GAUTAM AHUJA, MUMBAI V. ITO 8(2)(2), MUMBAI

ITA 5870/MUM/2012

• Counselvise Citation: 587019914 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: REEPAL TRALSHAWALA

Judgement Text

1 GAUTAM AHUJA ITA 5870/MUM/2012 G IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI . . . . . . . . , ! ! ! ! '!! '!! '!! '!! ! ! ! ! , # # # # BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : . : . : . : 5870 5870 5870 5870/ // / / // / 2012 * ! A.Y. 2009-10 ITA NO. : 5870/MUM/2012 (ASSESSMENT YEARS: 2009-10) GAUTAM AHUJA, A/120 RAJPIPLA, LINKING ROAD, SANTACRUZ (WEST), OPP STD CHTED BANK, MUMBAI -400 054 + .: PAN: AGAPA 3935 E VS ITO -8(2)(2), 212, AAYAKAR BHAVAN, M K ROAD, MUMBAI -400 020 +, (APPELLANT) -.+, (RESPONDENT) APPELLANT BY : SHRI REEPAL TRALSHAWALA RESPONDENT BY : SHRI PAVANKUMAR BEERLA *!/01 /DATE OF HEARING : 12-11-2014 23 /01/ DATE OF PRONOUNCEMENT : 19 -11-2014 4 4 4 4 O R D E R '!!! '!!! '!!! '!!! , : :: : PER VIVEK VARMA, JM: THE APPEAL IS DIRECTED AGAINST THE ORDER OF CIT(A) 17, MUMBAI, DATED 05.07.2012, WHEREIN, THE SOLITARY ISSUE PERTAINS TO APPLICABILITY OF SECTION 2(22)(E). 2. THE FACTS AS NARRATED BY THE AR ARE THAT THE ASS ESSEE IS IN THE BUSINESS OF MONEY LENDING, WHEREIN HE SOURCES FUNDS FROM GRO UP COMPANIES & LENDS THE SAME TO OTHER GROUP COMPANIES AND CHARGES AND PAYS INTEREST @ 15%. IN THE CURRENT YEAR, THE ASSESSEE RECEIVED FUNDS OF RS. 64 ,22,534/- FROM ONE OF THE COMPANIES, I.E. M/S AHUJA HOUSING PROJECTS LTD., WH ERE ASSESSEE IS A DIRECTOR. 2 GAUTAM AHUJA ITA 5870/MUM/2012 3. ACCORDING TO THE AO, SINCE THE ASSESSEE HAS RECE IVED LOAN OR ADVANCE FROM THE COMPANY WHERE THE ASSESSEE IS A DIRECTOR, PROVISIONS OF SECTION 2(22)(E) WOULD GET ATTRACTED AND TO PROPOUND THIS A RGUMENT, THE AO PLACED RELIANCE ON THE DECISION OF TARULATA SHYAM & OTHER REPORTED IN 108 ITR 345 AND ALSO ON CIT VS P SARDA REPORTED IN 154 ITR 387 AND CIT VS MUKUNDRAY K SHAH, REPORTED IN 290 ITR 433. 4. THE ASSESSEE ON THE OTHER HAND ARGUED THAT NO DO UBT THE FUNDS CAME FROM THE COMPANY WHERE THE ASSESSEE WAS A DIRECTOR, BUT THOSE FUNDS WERE NEITHER IN THE FORM OF GRATUITOUS FUNDS NOR WERE TH EY INTEREST FREE. THE FUNDS CAME IN, IN THE FORM OF NORMAL BUSINESS TRANSACTION , HENCE THE PROVISIONS OF SECTION 2(220(E) WOULD NOT BE APPLICABLE. 5. THE CIT(A), SUSTAINED THE ORDER OF THE AO, REJEC TING THE ARGUMENTS OF THE ASSESSEE. 6. AGAINST THIS ORDER OF THE CIT(A), THE ASSESSEE I S BEFORE THE ITAT. 7. BEFORE US, THE ASSESSEE REITERATED THE ARGUMENTS AND SUBMITTED THAT THE PROVISIONS OF SECTION 2(22)(E) SHALL NOT BE APPLICA BLE, IF THE FUNDS ARE FOR THE PURPOSE OF BUSINESS AND COME AS A NORMAL BUSINESS T RANSACTION. 8. THE DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 9. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE ORDER AND THE CASE LAWS CITED. 10. AT THE OUTSET, THE FUNDS WERE SOURCED FROM THE COMPANY, WHICH IS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND WHOSE OBJEC TS, AS ACCEPTED BY THE AR, DOES NOT INVOLVE ADVANCING OF LOANS, OR WAS A BANKI NG COMPANY OR NBFC. IN SUCH A SITUATION, WHEN THE FUNDS ARE SOURCED FROM A COMPANY WHOSE OBJECTS DO NOT TALK ABOUT LENDING AND FINANCING, THE FUNDS, WHETHER CARRYING INTEREST 3 GAUTAM AHUJA ITA 5870/MUM/2012 OR NOT, SHALL BE DEEMED TO BE DIVIDEND. IN ANY CASE , WHEN WE LOOK INTO THE FINANCIALS OF M/S AHUJA HOUSING PROJECTS PVT LTD. A S APPENDED IN THE APB, WE FIND THAT THE SOURCE COMPANY HAS SUBSTANTIALLY ACCU MULATED PROFITS. 11. WE AGREE WITH THE OBSERVATIONS OF THE AO THAT STATUTE HAS TO BE STRICTLY INTERPRETED AND THERE WAS NO SCOPE OF IMPORTING ANY WORDS INTO IT . 13. WE, THEREFORE, SUSTAIN THE ORDER OF THE CIT(A), CONSEQUENTIALLY REJECT THE GROUNDS AS RAISED BY THE ASSESSEE. 14. IN THE RESULT, THE APPEAL, AS FILED BY THE ASSE SSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER, 2014. SD/- SD/- ( . . . . . . . . ) ('!! ! '!! ! '!! ! '!! !) (R C SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 19 TH NOVEMBER, 2014 -0/ COPY TO:- 1) +,/ THE APPELLANT. 2) -.+,/ THE RESPONDENT. 3) THE CIT (A)-17, MUMBAI. 4) 7 CIT-8 , MUMBAI / THE CIT-8, MUMBAI. 5) '!89-0* G , , / THE D.R. G BENCH, MUMBAI. 6) 9:; COPY TO GUARD FILE. 4* / BY ORDER [ , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *@A=* !.*. * CHAVAN,SR. PS