DCIT, Cochin V. Trans Asia Shipping Services P. Ltd, Cochin

ITA 562/COCH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7816 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2011
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india; Non-deduction of tax; Deemed dividend
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 562/COCH/2011 ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4(2), KOCHI VS. M/S. TRANS ASIA SHIPPING SERVICES P. LTD., TRANS ASIAN CORPORATE PARK, XIV-396-C, SEAPORT-AIRPORT ROAD, CHITTETHUKARA, KAKKANAD, KOCHI-37 [PAN:AABCT2760J] (REVENUE-APPELLANT) (ASSESSEE- RESPONDENT) I.T.A. NO. 558/COCH/2010 ASSESSMENT YEAR : 2005-06 M/S. NORTRANS MARINE SERVICES PVT. LTD., TRANS ASIAN CORPORATE PARK, XIV-396-C, SEAPORT-AIRPORT ROAD, CHITTETHUKARA, KAKKANAD, KOCHI-37. [PAN: CHNN00623A] VS. THE JT. COMMISSIONER OF INCOME- TAX (TDS), KOCHI. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) I.T.A. NOS. 178 & 179/COCH/2009 ASSESSMENT YEAR : 2005-06 THE DY. COMMISSIONER OF INCOME-TAX (TDS), KOCHI. VS. M/S. NORTRANS MARINE SERVICES PVT. LTD., TRANS ASIAN CORPORATE PARK, XIV-396-C, SEAPORT-AIRPORT ROAD, CHITTETHUKARA, KAKKANAD, KOCHI-37. (REVENUE -APPELLANT) (ASSESSEE - RESPONDENT) TRANS ASIA SHIPPING SERVICES & NORTRANS MARINE SERVICES PVT. LTD. 2 C.O. NO. 25/COCH/2009 (ARSG. OUT OF I.T.A. NO. 179/COCH/2009) ASSESSMENT YEAR : 2005-06 M/S. NORTRANS MARINE SERVICES PVT. LTD., TRANS ASIAN CORPORATE PARK, XIV-396-C, SEAPORT-AIRPORT ROAD, CHITTETHUKARA, KAKKANAD, KOCHI-37. VS. THE DEPUTY COMMISSIONER OF INCOME-TAX (TDS), KOCHI. (ASSESSEE CROSS OBJECTOR) ( REVENUE - RESPONDENT) REVENUE BY SMT. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI R. VIJAYARAGHAVAN, CA DATE OF HEARING 07/05/2012 DATE OF PRONOUNCEMENT 09/05/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: ALL THESE APPEALS, DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY LD CIT(A), WERE HEARD TOGETHER AS THEY ARISE OUT OF COMMON SET OF FACTS. ACCORDINGLY, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. 2. THE COMMON FACTS WHICH ARE RELEVANT TO THE APPEALS UNDER CONSIDERATION ARE STATED IN BRIEF. IT WAS NOTICED THAT THE COMPANY M/S. NORTRANS MARINE SERVICE P. LTD. (NMSPL) HAD ADVANCED MONEY TO M/S. TRANS ASIA SHIPP ING SERVICES P. LTD. (TASSPL) AND FURTHER M/S. TASSPL HELD 40% SHARES OF M/S. NMS PL. ACCORDINGLY, THE AO NOTICED THAT THE PROVISIONS OF SEC. 2(22)(E) OF THE ACT ARE APPLICABLE TO THE ABOVE SAID TRANSACTIONS, I.E., THE LOAN AMOUNT RECEIVED TO THE EXTENT OF THE ACCUMULATED PROFITS ARE REQUIRED TO BE TAXED AS DEEMED DIVIDEND IN THE HA NDS OF THE RECIPIENT COMPANY, VIZ., M/S TASSPL. ACCORDINGLY, THE AO ASSESSED A SUM OF RS.6,71,74,703/- AS DEEMED DIVIDEND IN THE HANDS OF M/S TASSPL. SINCE THE COM PANY M/S NMSPL, I.E., THE PAYER TRANS ASIA SHIPPING SERVICES & NORTRANS MARINE SERVICES PVT. LTD. 3 COMPANY DID NOT DEDUCT TAX AT SOURCE FROM THE SAID DEEMED DIVIDEND AMOUNT, THE JT. CIT (TDS) INITIATED PROCEEDINGS U/S. 201(1), 20 1(1A) AND 276C OF THE ACT IN THE HANDS OF M/S. NMSPL FOR NON-DEDUCTION OF TAX AT SOU RCE ON THE DEEMED DIVIDEND. 3. THE COMPANY, M/S. TASSPL CHALLENGED THE ASSESSME NT ORDER BEFORE THE LD. CIT(A) AND THE FIRST APPELLATE AUTHORITY HELD THAT THE LOAN AMOUNT CANNOT BE TREATED AS DEEMED DIVIDEND IN ITS HANDS AND ACCORDINGLY DELETE D THE ASSESSMENT MADE U/S. 2(22)(E) OF THE ACT. THE REVENUE IS CHALLENGING TH E SAID ORDER OF THE LD. CIT(A). 4. M/S. NMSPL ALSO CHALLENGED THE ORDERS PASSED U/S 201(1), 201(1A) AND 276C OF THE ACT BEFORE THE LD. CIT(A). THE FIRST APPELLATE AUTHORITY DELETED THE DEMAND RAISED U/S. 201(1) OF THE ACT BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA BEVERAGES PVT. LTD. VS. CIT, 293 ITR 226; MODIFIED THE INTEREST LEVIED U/S. 201(1A) OF THE ACT AND DISMISS ED THE APPEAL FILED BY THE ASSESSEE AGAINST THE LEVY OF PENALTY U/S. 276C OF THE ACT. AGGRIEVED BY THE ORDERS RELATING TO THE DEMAND RAISED U/S 201(1) AND 201(1A) OF THE ACT , THE REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE IS CHALLENGING THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY LEVIED U/S 276C OF THE ACT. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN CONNECTION WITH THE APPEAL FILED BY THE REVENUE CHALLENGING TH E ORDER OF LD CIT(A) RELATING TO INTEREST CHARGED U/S 201(1A) OF THE ACT. 5. THE LD. DR, WHILE SUBMITTING THE ARGUMENTS IN TH E CASE OF M/S. TASSPL, POINTED OUT TO THE FACT THAT THE LD. CIT(A) HAD DELETED THE ASSESSMENT OF DEEMED INCOME BY ACCEPTING FRESH EVIDENCES WITHOUT CONFRONTING THEM TO THE ASSESSING OFFICER, WHICH IS IN VIOLATION OF RULE 46A. ACCORDINGLY SHE PLEADED THA T THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO FOR CONSIDERATION OF THE ISSUE A FRESH IN ACCORDANCE WITH LAW AFTER TAKING INTO ACCOUNT ALL THE EVIDENCES THAT WERE FIL ED BEFORE THE LD. CIT(A). THE LD. AR, ON THE OTHER HAND, CONTENDED THAT THE DOCUMENTS THA T WERE CONSIDERED BY THE LD. CIT(A) WERE ALSO PRODUCED BEFORE THE AO. THE LD. A R FURTHER SUBMITTED THAT, IN THE EVENT OF REMITTING BACK OF THE IMPUGNED MATTER TO T HE FILE OF AO, IT MAY BE DIRECTED TRANS ASIA SHIPPING SERVICES & NORTRANS MARINE SERVICES PVT. LTD. 4 THAT THE AO SHOULD RESTRICT HIMSELF TO THE ALLEGED FRESH DOCUMENTS WHILE CONSIDERING THE ISSUE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE ORDERS OF THE LOWER AUTHORITIES. THOUGH THE DEPARTMENT HAS TAKEN THE P LEA THAT THERE IS VIOLATION OF RULE 46A OF THE INCOME TAX RULES, YET THEY HAVE FAILED T O POINT OUT THE ALLEGED FRESH MATERIALS REFERRED SUPRA. THE LD A.R ALSO CONTENDE D THAT THERE WAS NO FRESH MATERIAL, YET NO ATTEMPT WAS MADE ON BEHALF OF THE ASSESSEE T O DEMONSTRATE THAT ALL THE DOCUMENTS THAT WERE CONSIDERED BY LD CIT(A) WERE AL SO PRODUCED BEFORE THE AO. HOWEVER, FROM THE CONTENTIONS OF BOTH THE PARTIES, IT IS CLEAR THAT THEY DO NOT HAVE OBJECTION FOR RE-EXAMINATION OF THE ISSUE, SUBJECT TO THE RIDER SUBMITTED BY LD A.R, I.E., THE AO SHOULD RESTRICT HIMSELF TO EXAMINATION OF FR ESH EVIDENCES ONLY. IN OUR VIEW, WHEN THE PRESENT MATTER IS REMITTED TO THE FILE OF THE AO, IT WOULD NOT BE PROPER TO RESTRICT HIS SCOPE OF EXAMINATION, SINCE THE AO HAS TO TAKE DECISION AFTER CONSIDERING ALL THE RELEVANT MATERIALS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECT ION TO EXAMINE THE ISSUE AFRESH ON THE BASIS OF ALL THE EVIDENCES AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD. 7. THE APPEALS FILED IN THE HANDS OF M/S. NMSPL ARE DEPENDENT UPON THE OUTCOME OF THE DECISION OF THE AO ABOUT THE ASSESSABILITY O F DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT IN THE HANDS OF M/S. TASSPL. ACCORDINGLY, ALL THE ORDERS OF THE LD. CIT(A) IN THE CASE OF M/S. NMSPL ARE SET ASIDE AND ALL THE MATTER S REMITTED BACK TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THEM AFRESH AFTER DECID ING THE ISSUE IN THE HANDS OF M/S. TASSPL. WHILE DOING SO, THE AO SHOULD FOLLOW THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA PVT. LTD., REFERRED SUPRA. 8. THE CROSS OBJECTION FILED BY THE ASSESSEE MERELY SUPPORTS THE ORDER OF THE LD. CIT(A). SINCE WE HAVE SET ASIDE THE MATTER TO THE F ILE OF THE ASSESSING OFFICER, THE CROSS OBJECTION STANDS DISMISSED. TRANS ASIA SHIPPING SERVICES & NORTRANS MARINE SERVICES PVT. LTD. 5 9. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE AS WELL AS THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION IS DISMISSED. PRONOUNCED ACCORDINGLY ON 09 -05-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 9TH MAY, 2012 GJ COPY TO: 1. M/S. NORTRANS MARINE SERVICES PVT. LTD., TRANS A SIAN CORPORATE PARK, XIV-396-C, SEAPORT-AIRPORT ROAD, CHITTETHUKARA, KAK KANAD, KOCHI-37. 2. M/S. TRANS ASIA SHIPPING SERVICES P. LTD., TRANS ASIAN CORPORATE PARK, XIV-396-C, SEAPORT-AIRPORT ROAD, CHITTETHUKARA, KAKKANAD, KOCH I-37 3. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4( 2), KOCHI. 4. THE JT. CIT (TDS), KOCHI. 5. THE DY. CIT (TDS), KOCHI. 6. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, KO CHI. 7. THE COMMISSIONER OF INCOME-TAX, KOCHI 8. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 9. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN