ITO, New Delhi V. M/s Navyug Promoters Pvt. Ltd., New Delhi

ITA 5473/DEL/2013

• Counselvise Citation: 547320114 RSA 2013
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKIT ARORA
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI RAJPAL YADAV, J.M. ITA NO. 5473/DEL/2013 ASSESSMENT YEAR : 2004-05 A N D ITA NO. 5474/DEL/2013 ASSESSMENT YEAR : 2009-10 ITO, WARD 13(1) VS. NAVYUG PROMOTERS PVT.LTD. NEW DELHI C/O SMT.BHAWNA ARORA, DIRECTOR 144, GOLF LINK, NEW DELHI 3 A-11, G.K.ENCLAVE, NEW DELHI 110 048 PAN: AAACN 0195 Q (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI ANKIT ARORA RESPONDENT BY:- SH.KEYUR PATEL, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE REVENUE AND ARE DIRECTED AGAINST THE ORDER DATED 24.07.2013 OF THE LD.COMMISSIONER OF I NCOME TAX (APPEALS)-XVI, NEW DELHI PERTAINING TO THE ASSESSMENT YEARS 2004-0 5 AND 2009-10. 2. FACTS IN BRIEF:- THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS IN THE BUSINESS OF CIVIL CONSTRUCTION. IT ALSO DERIVES IN COME FROM RENT AS WELL AS TRADING IN SHARES. IT FILED ITS RETURN OF INCOME O N 25.10.2004, DECLARING INCOME OF RS.3,48,278/-. THE ASSESSING OFFICER PASSED AN ORDER DT. 30.12.2011 FOR THE ITA NO. 5473/DEL/2013 ASSESSMENT YEAR 2004-05 NAVYUG PROMOTERS PVT.LTD. PAGE 2 OF 4 ASSESSMENT YEAR 2004-05 COMPUTING THE TOTAL INCOME AT RS.14,48,227/-, BY MAKING AN ADDITION OF RS.11 LAKHS U/S 2(22)(E) ON T HE GROUND THAT THE ASSESSEE HAS RECEIVED THE SAID AMOUNT FROM ITS SISTER CONCE RN M/S B.R.ARORA & ASSOCIATES PVT.LTD. AS A LOAN/ADVANCE. ON APPEAL THE FIRST APPEAL AUTHORITY APPLIED THE DECISION OF JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. ANKITECH PVT.LTD. IN ITA NO.462/2009 AND DELETED THE ADDIT ION ON THE GROUND THAT M/S B.R.ARORA & ASSOCIATES P.LTD. IS NOT A SHAREHOLDER OF THE COMPANY. 3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUNDS. 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE AMOUNT OF RS. 11, 00,000/- RECEIVED BY THE ASSESSEE COMPANY FROM M/S B R ARORA & ASSOCIATES PV T LTD WAS NOT TAXABLE AS DEEMED DIVIDEND U/S 2(22) (E) OF THE INCOME TAX ACT AND NOT CONSIDERING THE FACT THAT SH. B.R.ARORA WAS HOLDING MORE THAN 20% S HARES IN THE ASSESSEE COMPANY AS WELL AS IN M/S B R ARORA & ASSOCIATES PV T LTD. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN NOT CONSIDERING THE CBDT'S CIRCULA R NO 495 DATED 22/09/1987, WHEREBY THE SCOPE OF THE DEEMED DIVIDEND TAXABLE U/ S 2(22)(E) OF THE ACT WAS ENLARGED TO INCLUDE PAYMENTS MADE BY A COMPANY TO A CONCERN IN WHICH ITS SHAREHOLDER HOLDS A SUBSTANTIAL INTEREST. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION RELYING UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT GIVEN IN THE CASE OF CIT VS M/S ANKITECH PVT LIMITED WITHOUT APPRECIATIN G THE FACT THAT THE REVENUE HAS FILED FURTHER APPEAL AGAINST THE ORDER OF THE H IGH COURT BEFORE THE HON'BLE COURT AND THUS ISSUE HAS NOT ATTAINED ITS FINALITY. 4. MR.KEYUR PATEL, THE LD.SR.D.R. SUBMITTED THAT THER E IS A FURTHER DEVELOPMENT IN LAW ON THIS ISSUE AND THE HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS. NATIONAL TRAVEL SERVICES (2012) 294 CTR (D EL) 540 JUDGEMENT DT.11.07.2011, HAS DISTINGUISHED THE CASE OF M/S ANKITECH PVT.LTD. (SUPRA) AND ITA NO. 5473/DEL/2013 ASSESSMENT YEAR 2004-05 NAVYUG PROMOTERS PVT.LTD. PAGE 3 OF 4 UNDER THOSE CIRCUMSTANCES THE ORDER OF THE LD.COMMI SSIONER OF INCOME TAX (APPEALS) SHOULD BE REVERSED. MR.ANKIT ARORA, DIRE CTOR OF THE COMPANY REPRESENTED IN PERSON. HE RELIED ON THE ORDER OF T HE LD.COMMISSIONER OF INCOME TAX (APPEALS). 5. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATI ON OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDERS OF THE AUTHORITIE S BELOW, CASE LAWS CITED, WE HOLD AS FOLLOWS. 6. THE UNDISPUTED FACT IS THAT SHRI B.R.ARORA DOES NOT HOLD ANY SHARES IN M/S NAVYUG PROMOTERS PVT.LTD. IT IS ALSO NOT DISPU TED THAT THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006-07, MADE ADDITIONS U/ S 2(22)(E) ON LOANS AND ADVANCES RECEIVED BY THE ASSESSEE COMPANY FROM TH E SAME M/S B.R.ARORA ASSOCIATES PVT.LTD. AND M/S ARICON DEVELOPERS PVT .LTD. AND THAT ON APPEAL THE LD.COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE ITAT HAVE APPLIED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF ACIT VS. BHAUMIK COLOURS PVT.LTD., 314 ITR 80 (AT) (SB) (2008) A ND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 6.1. ON APPEAL BY THE REVENUE THE HONBLE DELHI HIGH C OURT IN ITA 497/2011 IN ITS JUDGEMENT DT. 21.11.2011, APPLIED THE DECISI ON IN THE CASE OF ANITECH PVT.LTD. (IN ITA NO.462/2009) AND UPHELD THE ORDER OF THE ITAT. THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS APPLIED THESE JUDGEMENTS OF THE JURISDICTIONAL HIGH COURT, IN THE ASSESSEES OWN C ASE FOR THE EARLIER ASSESSMENT YEAR AND GRANTED RELIEF ON THE GROUND THAT THE FACT S ARE IDENTICAL. THE LD.D.R. COULD NOT DISTINGUISH THE FACTS OF THE CASE FOR THE CURRENT YEAR, FROM THE FACTS OF THE CASES CONSIDERED BY THE HONBLE DELHI HIGH COUR T FOR THE ASSESSMENT YEAR ITA NO. 5473/DEL/2013 ASSESSMENT YEAR 2004-05 NAVYUG PROMOTERS PVT.LTD. PAGE 4 OF 4 2006-07. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS). 6.2. COMING TO THE DECISION IN THE CASE OF NATIONAL TRA VEL SERVICES, WE FIND THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF TH E CASE ON HAND, FOR THE REASON THAT BOTH THE LENDER AND THE BORROWER ARE PRIVATE L IMITED COMPANIES AND MR.B.R. ARORA & ASSOCIATES PVT.LTD. IS NOT A SHARE HOLDER OF THE ASSESSEE COMPANY. HENCE, WE UPHOLD THE ORDER OF THE LD.COMM ISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE APPEALS OF THE REVENUE. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND APRIL, 2014. SD/- SD/- (RAJPAL YADAV) ( J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: THE 02 ND APRIL, 2014 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR