ITO 8(3)(4), MUMBAI V. YASHAM BIO-SCIENCE P. LTD., MUMBAI

ITA 5659/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71538 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: NISHCAL AGARWAL
• Keywords: Deemed dividend
• Section: 143(3); 56

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . , . , BEFORE SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO. 5659/M/2012 ( / ASSESSMENT YEAR: 2009 - 2010 ) INCOME TAX OFFICER - 8(3)(4), 202, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. YASHAM BIO - SCIENCE P. LTD., 401 - A, 4 TH FLOOR, SATYADEV, VEERA INDUSTRIAL ESTATE, OFF VEERA DESAI ROAD, ANDHRI (W), MUMBAI 400 053. ./ PAN : AAACY 2899 N ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ASHOK SURI, DR / RESPONDENT BY : SHRI NISHCAL AGARWAL / DATE OF HEARING : 04.11.2013 / DATE OF PRONOUNCEMENT : 04.11.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 7.9.2012 IS AGA INST THE ORDER OF THE CIT (A) - 18, MUMBAI DATED 12 .6.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN DELETING THE ADDITION OF DEEMED DIVIDEND OF RS. 76,00,000/ - MADE U/S 2(22)(E) WITHOUT APPRECIATING THE FACTS THAT THE CASE, WHICH ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE CASE OF ACIT VS. BHAUMIK COLOURS (2009) SOT (MUM. SB) DECIDED BY THE HONBLE SPECIAL BENCH OF ITAT, MUMBAI. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN DELETING THE ADDITION OF DEEMED DIVIDEND OF RS. 76,00,000/ - MADE U/S 2(22)( E) WITHOUT 2 APPRECIATING THE FACT THAT THE ADDITION WAS MADE IN ACCORDANCE WITH THE CONTENTS AND SPIRIT OF PARA 10 OF CBDTS CIRCULAR NO.495 DATED 22.9.1987. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT OF BIO - PRODUCTS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 26,05,248/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 102,05,248/ - . IN THE ASSES SMENT AO MADE AND ADDITION O F RS. 76,00,000/ - ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) ALLOWED THE APPEAL AND DELETED THE ADDITION MADE BY THE AO. IN THIS REGARD, CIT (A) RELIED ON THE FOLLOWING DECISIONS I.E., (I) ACIT VS. BHAUMIK COLOUR (P) LTD. 120 TTJ 865 (MUMBAI E) (SB); (II) CIT VS. UNIVERSAL MEDICARE P. LTD 324 ITR 263 (BOM) AND EARLIER ORDER OF THE CIT (A) FOR THE AY 2007 - 2008. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, SHRI ASHOK SURI, LD DR HEAVILY RELIED ON THE ORDER OF THE AO. 6. ON THE OTHER HAND, SHRI NISHCAL AGARWAL, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. F URTHER, LD COUNSEL BROUGHT OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.7207/MUM/2010 (AY 2007 - 2008), DATED 21.5.2012, WHEREIN THE TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE AND READ OUT THE RELEVANT PARA 5 OF THE SAID ORDER OF THE TRIBUNAL. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US. WE HAVE ALSO PERUSED THE CITED ORDER OF THE TRIBUNAL FOR THE AY 2006 - 2007 IN THE ASSESSEES OWN CASE AND FIND THAT PARA 5 OF THE SAID ORDER OF THE TRIBUNAL IS RELEVANT IN THIS REGARD WHICH READS AS UNDER. 3 5. WE FIND THAT NOWHERE IT IS A CASE OF THE AO THAT THE ASSESSEE COMPANY IS A SHAREHOLDER IN M/S. YASHM CHEMPHOR PVT LTD. MERELY B ECAUSE THE DIRECTORS AND SHAREHOLDERS ARE COMMON IN BOTH THE COMPANIES , THAT CANNOT BE THE GROUND TO MAKE THE IMPUGNED ADDITION BY INVOKING THE PROVISIONS OF SECTION 56 R.W.S 2(22)( E) OF THE ACT. IN M/.S BHOUMIK COLOURS PVT. LTD . (SUPRA), IT IS HELD THAT UNLESS THE BORROWER IS A SHAREHOLDER NO AMOUNT CAN BE TAXED AS DEEMED DIVIDEND . THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF HILLTOP HOTELS 217 CTR (RAJ) 527 IS ALSO IN FAVOUR OF THE ASSESSEE. WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT (A). ACCORDINGLY, THE SAME IS CONFIRMED. 8. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SHAREHOLDER OF THE LENDER COMPANIES. AS EXPLAINED BY THE SAID SPECIAL BENCH DECISION, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE APPLICABLE TO TH E SHAREHOLDERS ONLY AND NOT TO THE BENEFICIAL SHAREHOLDER LIKE THE PRESENT ASSESSE. AS SUCH, REVENUE HAS NOT DEMONSTRATED HOW THE SAID SPECIAL BENCH DECISION IS DISTINGUISHABLE ON FACTS. THEREFORE, C ONSIDERING THE ABOVE SETTLED LEGAL POSITION OF THE ISSU E, WE ARE OF THE OPINION THAT WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND CONFIRM THE SAME. ACCORDINGL Y, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2013. S D / - S D / - (D. MANMOHAN ) (D. KARUNAKARA RAO ) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; 4.11 .2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 4 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI