ITO 9 (1) (1), MUMBAI V. MANOJ UPADHYAY, MUMBAI

ITA 5172/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7143 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 16-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHJRI PRAKASH JHUNJHUNWALA
• Assessee Lawyers: M C OMI NINGSHEN
• Keywords: Gift; Share purchase agreement; Deemed dividend; Assessment record
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 5172 / MUM/20 16 ( ASSESSMENT YEAR : 2010 - 11 ) INCOME TAX OFFICER - 9(1)(1) MUMBAI VS. MR. MANOJ UPADHYAY C/O. ACCU DAT TRANSCRIPTION SERVICES PVT. LTD., 2 ND FLOOR, LINKAGE HOUSE, 6 MAROL CO - OP INDUSTRIAL ESTATE, MAROL, ANDHERI (E) MUMBAI 400 059 PAN/GIR NO. AAUPU4335L APPELLANT ) .. RESPONDENT ) CO NO. 18/ MUM/20 17 ( ASSESSMENT YEAR : 2010 - 11 ) MR. MANOJ UPADHYAY C/O. ACCU DAT TRANSCRIPTION SERVICES PVT. LTD., 2 ND FLOOR, LINKAGE HOUSE, 6 MAROL CO - OP INDUSTRIAL ESTATE, MAROL, ANDHERI (E) MUMBAI 400 059 VS. INCOME TAX OFFICER - 9(1)(1) MUMBAI PAN/GIR NO. AAUPU4335L APPELLANT ) .. RESPONDEN T ) ASSESSEE BY SHRI M.C. OMI NINGSHEN REVENUE BY SHJRI PRAKASH JHUNJHUNWALA & SHRI VISHNU AGARWAL DATE OF HEARING 19/04 /201 8 DATE OF PRONOUNCEME NT 31 / 05 /201 8 / O R D E R PER R.C.SHARMA (A.M) : ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 2 THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.SECTION 147 OF THE IT ACT. 2. FOLLOWING GROUND S HAVE BEEN TAKEN BY THE REVENUE: - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S.2(22)(E) WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HELD 50% OF THE SHARES IN ACCU DAT TRANSCRIPT ION SERVICES LTD AND WAS BOTH A REGISTERED AND A BENEFICIAL SHAREHOLDER AS DISCLOSED BY THE ASSESSEE IN THE RETURN FILED BEFORE ROC AND BEFORE INCOME TAX IN WHICH THE ASSESSEE DISCLOSED THAT IT HELD 50% OF THE SHARES FROM A.YR. 2007 - 08 ONWARDS.' 2. 'WHET HER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN APPRECIATING THE FACT THAT THE GIFT DEED MADE BY THE ASSESSEE TO TRANSFER 4200 SHARES TO HIS WIFE ON 25.05.2007 WAS A SHAM SINCE THE GIFT DEED WAS NOT REGISTERED AND WAS MADE ON LY TO REDUCE THE SHAREHOLDING OF THE ASSESSEE IN ACCU DAT TRANSCRIPTION SERVICES LTD TO LESS THAN 10% WHEREAS ON THE OTHER HAND, THE ASSESSEE AS THE PRINCIPAL OFFICER OF THE COMPANY HAD FILED RETURNS BEFORE ROC AND INCOME TAX DISCLOSING THE SHAREHOLDING AS 50%. 3. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT BOTH THE DIRECTORS OF THE ASSESSEE COMPANY VIZ. MANOJ UPADHYAY AND POOJA SHARMA HAVE GIFTED THEIR SHAREHOLDING IN ACCU DAT TRANSCRIPTION S ERVICES LTD THROUGH GIFT DEED ON STAMP PAPERS BOUGHT ON 22.05.2007 WHICH HAVE BEEN PROCURED IN THE NAME OF MR.V.P. SINGH, ADVOCATE WHO IS NEITHER A DONOR NOR A DONEE THEREBY LEADING TO A CONCLUSION THAT THE SAME WAS AN AFTERTHOUGHT TO ESCAPE PAYMENT OF LEG ITIMATE TAXES.' 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS A DIRECTOR IN ACCU DAT TRANSCRIPTION SERVICES PVT. LTD., DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS RECEIVED A LOAN OF RS.38,19,274/ - ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 3 FROM THIS COMPANY. THE RETURN OF INCOME WAS E - FILED ON 23.07.2010 DECLARING TOTAL INCOME AT RS.4,74,160/ - . THE CASE WAS DULY PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961. THEREAFTER AO FOUND THAT THE ASSESSEE HAD RECEIVED A LOAN OF RS. 34,15,774/ - FRO M ACCU D AT TRANSCRIPTION SE R VICES PVT. LTD. IN WHICH THE ASSESSEE IS ONE OF THE SHAREHOLDER HOLDING 50% SHAREHOLDING. THEREAFTER THE CASE WAS REOPENED BY ISSUING NOTICE U/S. 148 OF THE I.T. ACT, 1961 AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S.147 OF THE IT ACT, 1961 DATED 30/11/2015, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.42,93,430/ - BY MAKING AN ADDITION OF RS.38,19,274/ - ON ACCOUNT OF DEEMED DIVIDEND. 5. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBS ERVATION: - 4. I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER OF THE AO AND THE SUBMISSIONS MADE BY THE AR IN SUPPORT OF HIS ARGUMENTS. AFTER TAKING INTO CONSIDERATION, THE AOS FINDINGS AND THE APPELLANTS ORAL AND WRITTEN SUBMISSIONS MADE DURING THE COUR SE OF HEARING AS WELL AS FACTS OF THE CASE, DECISION ON VARIOUS GROUNDS ARE ADJUDICATED AS UNDER: 4.1. GROUND NO. 1 4.1.1 VIDE THIS GROUND THE APPELLANT HAS AGITATED AGAINST TREATING THE DEEMED DIVIDEND INCOME OF RS.38,19,274/ - U/S.2(22)(E) OF THE AC T. IN PARA 5.1 OF THE ASSESSMENT ORDER THE ID. A.O. MENTIONED THAT THE ASSESSEE, SHRI MANOJ UPADHYAY WAS THE DIRECTOR OF THE SAID COMPANY WHO WAS ALSO THE BENEFICIAL OWNER HAVING 50% SHARE - HOLDING IN THE AFORESAID COMPANY. FROM PERUSAL OF THE LEDGER A/C., THE ID.A.O. OBSERVED THAT THE 'APPELLANT WAS IN RECEIPT OF CERTAIN SUMS BY WAY OF LOAN FROM M/S.ACCU - DAT TRANSCRIPTION SERVICES PVT. LTD IN WHICH APPELLANT WAS DIRECTOR AND HAVING 50% SHAREHOLDING. THEREFORE, A.O. INVOKED THE PROVISION OF SECTION 2(22)(E) AND MADE AN ADDITION OF RS.38,19,274/ - AS DEEMED DIVIDEND. SAME ISSUE HAD COME UP IN APPELLANT'S OWN CASE FOR A.Y.2009 - 10 WHEREIN MY PREDECESSOR HAD DECIDED THE CASE OF THE APPELLANT ON THE GROUND INVOLVED VIDE ORDER NO CIT (AJ - 16/ITO - 8(L)(L)/IT - 13/2013 - 1 4 DATED 20.03.2015 AS UNDER: 'I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, DOCUMENTS PRODUCED BEFORE ME AND ARGUMENT - ADVANCED BY LD. AR. IT IS AN UNDISPUTED FACT THAT TLIE APPELLANT IS ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 4 A REGISTERED SHARE HOLDER ON HOLDING 5000 EQUITY SHIRES (5 0% SHAR EHOLDING) OF M/5. ACCU - DAT TRANSCRIPTION SERVICES PVT. LTD. HOWEVER, IN ORDER TO ATTRACT THE DEEMING PROVISION OF SEC,2(22)(E), THE RECIPIENT OF THE MONEY SHOULD BE A REGISTERED SHAREHOLDER AS WELL AS A BENEFICIAL SHAREHOLDER OF THE LENDER COMPANY. TIN: H ON'BLE MUMBAI 1TAT SPECIAL BENCH IN THE CASE OF ACIT VS. B H AUMIK COLOUR PVT LTD REPORTED IN 27 SOT 270 (MUM)(SB) HAD DECIDED THAT 'WHETHER EXPRESSION 'SHAREHOLDER' REFERRED TO IN SECTION 2(22)(E) REFERS TO BOTH A REGISTERED SHAREHOLDER AND BENEFICIAL SHAR EHOLDER AND, THUS, IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT BENEFICIAL SHAREHOLDER TH EN PROVISIONS OF SECTION 2(22)(E) WOULD NOT APPLY AND SIMILARLY IF A PERSON IS A BENEFICIAL S H AREHOLDER BUT NOT A REGISTERED SHARE HOLDER THEN ALSO PROVISIONS OF SE CTION 2(22)(E) WOULD NOT APPLY.' ALSO IN THE CASE OF DCIT VS. ATUL ENGINEERING UDYOG REPORTED IN 342 TTJ (AGRA) 209 AND IN THE CASE OF MAKHIJA CONSTRUCTION COMPANY VS. AC1T REPORTED IN (2012) 9 SOT 27(INDORE), HON'BLE ITAT'S HAD DECIDED THAT SEC.2(22)(E) SHALL APPLY ONLY IF THE PERSON IS A REGISTERED SHAREHOLDER AND A BENEFICIAL SHAREHOLDER OF THE LENDER COMP ANY . A CCORDINGLY, IF A PERSON IS A REGI STERED SHAREHOLDER BUT IS NOT TH E BEN EFICIAL SHARE HOLDER OF THE LENDER COMPANY, TH EN PROVISION OF SEC.2(22)(E ) WOULD NOT APPLY. IN IMPUGNED CASE, T H E APPELLANT IS CERTAINLY A REGISTERED SHARE - HOLDER OF 5000 SHARES ON HOL DING 50% OF EQUITY SHARES OF M/S. ACCUDAT TRANSCRIPTION SERVICES PVT. LTD U NDER COMPANY, BUT IS A REGISTERED AND BENEFICIAL SHARE HOLDER 8% OF SH A RE - HOLDING) SINCE 4200 SHARES ARE BENEFICIALLY HE LD BY HIS WIFE SMT. EKTA M. UPADHYAY. ON PERUSAL OF THE GIFT DEED DATED 25/05/2007 NOTORISED BY SHRI V. SHINDE ON SAME DAY, TRANSFER D EED AND SHARE CERTIFICATES, IT IS OBSERVED THAT T HE APPELLANT HAD GIFT ED 4200 SHARES O F M/S. ACCUDAT TRANSCRIPTION SER VICES LTD TO HIS WIFE SMT EKTA M. UPADHYAY. THE BALANCE - SH EET OF SMT EKTA M L UPAD YAY AS ON 31/03/2008 RECOGNISES T HE RECEIPT OF GIFT FROM TH E APPELLANT OF 4200 SHARES OF M/S. ACCU - DAT TRANSCRIPTION SER VICES LTD AND SUCH 4200 SHARES H AD ALSO BEEN DISCLOSED AS 'INVESTMENT' IN THE BALANCE SHEET AS ON 31/03/2008 AND 31/03/2009 OF SMT EKTA M. UPADHYAY (WIFE). THE AO IS NOT JUSTIFIED IN IGNORING THE DOCUMENTARY EVIDENCES SUCH AS GIFT DEED, TRANSFER DEED, BALANCE S HEET, ETC WHICH JUSTIFIES THAT THE APPELLANT HAD GIFTED 4200 SHARES TO HIS WIFE SMT EKTA M. UPADHYAY. THE AO HAD NOT CARRIED ANY ENQUIRY FROM THE DONE E SMT EKTA M. UPADHY AY AND IS N OT CORRECT IN BRUSHING ASIDE TH E DOCUMENTARY EVIDENCES JUSTIFYING THE GENUI NENESS OF THE GIFT FILED ON ASSESSMENT RECORD. THE AO LAID MUCH EMPHASIS ON THE SHARE - HOLDING PATTERN DISCLOSED M/S. / ACCUDAT TRANSCRIPTION SERVICES PVT. LTD IN ITS I .T RETURN AND ROC RETURN WHICH ONLY DISCLOSES THE PARTICULARS OF THE REGISTERED SHARE - HOL DER S AND NOT OF THE BENEFICIAL SHAR E - HOLDERS. T H E APPELLANT, IN STATEMENT U/S 131, SPECIFIED TH AT THE APPELLANT IS A REGISTERED SHAREHOLDER ON HOLDING 50% SHARES OF M/S, ACCU - DAT TRANSCRIPTION SERVICES LTD, HOWEVER, HE DOES NOT SPECIFY ABOUT THE PARTICULA RS OF THE BENEFICIAL SHARE - HOLDERS. T H E AO HAD NOT LOOKED INTO THE ASPECT THAT THE APPELLANT IS NOT THE BENEFICIAL SHAREHOLDER OF 4200 EQUITY SHARES (42 %) M/S. ACCU DAT TRANSCRIPTION SERVICES PVT. LTD WHICH IS HELD BY SMT EKTA UPADHYAY. ACCORDINGLY, IT N EEDS TO FA ACCEPTED THAT THE APPELLANT IS A REGISTERED AMT . BENEFICIAL SHA R EH O LDER OF ONLY 800 SHARES WHICH IS 8% OF THE SHARE - HOLDING OF M/S. ACCUDAT TRANSCRIPTION SERVICES LTD AND SUCH BEING LOWER W% OF ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 5 PRESCRIBED LIMITS, ACCORD I NG L Y THE ADDITION U/S.2(2 2)(E) MADE IN HANDS OF THE APPELLANT CANNOT BE SUSTAINED. ACCORDINGLY, I HOLD THAT THE APPELLANT IS NOT THE BENEFICIAL SHAREHOLDER HOLDING MORE THAN 10% EQUITY SHARES OF M/S. ACCUDAT TRANSCRIPTION SERVICES LTD AND RESP ECTF ULLY FOLLOWING THE JUDICIAL DECIS IONS CITED SUPRA , THE ADDITION U/S.2(22)(E) OF RS . 5 6,65,072/ - IS HEREBY DELETED. 3. THERE IS ALSO A FORCE IN ALTERNATE ARGUMENT ADVANCED BY LD. AR THAT TH E ADDITION U/S.2(22)(E) COULD BE MADE ONLY IN RESPECT OF THE MONEY OF LOAN AND/OR ADVANCE RECEIVED DURING TH E YEAR. ON PERUSAL OF THE LEDGER ACCOUNT OF THE APPELLANT IN BOOKS OF M/S. ACCUDAT TRANSCRIPTION SERVICES LTD (PG.7 OF PB) AND BALANCE SHEET OF TH E SAID COMPANY (PG - 26 OF PB), IT IS ABSENTED THAT TH E OPENING BALANCE AS ON 01/04/2008 U DISCLOSED OF R S. 34,79,435/ - AND CLOSING BALANCE AS ON 31/03/2009 IS DISCLOSED OF RT.56,65,072/ - AND THE PAYMENT MADE BY TH E SAID COMPANY TO THE APPELLANT DURING THE YEAR IS OF RS.21,85,637/ - . T H E JUDICIAL DECISION RELIED BY LD AR IN THE CASE OF M/S. ITL FABRICS PVT L TD VS. ACIT [3 3 TAXMANN.COM 385], HON'BLE MUMBAI ITAT DECIDED THAT 'WE HOLD THAT SECTION 2(22)(E) HAS TO BE APPLIED TO ONLY TO LOAN/ADVANCES RECEIVED DURING THE YEAR'. ACCORDINGLY, I HOLD THAT THE ADDITION U/S.2(22)(E) COULD BE RESTRICTED ONLY TO THE EXTEN T OF RS.21,85,637/ - BEING THE AMOUNT OF THE LOAN/ADVANCE RECEIVED BY TH E APPELLANT DURING THE YEAR. 3.1. LEARNED AR HAD FURTHER ARGUED THAT T H E ADDITION U/S.2(22)(E) COULD BE MADE ONLY EXTENT OF TH E 'ACCUMULATED PROFITS' OF M/S. ACCU - DAT TRANSCRIPTION S PVT. LTD AND SUCH ACCUMULATED PROFITS SHALL EXCLUDE THE CURRENT YEAR'S . IN THIS CONTEXT LD. AR RELIED ON JUDICIAL DECISIONS AS UNDER : - I) ITL FABRI CS PVT LTD VS. A CIT (2012) 1 9 I TR (TRIB) 499 (MUMBAI) II) SUNIL P. M ANTRI VS. ACIT ITA NO. 5 40 2/M/2011 &5407/M/2011 III) P. SATY A PRASAD VS. I TO 31 TAXMANN.COM 267 (ITAT - VISAKHAPATNAM) IV) M.B. STOCK HOLDING PVT LTD VS. ACIT 84ITD - 342 (ITAT - AHD) V) CLT VS. P.K. BADIANI 76ITR 369 (HC - BOM) VI) CIT VS. V. DAMODARAN 121 ITRR 522 (SC) 3,2 ON PERUSAL OF THE ABOVE STATED JUDICIAL PRONOUNCEMENTS, IT IS OBSERVED THAT IT IS A SETTLED LAW TH AT THE ACCUMULATED PROFITS OF TH E COMPANY SHALL NOT INCLUDE THE CURRENT YEAR'S PROFIT SINCE THE PROFIT OF THE CURRENT YEAR ACCRUES AT END OF THE YEAR. ON PER USAL OF THE AUDITED BALANCE SHEET OF LENDER COMPANY M/S. ACCUDAT TRANSCRIPTION SERVICES LTD, THE ACCUMULATED PROFITS IS DISCLOSED AS UNDER : - OPENING BALANCE OF? & L A/C AS ON 01/04/2008 : RS.30,12,374/ - ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 6 ADD: CURRENT YEAR'S PROFIT : RS.78,89,750/ - CLOSING BALANCE AS ON 31/03/2009 : RS.1,09,02,124/ - 3.3 ACCORDINGLY, .I ALSO HOLD THE AGGREGATED ADDITION U/S.2(22)(E) IN HANDS OF THE SHAREHOLDERS MR. MANOJ UPADHYAY (APPELLANT) AND MRS.POOJA SHARMA COULD BE MADE ONLY TO T HE EXTENT OF TH E OPENING ACCUMULATED PROFITS AS ON 1/4/2008 OF RS.30,12,374/ - . 3.4 AS IN THE PRECEDI NG PARAGRAPHS, IT IS FIELD THAT THE APPELLANT IS NOT THE REGISTERED AND BENEFICIAL SH AREHOLDER ON HOLDING MORE THAN 10% EQUITY SHARE S OF M/S. ACCUDAT TRANSCRIPTION SERVI CES LTD, THE ADDITION MADE IN ASSESSMENT U/S.2(22)(E) OF R S. 56,65,072/ - IS HEREBY DELETED. ACCORDINGLY, GROUND NO. 1 IS HEREBY ALLOWED. ' 4.1.2 THE SAME ISSUE HAS ALSO BEEN DECIDED IN THE CASE OF APPEL LANT'S OWN CASE FOR THE A. Y.2012 - 13 IN WHICH ADDITION OF RS. 16,29,439/ - MADE BY AO IS DELETED. 4.1.3. IN THE INSTANT CA S E, THE FACTS ARE PERIMATERIA WITH A.Y.2009 - 10 AND A.Y. 2012 - 13 WHICH HAD BEEN DECID ED BY MY PREDECESSOR AND ME. SINCE THERE IS NO FAC TUAL CHANGE, THEREFORE, FOLLOWING THE DECISION AS HELD BY MY PREDECESSOR IN EARLIER YEAR, THE ADDITION OF RS. 38, 19,274 / - MADE BY THE A.O. IS DELETED AND THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 5. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS I N FURTHER APPEAL BEFORE US AND ASSESSEE HAS FILED CROSS OBJECTION WHEREIN ASSESSEE HAS ALLEGED THAT CIT(A) HAS FAILED TO APPRECIATE THAT GENUINENESS OF GIFT OF SHARES GIVEN BY THE ASSE SSEE TO HIS WIFE DURING THE A.Y . 2008 - 09 CANNOT BE DISPUTED IN THE IMPUG NED YEAR THEREBY ASSESSEE IS NOT THE BENEFICIAL SHAREHOLDERS EXCEEDING 10% OF LENDER COMPANY. 6. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM THE RECORD, WE FOUND THAT ALLEGED LOAN OF RS.38,19,724/ - RECEIVED BY ASSESSEE FROM M/S. ACCUDAT TR ANSCRIPTION SERVICES LTD WAS TREATED BY THE AO AS DEEMED DIVIDEND U/S.2 ( 22 ) ( E ) . T HE PROVISION OF SEC 2 ( 22)(E) APPLIES ONLY TO A CASE WHERE THE RECIPIENT OF THE MON EY IS A REGISTERED AND BENEFICIAL SHARE H OLDER OF LENDER - COMPANY. IN IMPUGNED CASE THOUG H ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 7 THE ASSESSEE IS A REGISTERED SHAREHOLDER OF 5000 SHARE S (50%) BUT IS BENEFICIAL SHAREHOLDER OF ONLY 800 SHARES (8%) AND 4200 SHARES (42%) IS BENEFICIALLY OWNED BY HIS WIFE MRS. EKT A M. UPADHYAY. AS THE ASSESSEE IS NOT A BENEFICIAL SHAREHOLDER OF M/S AC CU D AT TR ANSCRIPTION S ERVICE S PVT LTD OF MORE THAN 10% OF VOTING POWER, ACCORD INGLY AO IS N OT JUSTIFIED IN MAKING THE ADDITION U/S .2(22)(E) OF THE ACT . THE ASSESSEE IS NOT A BENEFICIAL SHARE - HOLDER HOLDING MORE THAN 10% OF THE VOTING POWER OF THE LENDER CO MPANY, ACCORDINGLY THE PROVISION OF SEC.2(22)(E) SHALL NO T APPLY. FROM THE RECORD WE FOUND THAT T HE ASSESSEE , TILL 25/5/2007, WAS HOLDING 5000 EQUITY SHARES (50% OF TOTAL SHARE - HOLDING) OF M/S. ACCU DAT TRANSCRI PTION SERVICES PVT LTD, HOWEVER , THE ASSESSE E ON 25/05/2007 GIFTED 4200 EQUITY SHARES (42% OF SHAREHOLD ING) OF SUCH COM PANY TO HIS WIFE SMT EK TA M. UPADHYAY AS A RESULT OF WHICH , THE SH A RE - HOLDING OF THE ASSESSEE WAS REDUCED TO 8% OF THE TOTAL SHARE HOLDING T H ERE IS NO CHANGE IN SHARE - HOLDING PATTE RN OF THE COMPAN Y SINCE A.Y 2008 - 09 AS THE PAID - UP SHARE CAPITAL IS IDENTICAL A T RS.1,00,000/ - . 7. WE ALSO FOUND THAT IN SUPPORT OF THE GENUINENESS OF GIFT OF SHARES GIVEN BY THE ASSESSEE DURING A.Y.2008 - 09 TO HIS WIFE, THE UNDERSTAND DOCUMENTS WERE FILED BEFORE LOWER AUTHORITIES A) GIFT FAD (NOTARISED) DATED 22/05/2007; B) TRANSFER DEED DATED 01/12/2007 WHEREIN THE NAME OF THE TRANSFEREE WIFE IS DISCLOSED OF SMT EKTA M.UPADHYAY; C) SHARE CERTIFICATES ANNEXED WITH TRANSFER DEED; D) BALANCE SHEET OF MRS. EKTA M. UPADHYAY AS ON 31.03.2008 AND 31.03.2009 DISCLOSING THE SHARE INVESTMENTS IN M/S. ACCU DAT TRANSCRIPTION SEWICES PVT, LTD. OF RS.42,000/ - (4200 SHA RES). SINCE THEN THERE IS NO CH ANGE IN HER SHARE INVESTMENTS; ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 8 8. THE ASSESSEE FILED THE COPIES TH E GIFT DEED, TRAN SFER DEED AND SHARE CERTIFICATE EVIDENCING THE GIFT OF 4,200 SHARES GIFTED BY ASSESSEE TO HIS WIFE MRS. EKTA M.UPADHY AY, IN ASSESSMENT ORDER, .AO DID NOT DISPUTE THE FACT T HAT ASSESSEE WAS ONLY A REGISTERED SHAREHOLDER AND WAS NOT A BENEFICI AL SHAREHOLDER OF 4200 EQUITY SHARES OF LENDER COMPANY, THUS ADDITION U/S. .2(22)(E) IS UNJUSTIFIED . SINCE ASSESSEE IS ONLY THE REGISTERED SHAREHOLDER AND NOT THE BENEFICIARY SHARE HOLDER OF MORE THAN 10% OF VOTING POWER, U/S .2(22)(E) OF THE ACT IS NOT APPL ICABLE IN VIEW OF THE DECISION OF THE ITAT SPECIAL BENCH IN CASE OF BHAUMIK COLOUR PVT LTD REPORTED IN 27 SOT 270 . THE DECISION OF THE SPECIAL BENCH HAS BEEN CONFIRMED BY BOMBAY HIGH COURT IN THE CASE OF CIT VS. IMPACT CONTAINERS PVT. LTD., 367 ITR 346. 9 . WITH RESPECT TO GENUINENESS OF THE GIFT, WE FOUND THAT ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCE BEFORE THE LOWER AUTHORITIES WHICH CLEARLY INDICATE THAT GIFTS OF 4200 SHARES SO GIVEN BY THE ASSESSEE TO HIS WIFE ARE GENUINE. ACCORDINGLY, GENUINENES S OF GIFT WAS GIVEN DOUBT AND AS ON DATE, THE ASSESSEE WAS HOLDING ONLY 8% OF THE SHARES, THEREFORE PROVISIONS OF SECTION 2(22)(E) IS NOT APPLICABLE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREIN CROSS OBJECTION FILED BY THE ASSESSEE IS ALL OWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 31 / 05 /201 8 SD/ - ( SANDEEP GOSAIN ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 31 / 05 /201 8 KARUNA SR. PS ITA NO. 5172/MUM/2016 MR. MANOJ UPADHYAY 9 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//