M/s. Kulvinder Singh Kohli HUF, New Delhi V. DCIT, New Delhi

ITA 5873/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7375 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• 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.5873/DEL/2014 ASSESSMENT YEAR : 2010-11 KULVINDER SINGH KOHLI, HUF, 47, JOR BAGH, NEW DELHI. PAN: AAFHK7990E VS. DCIT, CIRCLE-31(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATYAJIT GOEL, CA DEPARTMENT BY : SHRI DEEPAK GARG, SR. DR DATE OF HEARING : 23.06.2016 DATE OF PRONOUNCEMENT : 23.06.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CIT(A) ON 29.8.2014 IN RELATION TO TH E ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.1,60,000/- MADE BY THE AO U/S 2(22)( E) OF THE ACT. ITA NO.5873/DEL/2014 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A SUBSTANTIAL SHAREHOLDER OF SURYA HOTELS PVT. LTD. M/S ENKAY TRAVELS IS A UNIT OF SURYA HOTELS PVT. LTD. THE ASSESSEE SHOWED A CREDIT BALANCE OF RS.1,60,000/- IN THE NAME OF M/S ENKAY TRAVELS IN I TS BOOKS OF ACCOUNT. THE AO INVOKED THE PROVISIONS OF SECTION 2(22)(E) A ND MADE ADDITION FOR A SUM OF RS.1,60,000/- BY TREATING IT AS DEEMED DIVIDEND. THE LD. CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS SCORE. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE ASSESSEE IS UNDOUBTEDLY A S UBSTANTIAL SHAREHOLDER IN SURYA HOTELS PVT. LTD. AND FURTHER M/S ENKAY TRAVELS IS A UNIT OF SURYA HOTELS PVT. LTD. THIS SHOWS THAT B OTH SURYA HOTELS PVT. LTD. AND M/S ENKAY TRAVELS ARE ONE AND THE SAME TH INGS. THE ASSESSEE IN ITS BALANCE SHEET SEPARATELY INDICATED THE AMOUN T PAYABLE TO M/S ENKAY TRAVELS AT RS.1,60,000/- ON THE LIABILITY SID E AND AMOUNT RECEIVABLE FROM SURYA HOTELS PVT. LTD. AT RS.3,18,2 49/- ON THE ASSET SIDE. COPIES OF ACCOUNTS OF SURYA HOTELS PVT. LTD. AND M/ S ENKAY TRAVELS HAVE BEEN PLACED ON RECORD. THERE WAS AN OPENING D EBIT BALANCE ITA NO.5873/DEL/2014 3 RECEIVABLE BY THE ASSESSEE FROM M/S SURYA HOTELS PV T. LTD. AT RS.27.31 LAC, AGAINST WHICH THE ASSESSEE RECEIVED A SUM OF R S.27 LAC. ON 31 ST MARCH, THERE IS A DEBIT IN THE ACCOUNT OF M/S SURYA HOTELS PVT. LTD. ON ACCOUNT OF INTEREST AMOUNTING TO RS.2,29,833/-. THE ASSESSEE ALSO PAID A SUM OF RS.80,000/- TO M/S SURYA HOTELS PVT. LTD. ON 31 ST MARCH, 2010, THEREBY DETERMINING THE TOTAL AMOUNT RECEIVABLE FRO M SURYA HOTELS PVT. LTD. AT RS.3,18,249/-. WHEN I TURN TO THE ACCOUNT OF M/S ENKAY TRAVELS, IT IS NOTICED THAT THE ASSESSEE RECEIVED A SUM OF R S.1,60,000/- FROM THEM ON 16 TH MARCH, 2010. AS ENKAY TRAVELS IS A UNIT OF SURYA H OTELS PVT. LTD., BOTH THE ACCOUNTS NEED TO BE VIEWED IN A COMB INED MANNER. TOTAL INTEREST DEBITED BY THE ASSESSEE, BEING THE AMOUNT RECEIVABLE ON LOANS ADVANCED TO M/S SURYA HOTELS PVT. LTD., STANDS AT R S.2,29,833/-, WHICH IS FOR THE YEAR 1.4.2009 TO 31.3.2010, BEING THE PR EVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THIS AMOU NT OF INTEREST RELATES TO THE WHOLE OF THE YEAR AND HENCE ACCRUED ALSO COR RESPONDINGLY. IF INSTEAD OF PASSING ONE ENTRY FOR INTEREST ON 31 ST MARCH, 2010, THE ASSESSEE HAD SHOWN INTEREST ON MONTHLY BASIS, THEN, THE DEBIT BALANCE IN THIS ACCOUNT AT THE TIME OF RECEIPT OF RS.1,60,000/ - FROM M/S ENKAY ITA NO.5873/DEL/2014 4 TRAVELS, WOULD HAVE BEEN MUCH MORE THAN THAT. AS THE INTEREST RELATES TO THE WHOLE OF THE YEAR, ITS ACCRUAL HAS TO BE CON SIDERED ACCORDINGLY. WHEN SO CONSIDERED, THERE DOES NOT REMAIN ANY CASE OF THE ASSESSEE RECEIVING A LOAN OF RS.1,60,000/- IN CASH ATTRACTIN G THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. I, THEREFORE, ORDER F OR THE DELETION OF THE ADDITION. 5. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.06.20 16. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 23 RD JUNE, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.