ACIT 1(1), MUMBAI V. CAPRICORN LEASORS & DISTRIBUTORS P. LTD( MERGED WITH SHEARSON INVESTMENT & TRADING CO. P. LTD), MUMBAI

ITA 5262/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55033 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASHTRI
• Assessee Lawyers: AJIT SHETTY
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C BEFORE SHRI D. MANMOHAN (VP) & SHRI T.R. SOOD (AM) I.T.A.NO. 5262/MUM/2010 (ASSESSMENT YEAR : 2005-06) DCIT 1(1) ROOM NO. 579 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. CAPRICORN LEASORS & DISTRIBUTORS PVT. LTD. (MEREGED WITH SHEARSON INVESTMENT & TRADING CO. PVT. LTD.) INDUSTRY HOUSE 159, CHURCHGATE RECLAMATION MUMBAI-400 020. PAN/GIR NO. : AABCC4308H ASSESSEE BY : SHRI AJIT SHETTY DEPARTMENT BY : SHRI V.V. SHASHTRI DATE OF HEARING : 30.8.2011 DATE OF PRONOUNCEMENT : 30.8.2011 ORDER PER D. MANMOHAN (VP) :- THE ONLY GROUND URGED BY THE REVENUE READS AS UNDE R :- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW LEARNED CIT(A) WAS JUSTIFIED IN DIRECTING TO DELETE THE ADDITION OF ` 13,02,900/- U/S. 2(22)(E) OF THE INCOME TAX ACT, 19 61. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE A S FOLLOWS. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF INVE STMENT IN SHARES AND SECURITIES. IT DECLARED INCOME OF ` 21,86,300/- FOR A.Y. 2005-06. THOUGH THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT ON 17.2.2006, IT WAS LATER ON SELECTED FOR SCRUTINY AND AFTER TAKING APPROPRIATE STEPS IN THAT REGARD THE ASSESSING OFFICER SOUGHT TO COMPLET E ASSESSMENT U/S. 143(3) OF THE ACT. DURING THE COURSE OF EXAMINATION OF BOOKS OF ACCOUNT IT WAS NOTICED THAT THE VALUE OF SHARE INVESTMENTS DUR ING THE YEAR HAVE GROWN UP BY ` 13,02,900/- ON ACCOUNT OF INVESTMENT IN SHARES OF BIRLA AGRO PVT. LTD. THE SAID INVESTMENT IN SHARES WAS NO T OUT OF BORROWED FUND BUT IT WAS CLAIMED THAT IT WAS MIXED SET OF FU NDS. 2 3. THE CASE OF THE ASSESSING OFFICER ON THE OTHER H AND WAS THAT THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM THAT THE SAID AMOUNT OF SHARE IS NOT OUT OF BORROWE D FUNDS. THE ASSESSEE IS NOT A TRADER OF SHARES. IT WAS FURTHER NOTICED T HAT THE ASSESSEE HAVING 15.86% SHAREHOLDING OF THE COMPANY I.E. M/S. BIRLA INTERNATIONAL PVT. LTD., WHICH HAS GIVEN A LOAN OF ` 13,02,900/-. HE THEREFORE APPLIED PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND ADDED THE IMPUGNED SUM AS DEEMED DIVIDEND. 4. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT( A) OBSERVED THAT THE ASSESSEE-COMPANY HAD ACCEPTED AN INTER-CORPORA TE DEPOSITS FROM BIRLA INTERNATIONAL PVT. LTD. IN THE ORDINARY COURS E OF ITS BUSINESS. SINCE IT WAS ACCEPTED AS DEPOSIT AND WAS NOT IN THE NATUR E OF LOAN OR ADVANCE, THE SAID INTER-CORPORATE DEPOSITS CANN OT BE TREATED AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. IN THIS REGARD HE RELIED UPON THE DECISION OF ITAT, MUMBAI BENCH I N THE CASE OF BOMBAY OIL INDUSTRIES LTD. VS. DCIT, 28 SOT 383 AND ALSO STATED THAT THE BIRLA INTERNATIONAL PVT. LTD. IS A COMPANY WHOS E SUBSTANTIAL BUSINESS IS LENDING OF MONEY BY WAY OF INTER-CORPORATE DEPOS ITS AND THUS IT CANNOT BE TERMED AS LOAN OR ADVANCE. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. EXCEPT RELYING ON THE ORDER PASSED BY THE ASSESSING OFFICER, LEARNED DEPARTMENTAL REPRESENTATIVE WAS UNABLE TO CONTRADICT THE FINDING S OF LEARNED CIT(A) AND COULD NOT PLACE ANY MATERIAL TO SUPPORT HIS CON TENTION THAT IT CANNOT BE TREATED AS INTER-CORPORATE DEPOSITS. SINCE NO MA TERIAL WHATSOEVER WAS FURNISHED TO CONTRADICT THE FINDINGS OF LEARNED CIT (A), WE AFFIRM THE ORDER OF LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY T HE REVENUE. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 30.8.20 11. SD/- (T.R. SOOD) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE-PRESIDENT DATED : 30 TH AUGUST, 2011. 3 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS