY THE CUSTOMERS OF THE RESPECTIVE COMPANIES. HE HA S ALSO TAKEN NOTE OF THE OPINION EXPRESSED BY THE ASSESSING OFFICER I N THE REMAND REPORT TO COME TO THE CONCLUSION THAT INDEED THERE HAD BEE N PURCHASES AND SALE TRANSACTIONS ENTERED IN THE REGULAR COURSE OF BUSINESS AND THUS EVEN ON THIS ALTERNATIVE GROUND PROVISIONS OF SECTI ON 2 (22) (E) OF THE ACT DO NOT APPLY IN THE FACTS SITUATION. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. ADMI TTEDLY, THE IMPUGNED ISSUE STANDS SQUARELY COVERED BY THE DECIS ION OF THE ITAT, MUMBAI, SPECIAL BENCH IN THE CASE OF BHAUMIK COLOUR CHEMICALS P. LTD. (2009) 27 SOT 280 (MUM.) (SB). LEARNED D.R. HA S NOT BEEN ABLE TO POINT OUT ANY CONTRARY DECISION ON THE ISSUE. EV EN ON THE FINDING OF THE CIT(A) WITH REGARD TO THE ALTERNATIVE SUBMISSIO N OF THE ASSESSEE, 3 LEARNED D.R. COULD NOT PLACE ANY MATERIAL ON RECORD TO CONTRADICT THE SAID FINDINGS. 6. HAVING HEARD THE LEARNED D.R. AS WELL AS LEARNE D COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. AS PRONOUNCED IN THE OPEN COURT, THE APPEAL FILED BY T HE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-09-2011. SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE PRESIDENT DATED : 15 TH SEPTEMBER, 2011 VBP/- COPY TO 1. ACIT 4 (2), ROOM NO. 642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. 2. M/S. KOGTA GLOBAL PVT. LTD. ROOM NO. 7, 2 ND FLOOR, SHAHVIRI BUILDING, 37/41, PICKET ROAD, KALBADEVI, 35, NE W MARINE LINES, MUMBAI 400 002 PAN AAACK4755H 3. COMMISSIONER OF INCOME TAX (APPEALS)-8, MUMBAI 4. C.I.T.-4, MUMBAI 5. DR A BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI