Indobrine Industries Ltd., GANDHIDHAM V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 592/RJT/2012

• Counselvise Citation: 59224914 RSA 2012
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-04-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 02-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: VIMAL DESAI CA D S
• Keywords: Depreciation; Deemed dividend
• Section: 143(3); 2

Judgement Text

' R, K IN THE INCOME TAX APPELLATE TRIBU N AL; RAJKOT BENCH, RAJKOT. BEFORE SHRI D . K. TYAGI , JM AND SHRI A. M OHAN ALANKAMONY , AM IT A NO . 592 /RJT/ 2012 H H / ASSESSMENT YEAR 200 0 - 01 M/S. INDOBRINE INDUSTRIE S LTD., PLOT NO.356, WARD 12/B, GOKUL PARK, TAGORE ROAD, GANDHIDHAM (KUTCH) PAN : AAACI 4654 H ( Y / APPELLANT) VS. ACIT, GANDHIDHAM CIRLE, GANDHIDHAM CY / RESPONDENT HS /ASSESSEE BY SHRI VIMAL DESAI, CA D S / REVENUE BY SHRI M K SINGH, DR S ' / DATE OF HEARING 2 3 .04.2013 S ' / DATE OF PRONOUNCEMENT 26 .04.2013 / ORDER PER BENCH: - THIS A PPEAL OF THE ASSESSEE IS FILED AGAINST THE ORDER OF THE L D. CIT(A) - XX , AHMEDABAD IN APP EAL NO.CIT(A) - XX/350/10 - 11 DATED 04 . 09 .201 2 FOR THE ASSESSMENT YEAR 200 0 - 01 PASSED U/S. 143(3) R.W.S . 254 OF THE ACT. 2. THOUGH THE ASSESSEE HAS RAISED FIVE GROUNDS IN ITS APPEAL, THE CRUX OF THE ISSUE RELATES TO THE LONE GROUND NO.2 WHICH IS REPRODUC ED HEREIN BELOW FOR ADJUDICATION : - 2. THE LD A.O. HAS ERRED IN LAW AS WELL AS ON FACTS IN MAKING ADDITION OF RS.21,06,571/ - U/S 2(22)(E). THE LD CIT(A) HAS ERRED IN CONFIRMING THE SAME DISBELIEVING THE APPELLA NTS EXPLANATIONS. 2. BRIEFLY STATED FAC TS ARE THAT THE ASSESSEE IS A LIMITED COMPANY , ENGAGED IN THE BUSINESS OF MANUFACTURING OF FREE FLOW SALT AND TRADING OF SALT , FILED ITS RETURN OF INCOME ON 20 . 10 .200 0 FOR THE ASSESSMENT YEAR 2000 - 0 1 , DECLARING TOTAL LOSS OF RS.29,89,340/ - . THE CASE WAS RE OPENED AND THE 592 /RJT/2012 2 ASSESSMENT WAS FINALIZED U/S 143(3) OF THE ACT, R.W.S 147 ON 20.02.2006. SUBSEQUENTLY, THE MATTER WAS RESTORED BACK TO THE LD AO BY THE TRIBUNAL FOR DE - NOVA CONSIDERATION AND TO PASS APPROPRIATE ORDER IN THE LIGHT OF THE DECISION OF HONB LE BOMBAY HIGH COURT IN THE CASE OF NAVNITLAL C. JHAVERI V. CIT (80 ITR 583). FINALLY THE CASE WAS HEARD BY LD AO AND VIDE HIS ORDER DATED 18.12.2008 ADDED RS.21,06,571/ - BEING THE ACCUMULATED PROFIT AFTER MAKING ADJUSTMENTS FOR EXCESS DEPRECIATION U/S. 2(22)(E) OF THE ACT . ON APPEAL BEFORE THE LD CIT(A), THE ORDER OF THE LD AO WAS CONFIRMED AND THE APPEAL OF THE ASSESSEE WAS DISMISSED. AGGRIEVED BY THE AFORESAID