ITO, New Delhi V. Smt. Saroj Chachra, New Delhi

ITA 5931/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3534 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 21-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend; Commercial expediency
• Section: 143(3); 2(22)(e); 143(1); 192; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI , ! ' $% . & , ( ) ! BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT & DR.B.R. R.KUMAR, AM * / ITA NOS.5931 & 5932/DEL/2016 + , , / ASSESSMENT YEARS 2011-12 & 2012-13 THE ITO, WARD-50(2), NEW DELHI .......... -. /APPELLANT VS SMT. SAROJ CHACHRA, SATYAM CINEMA BUILDING, RANJIT NAGAR, NEW DELHI-110060. PAN-ABIPC4716E . /0-. / RESPONDENT -.12 / APPELLANT BY : SH. H.K.CHOUDHARY, CIT DR /0-.12 / RESPONDENT BY : SH. ABHISHEK MATHUR, ADV. 13( / DATE OF HEARING : 09.01.2020 45 13( / DATE OF PRONOUNCEMENT: 28.02.2020 6 / ORDER PER SUSHMA CHOWLA,VP THE PRESENT APPEALS FILED BY REVENUE ARE AGAINST OR DER OF CIT(A)-17, NEW DELHI DATED 01.09.2016 RELATING TO ASSESSMENT YEARS 2011-12 & 2012-13 AGAINST THE ORDER PASSED UNDER SECTION 143(3)/147 O F THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. BOTH THESE APPEALS ARE RELATING TO SAME ASSESSE E ON SIMILAR ISSUES, WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE LD.AR FOR THE ASSESSEE POINTED OUT THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE CASE OF HUSBAND OF THE ASSESSEE, SH. DEVEN CHACHRA VS DCIT IN ITA NOS. 4209 & 4210/DEL/2017 RELATING TO AYS 2011-12 & 2012-13, ORDER DATED 02.1 1.2017. 4. THE ISSUE WHICH ARISES IN BOTH THE APPEALS IS AG AINST THE DELETION OF ADDITION MADE U/S 2(22)(E) OF THE ACT. IN THE FACT S OF THE CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WAS THE SHAREHOLDER OF M/S. SUPRERIOR FILMS PVT.LTD. AS WELL AS M/S. SUPERIOR CLOTHING PVT.LTD. BOTH THE COMPANIES RELATED TO ONE GROUP OF COMPANIES. THERE WERE FOUR SHAREHO LDERS IN BOTH THE COMPANIES AND THE ASSESSEE WAS ONE OF THE SHAREHOLD ERS IN BOTH THE COMPANIES HAVING 16.35% AND 49% SHAREHOLDING IN M/S . SUPERIOR FILMS PVT.LTD. AND M/S. SUPERIOR CLOTHING PVT.LTD. RESPEC TIVELY. M/S. SUPERIOR FILMS PVT.LTD. HAD GIVEN UNSECURED LOAN OF RS11,20,40,194 /- DURING THE ASSESSMENT YEAR 2011-12 AND RS.23,93,41,428/- FOR THE ASSESSME NT YEAR 2012-13. SINCE THE ASSESSEE WAS HAVING SUBSTANTIAL SHAREHOLDING IN BOTH THE COMPANIES, WHICH WAS MORE THAN 10% AND LENDER COMPANY POSSESSE D ACCUMULATED PROFITS DURING THE YEARS UNDER CONSIDERATION, THEREFORE, TH E ASSESSING OFFICER INVOKED SECTION 2(22)(E) OF THE ACT AND MADE ADDITION ACCOR DINGLY. 5. THE CIT(A) DELETED THE ADDITION MADE U/S 2(22)(E ) OF THE ACT OBSERVING AS UNDER:- 2.3. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSION OF THE APPELLANT AND ALSO PERUSED THE AS SESSMENT ORDER. I FIND THAT THE APPELLANT WAS ONE OF THE SHAREHOLDERS IN B OTH THE COMPANIES AND HAVING MORE THAN 10% SHAREHOLDING. THERE WAS ACCUMU LATED PROFIT AVAILABLE WITH THE LENDER COMPANY I.E. M/S. SUPERIO R FILMS PVT. LTD. FOR BOTH THE YEARS, HOWEVER, IT IS OBSERVED THAT THE LO AN OF RS.11,20,40,194/- GIVEN DURING THE AY-2011-12 WAS REPAID BY M/S. SUPE RIOR CLOTHING PVT. LTD. DURING THE YEAR ITSELF TO THE EXTENT OF RS. 10 ,42,55,000/-. DURING THE AY-2012-13 A LOAN OF RS.23,93,41,428/- WAS GIVEN OU T OF WHICH RS.8,94,36,000/- WAS REPAID DURING THE YEAR ITSELF. THE BALANCES AMOUNT OF LOANS WAS REPAID IN THE SUBSEQUENT YEARS. IT WAS ARGUED BY THE APPELLANT THAT THE NATURE OF LOANS WAS A NORMAL BUS INESS ACCOMMODATION PROVIDED TO THE GROUP COMPANY, WHICH CANNOT BE TERM ED AS DEEMED DIVIDEND. THERE WAS ONLY A CURRENT ACCOUNT MAINTAIN ED BETWEEN THE GROUP COMPANIES TO FACILITATE A BUSINESS NEED AND TO FULF ILL COMMERCIAL EXPEDIENCY, THEREFORE, THE SAME DOES NOT COME UNDER THE PURVIEW OF THE SECTION 2(22)(E) OF THE ACT. IT WAS FURTHER SUBMITT ED THAT IT WAS NOT INTEREST FREE LOAN BUT IT WAS INTEREST BEARING LOAN ON WHICH INTEREST @ 12% WAS CHARGED, WHICH WAS CALCULATED ON DAY TO DAY BASIS, AND THE SAME CAN BE SEEN FROM THE FINANCIAL STATEMENT OF BOTH THE COMPA NIES FOR BOTH THE YEARS. DURING THE FY-2010-11 INTEREST OF RS.78,51,725/- WA S PAID AND FOR THE FY- 2011-12 THE SAME WAS PAID OF RS.2,62,90,476/- TO M/ S. SUPERIOR FILMS PVT. LTD. BY M/S. SUPERIOR CLOTHING PVT. LTD. THE S AME WAS REFLECTED IN THE P & L ACCOUNT OF BOTH THE COMPANIES FOR BOTH THE YE ARS. THE FACT REMAINS THAT M/S. SUPERIOR CLOTHING PVT. LTD. WAS NOT SHARE HOLDER OF M/S. SUPERIOR FILMS PVT. LTD. THOUGH, THE APPELLANT WAS SHAREHOLD ER IN BOTH THE COMPANIES BUT THERE WAS NO DIRECT OR INDIRECT BENEF IT RECEIVED BY HER FROM ANY OF THE COMPANIES. THEREBY, THOUGH THE APPELLANT WAS REGISTERED SHAREHOLDER BUT SHE WAS NOT BENEFICIAL SHAREHOLDER OF THE COMPANY. IN THIS REGARD, RELIANCE WAS PLACED BY THE APPELLANT ON THE JUDGEMENT OF SPECIAL BENCH OF ITAT, MUMBAI, IN THE CASE OF ACIT VS. BHAU MIK COLOR PVT. LTD. REPORTED T: 120 TTJ 865 (SB). IN THE INSTANT CASE A LSO, THOUGH, BOTH THE COMPANIES WERE PERTAINING TO ONE GROUP OF COMPANIES BUT M/S. SUPERIOR CLOTHING PVT. LTD. WAS NEITHER REGISTERED NOR BENEF ICIAL SHAREHOLDER OF M/S. SUPERIOR FILMS PVT. LTD. AS INTEREST WAS RECEIVED O N THE LOAN AMOUNT. SIMILARLY, THOUGH THE APPELLANT WAS REGISTERED SHAR EHOLDER OF M/S. SUPERIOR FILMS PVT. LTD. BUT SHE WAS NOT BENEFICIAL SHAREHOLDER AS SHE HAD NOT RECEIVED ANY LOAN, MONEY OR ANY OTHER BENEFIT F ROM M/S. SUPERIOR FILMS PVT. LTD. IN THE SAME WAY, SHE HAD ALSO NOT RECEIVE D ANY BENEFIT DIRECTLY OR INDIRECTLY FROM M/S. SUPERIOR CLOTHING PVT. LTD., T HEREFORE, THE FACTS OF THE JUDGEMENT OF SPECIAL BENCH OF ITAT (SUPRA) ARE IDEN TICAL WITH THE FACTS OF THE PRESENT CASE. FURTHER, IN THE CASE OF MEHUL PRA TAP ASNARII VS. ITO, WARD-1(2), AHMEDABAD, THE ITAT AHMEDABAD 'A' BENCH IN ITA NO.2476/AHD/2011 & ITA NO.245/AHD/2011 AND ALSO IN THE CASE OF ACIT, CIRCLE-14 AHMEDABAD VS. BHARAT J. PATEL, THE AHMEDABAD ITAT 'C' BENCH IN ITA NO.L371/AHD/2QLL THE JUDGEMENT OF SPEC IAL BENCH WAS FOLLOWED ON SIMILAR FACTS. 6. WE FIND THAT THE TRIBUNAL HAS ALSO APPRECIATED T HE AFORESAID FACTS IN THE CASE OF SHRI DEVEN CHACHRA VS DCIT (SUPRA) AND DELE TED THE ADDITION OBSERVING AS UNDER:- 7. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT AT PAGE 4 OF THE ASSESSEES WRITTEN SUBMISSIONS, HE HAS GIVEN A CHAR T POINTING OUT THE INTEREST INCOME RECEIVED BY M/S SUPERIOR FILMS (P) LTD. IN THE YEARS UNDER APPEAL AS WELL AS IN THE PRECEDING AND SUBSEQUENT Y EARS. THIS CHART GIVES THE DETAILS OF INTEREST RECEIVED FROM THE GROUP CON CERN AS WELL AS OTHERS. FOR READY REFERENCE, THE SAME IS REPRODUCED BELOW : - SR.NO. A.Y. INTEREST RECEIVED FROM SUPERIOR CLOTHING INTEREST RECEIVED FROM SUPERIOR CRAFT INTEREST RECEIVED FROM OTHER PARTIES GROSS INTEREST OTHER INCOME REVENUE FROM OPERATIONS ASSESSMENT U/S I) 2007- O8 5,99,135 10,71,186 4,18,192 20,88,513 2,28,01,673 2,48,90,186 143(1) II) 2008- 09 47,78,479 7,25,342 13,79,730 68,83,551 10,45,77,420 11,14,60,971 143(1) III) 2009- 10 7,21,01,18 9,089 10,45,446 82,64,653 6,33,29,416 7,15,94,069 143(1) IV) 2010- 11 8,61,190 8,61,190 13,88,227 22,49,417 143(1) V > 2011- 12 78,51,725 (124.131G) 29,650 (124.131G) 72,65,167 1,51,46,542 (124) 74,05,288 2,23,03,697 (131) 143(3) PAGES 188- 190 OF PAPER BOOK FOR AY 2011-12 VI) 2012- 13 2,62,90,476 (101) 33,11,489 (101) 85,83,797 3,81,85,762 1,18,49,712 5,00,35,474 (91 READ WITH 99) 143(3) PAGE 104 OF PAPER BOOK FOR AY 2012-13 VII) 2013- 14 3,91,85,297 2,53,643 88,69,752 4,83,08,692 1,83,37,728 6,66,46,420 143(3) PAGES 191- 192 OF PAPER BOOK FOR AY 2011-12 VIII) 2014- 15 3,66,45,585 1,09,86,305 4,76,31,890 1,20,66,381 5,96,98,271 143(3) IX) 2015- 16 4,39,68,508 2,24,02,759 6,63,71,267 1,53,01,200 8,16,72,467 143(1) X) 2016- 17 2,86,31,756 2,57,26,625 5,43,58,381 1,76,47,588 7,20,05,969 143(1) 8. FROM THE ABOVE, IT IS EVIDENT THAT M/S SUPERIOR FILMS (P) LTD. IS RECEIVING SUBSTANTIAL INTEREST FROM THE GROUP CONCERNS AS WEL L AS OTHERS RIGHT FROM ASSESSMENT YEAR 2007-08 TO 2016-17. FROM PAGE 6 ONW ARDS OF THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS GIVEN THE TRANSACTION S BETWEEN M/S SUPERIOR FILMS (P) LTD. AND OTHER GROUP CONCERNS, F ROM WHICH, IT IS EVIDENT THAT THERE WERE SEVERAL TRANSACTIONS OF THE PAYMENT AND RECEIPT OF THE MONEY DURING THE YEARS UNDER APPEAL. CONSIDERING TH E TOTALITY OF ABOVE FACTS, WE HAVE NO HESITATION TO HOLD THAT M/S SUPER IOR FILMS (P) LTD. USED TO ADVANCE THE MONEY FOR EARNING INTEREST INCOME TO VARIOUS CONCERNS WHICH INCLUDED GROUP CONCERNS ALSO. THE ADVANCING O F MONEY WAS A REGULAR COURSE OF BUSINESS FOR M/S SUPERIOR FILMS ( P) LTD., NOT ONLY IN THE YEARS UNDER APPEAL BUT ALSO IN THE PRECEDING AS WEL L AS SUBSEQUENT YEARS. IN VIEW OF THE ABOVE, WE HAVE NO HESITATION TO HOLD THAT ADVANCING OF MONEY BY M/S SUPERIOR FILMS (P) LTD. TO THE GROUP C ONCERNS WAS DURING THE COURSE OF NORMAL COURSE OF ADVANCING MONEY FOR THE PURPOSE OF EARNING INTEREST. 9. IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA), HO N'BLE HIGH COURT OF CALCUTTA HAS HELD AS UNDER :- HELD, ALLOWING THE APPEAL, THAT FOR RETAINING THE BENEFIT OF LOAN AVAILED OF FROM THE BANK IF DECISION WAS TAKEN TO G IVE ADVANCE TO THE ASSESSEE SUCH DECISION WAS NOT TO GIVE GRATUITOUS A DVANCE TO ITS SHAREHOLDER BUT TO PROTECT THE BUSINESS INTEREST OF THE COMPANY. THE SUM OF RS.20,75,000 COULD NOT BE TREATED AS DEEMED DIVIDEND. 10. IN CIRCULAR NO.19/2017, PARAGRAPH 3, THE CBDT H AS ALSO HELD THAT TRADE ADVANCES, WHICH ARE IN THE NATURE OF COMMERCI AL TRANSACTIONS WOULD NOT FALL WITHIN THE AMBIT OF THE WORD ADVANCE IN SECTION 2(22)(E) OF THE ACT. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE. 11. IN THE CASE UNDER CONSIDERATION, THE ADDITION U /S 2(22)(E) IS MADE IN THE CASE OF AN ASSESSEE WHO IS AN INDIVIDUAL. ADMIT TEDLY, NO ADVANCE OR BORROWED MONEY IS RECEIVED BY THE ASSESSEE FROM THE CONCERNS IN WHICH THE ASSESSEE IS A SHAREHOLDER. THERE IS A TRANSACTI ON OF ADVANCING OF MONEY BY M/S SUPERIOR FILMS (P) LTD. TO THE GROUP C ONCERNS IN THE NORMAL COURSE OF BUSINESS. IN VIEW OF THE ABOVE DECISION O F HONBLE HIGH COURT OF CALCUTTA AS WELL AS CBDTS CIRCULAR, SECTION 2(22)( E) IS NOT APPLICABLE IN THE FACTS OF THE CASE UNDER APPEAL BEFORE US. WE, T HEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBLE HIGH COURT OF CALCUTTA AS WELL AS CBDTS CIRCULAR, DELETE THE ADDITION MADE U/S 2(22) (E) OF THE ACT. 7. FOLLOWING THE SAME PARITY OF REASONING, WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE. ACCORDINGLY, WE U PHOLD THE ORDER OF CIT(A) IN DELETING THE AFORESAID ADDITION MADE U/S 2(22)(E) O F THE ACT. 8. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 TH FEBRUARY, 2020. SD/- SD/- (DR.B.R.R.KUMAR) (SUSHMA CHOWLA) ( ) / ACCOUNTANT MEMBER ! / VICE PRESIDENT / DATED : 28 TH FEBRUARY, 2020 * AMIT KUMAR * 61/+378983: COPY OF THE ORDER IS FORWARDED TO : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT 3. ;3 < = / THE CIT(A) 4. > ;3 / THE PR. CIT 5. 6. ITAT, DELHI ?$,@: GUARD FILE. 6 / BY ORDER, 083/+3 //TRUE COPY// ASSISTANT REGISTRAR, ITAT, DELHI