N.Y. CONSTRUCTION & DEVELOPERS P. LTD, MUMBAI V. DCIT 3(2), MUMBAI

ITA 5470/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1429 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 05-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: JAIDEV
• Keywords: Deemed dividend
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVAN , JM ITA NO.5470/MUM/2009 : ASST.YEAR 2005-2006 M/S.N.Y.CONSTRUCTION & DEVELOPERS PRIVATE LIMITED, 101-B MITTAL COURT 10 TH FLOOR, NARIMAN POINT MUMBAI 400 021. PA NO.AAACN3370R. VS. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 3(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JAIDEV RESPONDENT BY : SHRI VIRENDRA OJHA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 24.8.2009 I N RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE SUSTENANCE OF ADDITION OF RS.6,60,000 MADE BY THE ASSESSING OFFICER BY INVOK ING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. BRIEFLY STATED THE FACTS OF TH E CASE ARE THAT THE ASSESSEE RECEIVED A SUM OF RS.6,60,000 IN THE FORM OF LOAN / ADVANCE FROM M/S.AKTARIA REAL ESTATE PRIVATE LIMITED, WHICH THE ASSESSING OFFICER HELD T O BE DEEMED DIVIDEND IN TERMS OF SECTION 2(22)(E) OF THE ACT. THE LEARNED CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS ISSUE. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE SHAREHOLDING PATTERN OF THE ASSESSEE-COMPANY AS WELL AS M/S.AKTARIA REAL ESTATE PRIVATE LIMITED HAS BEEN SE T OUT ON PAGE 2 OF THE IMPUGNED ORDER. IT CAN BE NOTICED THAT SMT.HANSA K. AGARWAL AND SHRI NISHANT K.AGARWAL ARE THE COMMON SHAREHOLDERS IN BOTH THE C OMPANIES, BUT THE ASSESSEE- COMPANY, AS SUCH, IS NOT A SHAREHOLDER IN M/S.AKT ARIA REAL ESTATE PRIVATE LIMITED. SPECIAL BENCH OF THE TRIBUNAL IN ACIT VS. BHAUMIK COLOUR [(2009) 27 SOT 270 ITA NO.5470/MUM/2009 M/S.N.Y.CONSTRUCTION & DEVELOPERS PVT.LTD. 2 (MUM.) (SB)] HAS HELD THAT IF THE LOAN IS MADE TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH H E HAS SUBSTANTIAL INTEREST THEN DIVIDEND IS TAXABLE IN THE HANDS OF SUCH SHAREHOLDE R AND NOT THE NON-SHAREHOLDER. IT IS FOUND THAT THE FACTS AND CIRCUMSTANCES OF THE IN STANT APPEAL ARE SQUARELY COVERED BY THIS SPECIAL BENCH ORDER IN FAVOUR OF THE ASSESS EE. SINCE THE ASSESSEE COMPANY IS NOT A SHAREHOLDER IN THE COMPANY GRANTING LOANS/ ADVANCE TO IT, WE ARE OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 2 (22)(E) ARE NOT ATTRACTED HERE. RESPECTFULLY FOLLOWING THE PRECEDENT, WE OVERTURN THE IMPUGNED ORDER ON THIS ISSUE. 4. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF JUNE, 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 18 TH JUNE, 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-III, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.