ITO 1(1)(2), MUMBAI V. CONDOR TRAVELS AND TOURS P. LTD, MUMBAI

ITA 5210/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55020 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 24-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 5208 TO 5210/MUM./2010 (A.YS : 2005-06 TO 2007-08 ) INCOME TAX OFFICER WARD-1(1)(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. CONDOR TRAVELS AND TOURS P. LTD. 7, BRABOURNE STADIUM VEER NARIMAN ROAD, CHURCHGATE MUMBAI 400 020 PAN AAACC4615Q .... RESPONDENT REVENUE BY : MR. ALEXANDER CHANDY ASSESSEE BY : NONE DATE OF HEARING 29.8.2011 DATE OF ORDER 29.8.2011 O R D E R PER D. MANMOHAN, V.P. THESE THREE APPEALS, FILED AT THE INSTANCE OF THE R EVENUE, ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED CIT(A) AND PERTAIN TO ASSESSMENT YEARS 2005-06 TO 2007-08. 2. IN THE FIRST TWO YEARS, REGULAR ASSESSMENTS WERE MA DE WHEREIN THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME M/S. CONDOR TRAVELS AND TOURS P. LTD. A.YS : 2005-06 TO 2007-08 2 TAX ACT, 1961 (FOR SHORT THE ACT ) TO ADD THE SUMS OF ` 13,91,600 / 1,18,78,000 AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY, WHEREAS IN RESPECT OF ASSESSMENT YEAR 2007-08, THE ADDITION WAS MADE UNDER SECTION 2(22)(E) OF THE ACT ON A PROTECTIVE B ASIS BY OBSERVING THAT SUBSTANTIVE ADDITION ON THIS ACCOUNT SHALL BE MADE IN THE HANDS OF THE SHAREHOLDER SHRI AJEET ARENJA. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. HAVING REG ARD TO THE FACT THAT THE ISSUE RAISED BY THE REVENUE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE BY MUMBAI SPECIAL BENCH DECISION OF THE TR IBUNAL IN THE CASE OF ACIT V/S BHAUMIC COLOURS P. LTD, 120 TTJ 865 (MUM.) (SB), WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE, QUA THE ASSESSEE. 4. FACTS OF THE CASE ARE STATED IN BRIEF. IN RESPECT O F THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, SHAREHOLDING P ATTERN IN CASES OF GROUP COMPANY M/S. TRANS ARABIA TRANSPORT & TRAVELS PVT. LTD. AND THE ASSESSEE COMPANY, ARE AS FOLLOWS:- IN TRANS ARABIA TRANSPORT AND TRAVELS PVT. LTD. SHAREHOLDER NO. OF SHARES HELD % TO THE TOTAL SHRI AJEET ARENJA 5000 20% M/S. SALSETTE AGENCIES PVT. LTD. 5000 20% M/S. PREMIER FURNISHING AND DECORATING PVT. LTD. 15000 60% IN THE APPELLANT COMPANY SHAREHOLDER NO. OF SHARES HELD % TO THE TOTAL SHRI AJEET ARENJA 500 50% SHRI ANUJ ARENJA 500 50% THERE APPEARS TO BE NO CHANGE IN THE SHAREHOLDING P ATTERN IN THE SUBSEQUENT YEARS. M/S. CONDOR TRAVELS AND TOURS P. LTD. A.YS : 2005-06 TO 2007-08 3 5. THE ASSESSING OFFICER OBSERVED THAT SINCE ONE OF TH E SHAREHOLDERS SHRI AJEET ARENJA, WAS HOLDING 20% SHARES IN M/S. TRANS ARABIA TRANSPORT & TRAVELS PVT. LTD. AND WAS ALSO HOLDING 50% SHARES I N THE ASSESSEE COMPANY, PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE APPLI CABLE. ACCORDINGLY, HE BROUGHT TO TAX SUMS MENTIONED IN PARA-2 ABOVE AS DE EMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY ON THE PREMISE THAT C ONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE S ATISFIED. 6. BEFORE THE LEARNED CIT(A), THE CASE OF THE ASSESSEE WAS THAT NEITHER THE ASSESSEE COMPANY HOLDS ANY SHARES IN OTHER COMP ANY NOR DOES THE OTHER COMPANY HOLDS ANY SHARES IN THE ASSESSEE COMPANY. M ERELY BECAUSE ONE OF THE SHAREHOLDERS WAS HOLDING 50% OF THE SHARES IN A SSESSEE COMPANY AND ALSO 20% SHARES IN THE OTHER COMPANY, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION 2(2 2)(E) OF THE ACT. RELIANCE WAS PLACED ON MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF BHAUMIC COLOURS P. LTD. (SUPRA). HAVING REGARD TO T HE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ACCEPTED THE PLEA OF THE A SSESSEE AND IN THIS REGARD, HE OBSERVED THAT IF A PERSON IS A REGISTERE D SHAREHOLDER BUT NOT THE BENEFICIAL SHAREHOLDER, PROVISIONS OF SECTION 2(22) (E) OF THE ACT WILL NOT APPLY. SIMILARLY, IF A PERSON IS BENEFICIAL SHAREHO LDER BUT NOT A REGISTERED SHAREHOLDER, THEN ALSO, PROVISIONS OF SECTION 2(22) (E) WILL NOT APPLY. IT WAS ALSO EXPLAINED THAT DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN SHAREHOLDER. HAVING REGARD TO T HE FACT THAT THE ASSESSEE COMPANY IS NEITHER A REGISTERED SHAREHOLDER NOR A B ENEFICIAL SHAREHOLDER, THE LEARNED CIT(A) HELD THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT APPLICABLE TO THE FACTS ON HAND. HE ACCORDINGLY DEL ETED THE IMPUGNED ADDITIONS. AGGRIEVED, THE REVENUE IS IN APPEAL BEFO RE THE TRIBUNAL. 7. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND CAREFULLY PERUSED THE RECORD. SINCE THE ISSUE IS SQUARELY COV ERED BY MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF ACIT V/S BHAUMIC COLOURS P. LTD, (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE O RDERS PASSED BY THE LEARNED M/S. CONDOR TRAVELS AND TOURS P. LTD. A.YS : 2005-06 TO 2007-08 4 CIT(A). WE, THEREFORE, UPHOLD THE ORDERS OF THE LEA RNED CIT(A) AND DISMISS THE APPEALS FILED BY THE REVENUE. IT MAY BE CLARIFI ED THAT IN RESPECT OF ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER HIMS ELF WAS NOT TOO SURE AS TO WHETHER IT CAN BE ASSESSED IN THE HANDS OF THE A SSESSEE COMPANY AND, HENCE, ONLY A PROTECTIVE ASSESSMENT WAS MADE WHICH STANDS VACATED AND HE IS FREE TO MAKE A SUBSTANTIVE ADDITION IN THE HANDS OF THE SHAREHOLDERS IN ACCORDANCE WITH LAW. 8. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E., 29 TH DAY OF AUGUST 2011. SD/- T.R. SOOD ACCOUNTANT MEMBER SD/- D. MANMOHAN VICE PRESIDENT MUMBAI, DATED: 29 TH AUGUST 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, C BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI