Ms. Mitu Singh, New Delhi V. DCIT, New Delhi

ITA 5652/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4230 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 10-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K BAWAL
• Assessee Lawyers: BHAGWAN JHA
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.5652/DEL/2014 ASSESSMENT YEAR : 2010-11 MITU SINGH, C-4/142, SDA, NEW DELHI. PAN: AUSPS8598M VS. DCIT, CIRCLE-14(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHAGWAN JHA, CA DEPARTMENT BY : SHRI N.K. BAWAL, SR. DR DATE OF HEARING : 10.10.2016 DATE OF PRONOUNCEMENT : 13.10.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A) ON 16.7.2014 IN RELATION TO THE ASSES SMENT YEAR 2010-11. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS THE CONF IRMATION OF ADDITION OF RS.14,34,968/- MADE BY THE AO AS DEEMED DIVIDEND U/ S 2(22)(E) OF THE ACT. ITA NO.5652/DEL/2014 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS OF M/S PEARTREE ENTERPRISES PVT. LTD., FOR THE ASSESSMENT YEAR 2010-11, IT CAME TO THE NOTICE OF T HE AO THAT THE ASSESSEE RECEIVED CERTAIN SUM AS ADVANCE FROM THIS COMPANY, OUT OF WHICH A SUM OF RS.14,34,968 WAS APPEARING AS RECEIVABLE AT THE END OF THE YEAR. SINCE THE ASSESSEE WAS HAVING SUBSTANTIAL SHAREHOLDING WI THIN THE MEANING OF SECTION 2(22)(E) AND THE AMOUNT IN QUESTION WAS PAI D TO THE ASSESSEE OUT OF ACCUMULATED PROFITS OF THE COMPANY, THE AO CALLED U PON THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT BE NOT TREATED AS DEEM ED DIVIDEND. THE ASSESSEE SUBMITTED THAT THE LATE CHAIRMAN OF THE CO MPANY WANTED THE ASSESSEE TO AVAIL ADVANCE TO MEET CERTAIN CONTINGEN CIES. IT WAS FURTHER EXPLAINED THAT OUT OF SUCH ADVANCE AVAILED AFTER AD JUSTING A REMUNERATION FOR THE YEAR AS ON 31.3.2010, THE OUTSTANDING BALAN CE AT THE END OF THE YEAR STOOD AT RS.14,34,968/-, WHICH WAS FULLY ADJUSTED U P TO ON 31.3.2013. NOT CONVINCED, THE AO MADE ADDITION U/S 2(22)(E). THE LD.CIT(A), RELYING ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN CIT VS. ANKITECH (P) LTD. & OTHERS (2012) 340 ITR 14 (DEL), UPHELD THE ADDITION. ITA NO.5652/DEL/2014 3 4. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEES APPLICATION FOR ADJOURNMENT WAS REJE CTED. THEREAFTER, SHRI BHAGWAN JHA, THE AUTHORISED REPRESENTATIVE OF THE A SSESSEE, PARTICIPATED IN THE PROCEEDINGS. ON FACTS, IT IS NOTICED THAT THE ASSESSEE RECEIVED CERTAIN AMOUNT AS ADVANCE FROM M/S PEARTREE ENTERPRISES PVT . LTD., WHICH WAS HAVING ACCUMULATED PROFITS AT A HIGHER LEVEL THAN T HE AMOUNT OF ADVANCE APPEARING AT THE END OF THE YEAR. THE HONBLE DELH I HIGH COURT IN ANKITECH (P) LTD. (SUPRA) HAS HELD THAT WHERE THE PROVISIONS OF SECTION 2(22)(E) ARE ATTRACTED, THE ADDITION SHOULD BE MADE IN THE HANDS OF A SHAREHOLDER AND NOT IN SUCH A COMPANY, WHICH IS S HAREHOLDER IN THE COMPANY DISTRIBUTING DIVIDEND. ADMITTEDLY, THE ASSE SSEE RECEIVED ADVANCE WITH OUTSTANDING BALANCE OF RS.14.34 LAC AT THE END OF THE YEAR, WHICH WAS ADJUSTED IN LATER YEARS. THE HONBLE SUPREME COURT IN MISS P. SARDA VS. CIT (1998) 229 ITR 444 (SC), HAS HELD THAT WITHDRAWALS MADE BY MAJOR SHAREHOLDER IS DIVIDEND U/S 2(22)(E), EVEN IF SUCH AMOUNT IS ADJUSTED LATER ON. THE FACTS AND CIRCUMSTANCES OF THE INSTANT CAS E ARE FULLY GOVERNED BY THE AFORENOTED TWO JUDGMENTS. I, THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS ISSUE CONFIRMING THE ADDITION. ITA NO.5652/DEL/2014 4 5. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.10.20 16. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 13 TH OCTOBER, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.