ORDER OF LD CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE US. 3. LD. AR SUBMITTED BEFORE US V ARIOUS DECISIONS OF THE TRIBUNAL AND ARGUED THAT DEEMED DIVIDEND CAN BE TAXED INVOKING THE PROVISION OF S. 2(22)(E) OF THE ACT ONLY IN A CASE WHERE THE ASSESSEE IS A SHAREHOLDER OF THE COMPANY FROM WHOM THE LOAN IS RECEIVED. THE LD AR SUBMITTED THAT THE A SSESSEE IS NOT A SHAREHOLDER OF M/S. KIRAN SHIPPING AGENCY FROM WHOM IT HAS RECEIVED LOAN OF RS.25 LACS. IT WAS THEREFORE PRAYED THAT THE ADDITION MADE BY THE LD AO WHICH WAS FURTHER SUSTAINED BY THE LD CIT(A) MAY BE DELETED. LD DR ARGUED IN SUPPORT OF T HE ORDER OF THE REVENUE AND STATED THAT THE SAME MAY BE CONFIRMED. 4. WE HAVE HEARD THE RIVAL SUBMISSION AND CAREFULLY PERUSED THE MATERIALS ON RECORDS. AS SUBMITTED BY THE LD AR THE ISSUE IS SQUARELY COVERED BY THE DECISION OF SPECIAL BENCH OF ITAT MUMBA I IN THE CASE OF ACIT V. BHAUMIK COLOUR (P) LTD. IN ITA NO.5030/MUM/2004 : (2009) 120 TTJ (MUMBAI) (SB) 865, WHEREIN THE BENCH CONCLUDED AS UNDER: - CONCLUSION: - FOR PURPOSES OF INVOKING S. 2(22)(E), SUCH SHAREHOLDER IN THE CONCERN TO WHICH LOAN IS ADVA NCED MUST BE BOTH THE REGISTERED SHAREHOLDER AS ALSO BENEFICIAL SHAREHOLDER; LOAN OBTAINED BY ASSESSEE COMPANY IN WHICH N TRUST HAD 20 PER CENT SHAREHOLDING FROM A COMPANY IN WHICH N TRUST HAD 10 PER CENT SHAREHOLDING COULD NOT BE TAXED AS DEEMED DIVIDEND UNDER S. 2(22)(E) SINCE N TRUST WAS ONLY A REGISTERED SHAREHOLDER AND NOT BENEFICIAL SHAREHOLDER. 592 /RJT/2012 3 4.1 FOLLOWING THE DECISION OF SPECIAL BENCH , WE HEREBY DIRECT THE LD AO TO DELETE THE ADDITION MADE BY HIM INVOKING S. 2(22)(E) OF THE ACT AFTER VERIFYING T HE SUBMISSION OF THE LD AR THAT THE ASSESSEE WAS NOT A SHAREHOLDER HOLDING THE REQUISITE SHARES OF M/S. KIRAN SHIPPING AGENCY , AS PRESCRIBED UNDER S. 2(22)(E) OF THE ACT, FROM WHOM IT HAS RECEIVED RS.25 LACS AS INTER - CORPORATE DEPOSIT. 5. IN THE RESULT, T HE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. T HIS O RDER IS PRONOUNCED IN THE O PEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - (D .K. TYAGI) ( A. M OHAN ALANKAMONY ) K D / JUDICIAL MEMBER OHAN / ACCOUNTANT MEMBER N/ ORDER DATE 26 .04.2013 /RAJKOT BT T RJO O / COPY OF ORDER FORWARDED TO: - 1. Y / APPELLANT - M/S. INDOBRINE INDUSTRIES LTD., PLOT NO.356, WARD 12/B, GOKUL PARK, TAGORE ROAD, GANDHIDHAM (KUTCH) 2. CY / RESPONDENT - ACIT, GANDHIDHAM CIRLE,GANDHIDHAM . R I / CIT CONCERNED 4. I - / CIT (A) - XX, AHMEDABAD 5. R, ' R, / DR, ITAT, RAJKOT 6. H / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.