ITO, New Delhi V. Sh. Praveen Aggarwal, Gurgaon

ITA 6/DEL/2012

• Counselvise Citation: 620114 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.6/DEL/2012 6/DEL/2012 6/DEL/2012 6/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -30(1), 30(1), 30(1), 30(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI PRAVEEN AGGAR SHRI PRAVEEN AGGAR SHRI PRAVEEN AGGAR SHRI PRAVEEN AGGARWAL, WAL, WAL, WAL, C CC C- -- -122, SOUTH CITY, PART 122, SOUTH CITY, PART 122, SOUTH CITY, PART 122, SOUTH CITY, PART- -- -1, 1,1, 1, GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). PAN : PAN : PAN : PAN : AAGPA4937N. AAGPA4937N. AAGPA4937N. AAGPA4937N. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y.KAKKAR, SR.DR. RESPONDENT BY : SHRI AJAY WADHWA, ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXV, NEW DELHI DATED 13 TH OCTOBER, 2011 FOR THE AY 2008-09. 2. THE ONLY GROUND RAISED BY THE REVENUE READS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS.2,21,71,181/- OUT OF TOTAL ADDITION OF RS.2,2 3,29,601/- MADE BY AO U/S 2(22)(E) OF IT ACT. 3. THE FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS TAKEN LOAN/ADVANCE FROM M/S MULTIPLEX FINCAP LTD. (IN SHO RT MFL) AMOUNTING TO ` 2,23,29,601/-. THE ASSESSEE WAS THE BENEFICIAL OWN ER OF EQUITY SHARES HOLDING NOT LESS THAN 10% OF THE VOTING POWE R IN MFL. THEREFORE, THE LOAN WAS TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961. ON APPEAL, L EARNED CIT(A), IN ITA-6/DEL/2012 2 PRINCIPLE, UPHELD THE APPLICABILITY OF SECTION 2(22 )(E), BUT, HE REDUCED THE ADDITION TO ` 1,58,420/- WITH THE FOLLOWING FINDING:- 3.3 I HAVE CONSIDERED THE ADDITION OF THE AO AND T HE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE. THE ASSESSEE WA S ASKED ON 11/10/2011 TO SUBMIT THE DETAILS OF THE P& L ACCOUNT AND BALANCE SHEET OF THE ASSESSEE AND ALSO THE P&L ACCOUNT AND BALANCE SHEET OF THE COMPANY I.E. MULTIPLEX FINCAP LTD. AND THE ASSESSEE HAS SUBMITTE D THE SAME DURING THE COURSE OF HEARING ON 12/10/2011. A PERUSAL OF THE BALANCE SHEET SHOWS THAT THE ACCUMUL ATED PROFITS (RESERVE AND SURPLUS) IS ONLY RS.1,58,420/- (RS.1,51,189/- (+) RS.7,231/-) AS CLAIMED BY THE AS SESSEE EARLIER VIDE ANNEXURE-A AND PARA 14 OF THE AO. THE ACCOUNTS OF THE COMPANY ARE AUDITED BY M/S DEEPAK I P AGGARWAL & CO, CAS (MEMBERSHIP NO.503548) AND A COP Y OF THE AUDITED P&L ACCOUNT AND BALANCE SHEET IS MAR KED AS ANNEXURE-B. 4. THE REVENUE, AGGRIEVED WITH THE ORDER OF THE CIT (A), IS IN APPEAL BEFORE US WHILE THE ASSESSEE IS NEITHER IN APPEAL N OR IN CROSS-OBJECTION. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE MATERIAL PLACED BEFORE US. SECTION 2(22)(E) OF THE ACT READS AS UNDER:- 2. 2.2. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIR ES, - (22) (22) (22) (22) DIVIDEND INCLUDES - (E) (E)(E) (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF A NY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS OF TH E COMPANY OR OTHERWISE)[MADE AFTER THE 31ST DAY OF MA Y, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, B EING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT B EING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CO NCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN T HIS CLAUSE REFERRED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEF IT, OF ITA-6/DEL/2012 3 ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE CO MPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS ; (EMPHASIS BY UNDERLINING PROVIDED BY US) 6. FROM THE ABOVE, IT IS EVIDENT THAT DEEMED DIVIDE ND AS PER SECTION 2(22)(E) WOULD BE LIMITED TO THE EXTENT TO WHICH THE COMPANY POSSESSES ACCUMULATED PROFITS. THAT THE CIT(A) HAS RECORDED THE FINDING THAT FROM THE BALANCE SHEET OF THE COMPANY, IT IS EVIDENT THAT ACCUMULATED PROFITS OF MFL WERE ONLY ` 1,58,420/-. WE FIND THAT THE ASSESSEE MADE SIMILAR CLAIM BEFORE THE ASSESSING OF FICER ALSO WHICH HE HAS REPRODUCED IN PARAGRAPH 14 OF THE ASSESSMENT OR DER. 7. AT THE TIME OF HEARING BEFORE US, IT WAS STATED BY THE LEARNED COUNSEL THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE ACCUMULATED PROFITS OF MFL AT ` 1,58,420/- ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED HIS VERSION OF COMPUTATION OF ACCUMULATED PROFIT WITHIN THE MEANING OF SECTION 2(22)(E). HE STATED THAT THERE IS NO QUESTION OF DIFFERENT VERSION OF ACCUMULATED PROFITS. THE ASSE SSEE HAS ALREADY STATED THAT ACCUMULATED PROFIT IS ` 1,58,420/- AND THE ASSESSING OFFICER HAS NOT REBUTTED THE SAME. AFTER CAREFULLY CONSIDE RING THE ARGUMENTS OF BOTH THE SIDES AND PERUSING THE MATERIAL PLACED BEFORE US, WE ARE OF THE OPINION THAT THE ADDITION OF DEEMED DIVIDEND UN DER SECTION 2(22)(E) CAN BE MADE ONLY TO THE EXTENT OF ACCUMULA TED PROFIT OF THE COMPANY FROM WHOM THE ASSESSEE HAD TAKEN THE LOAN. IN THE PAPER BOOK, THE ASSESSEE HAS GIVEN THE BALANCE SHEET OF M FL AS ON 31 ST MARCH, 2008. THE RESERVE AND SURPLUS OF THE SAID C OMPANY IS AS UNDER:- 2) RESERVES AND SURPLUS PROFIT & LOSS ACCOUNT 151,189.30 SPECIAL RESERVE 7,231.38 TOTAL : 158,420.68 ITA-6/DEL/2012 4 8. FROM THE BALANCE SHEET OF MFL, IT IS EVIDENT THA T THE ACCUMULATED PROFIT IS ONLY ` 1,58,420/-. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). THE SAME IS SUSTAINED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2013. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 25.10.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -30(1), 30(1), 30(1), 30(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 2. RESPONDENT : SHRI PRAVEEN AGGARWAL, SHRI PRAVEEN AGGARWAL, SHRI PRAVEEN AGGARWAL, SHRI PRAVEEN AGGARWAL, C CC C- -- -122, SOUTH CITY, PART 122, SOUTH CITY, PART 122, SOUTH CITY, PART 122, SOUTH CITY, PART- -- -1, 1,1, 1, GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR