DCIT, Alwar V. SHRI BASANT BANSAL, GURGAON

ITA 610/JPR/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0471 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ROLEE AGARWAL
• Assessee Lawyers: RAKESH GUPTA; MILAP CHATURVEDI ADV DH
• Keywords: Share purchase agreement; Opportunity of being heard; Additional evidence; Deemed dividend

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 610 & 611/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2007-08 & 2008-09 D.C.I.T. CENTRAL CIRCLE, ALWAR. CUKE VS. BASANT BANSAL, C-13, SUSHANT LOK-1, GURGAON, HARYANA. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AHYPB 1937 A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : MRS. ROLEE AGARWAL (CIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAKESH GUPTA & SHRI MILAP CHATURVEDI (ADV) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 06/04/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 23/04/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THESE ARE THE APPEALS FILED BY THE DEPARTMENT AGAIN ST THE ORDER DATED 30/03/2012 PASSED BY THE LEARNED CIT(A), CENT RAL, JAIPUR FOR A.Y. 2007-08 & 2008-09. THE RESPECTIVE GROUNDS OF BOTH TH E APPEALS ARE AS UNDER:- ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 2 GROUNDS IN REVENUES APPEAL ITA NO. 610/JP/2012 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE AMOUNT OF RS. 25,25,000/- PAID BY M/S MISTRY MEADOWS PVT. LTD. TO M/S BENCHMARK INFOTECH PVT. LTD. WHERE THE ASSESSEE WAS HOLDING 18.8% AND 50% SHARES RESPECTIVELY, DO NOT FALL WITHI N THE PURVIEW OF SECTION 2(22)(E) AND THEREBY DELETING THE ADDITION OF RS. 25,25,000/- MADE BY THE A.O. BY INVOKING PROVISIONS OF SEC 2(22)(E) OF THE ACT. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AMOUNT ADVANCED BY M/S MANGLAM MULTIPLEX PVT. LTD., TO M/S BENCHMARK INFOTECH PVT. LTD., WHERE THE ASSESSEE WAS ONE OF TH E DIRECTORS HOLDING MORE THAN 10% SHARES RESPECTIVELY DO NOT FALL WITHIN THE PURVIEW OF SECTION 2(22)(E) AN D THEREBY DELETING THE ADDITION OF RS. 7,85,559/- REPRESENTING 50% OF THE ACCUMULATED PROFIT OF P&L A/C. GROUNDS IN REVENUES APPEAL ITA NO. 611/JP/2012 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE AMOUNT ADVANCED BY M/S MISTRY MEADOWS PVT. LTD. TO M/S MARTIAL BUILDCON PVT. LTD., WHERE THE ASSESSEE WAS ONE OF THE DIRECTORS HOLDING MORE THAN 10% SHARES RESPECTIVELY DO NOT FALL WITHIN THE PURVIEW OF SECTION 2(22)(E) AND THEREBY DELETING THE ADDITION OF RS. 13,76,629/-. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AMOUNT ADVANCED BY M/S MANGLAM MULTIPLEX PVT. LTD., TO M/S MARTIAL BUILDCO N PVT. LTD. WHERE THE ASSESSEE WAS ONE OF THE DIRECTORS HOLDING MORE THAN 10% SHARES RESPECTIVELY DO NOT FA LL ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 3 WITHIN THE PURVIEW OF SECTION 2(22)(E) AND THEREBY DELETING THE ADDITION OF RS. 16,71,302/- REPRESENTI NG 50% OF THE ACCUMULATED PROFIT OF P&L A/C. 1(III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AMOUNT ADVANCED BY M/S B& B MERCANTILE PVT. LTD., TO M/S MARTIAL BUILDCON PVT. LTD. WHERE THE ASSESSEE WAS ONE OF THE DIRECTORS HOLDING MORE THAN 10% SHARES RESPECTIVELY DO NOT FALL WITHIN THE PURVIEW OF SECTION 2(22)(E) AND THEREBY DELETING THE ADDITION OF RS. 40,23,050/- REPRESENTING 50% OF THE TOTAL ADVANCE OF RS. 80,46,100/-. 2. IN BOTH THE ASSESSMENT YEARS, THE REVENUE IS CHA LLENGING THE DELETING ADDITION OF RS. 25,25,000/- AND RS. 7,85,5 59/- IN A.Y. 2007-08 AND RS. 13,76,629/- , 16,71,302/- AND RS. 80,46,100 IN A.Y. 2008-09, THE ADDITIONS MADE U/S 2(22)(E) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED AS THE ACT) AS DEEMED DIVIDEN D. THE LD ASSESSING OFFICER OBSERVED THAT FROM HDFC BOOK FOR THE PERIOD 01/4/2006 TO 31/3/2007 SUBMITTED ALONGWITH REPLY DATED 10/08/2010 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S BENCHMARK INFOTECH PVT. LTD. THAT AN AMOUNT OF RS. 25.25 LACS HAD BEEN RECEIVED BY IT FROM M/S MISTY MEADOWS PVT. LTD., WHICH HAS BEE N REPAID ON 22/03/2007. SHRI BASANT BANSAL HELD 18.80% SHARES O F M/S MISTY MEADOWS (P) LTD. AND 50% SHARES OF M/S BENCHMARK INF OTECH PVT. LTD. DURING THE YEAR 2006-07. SHRI BASANT BANSAL HELD MO RE THAN 10% ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 4 SHARES IN M/S MISTY MEADOWS (P) LTD., WHICH HAD GIVEN THE LOAN AND HELD MORE THAN 20% SHARES OF M/S BENCHMARK INFOTECH PVT. LTD., WHICH HAD RECEIVED THE ADVANCE. ACCUMULATED PROFIT ON THE M/S MISTY MEADOWS (P) LTD. AS ON 31/3/2007 WAS RS. 1,85,91,329. 39. THEREFORE, THE AMOUNT OF RS. 25.25 LACS PAID BY M/S MISTY MEAD OWS (P) LTD. TO M/S BENCHMARK INFOTECH PVT. LTD. WAS CONSIDERED TO BE DI VIDEND PAID TO SHRI BASANT BANSAL IN VIEW OF THE PROVISIONS OF SECTION 2 (22)(E) OF THE ACT. THE LD ASSESSING OFFICER GAVE SHOW CAUSE NOTICE ON IT , WHICH WAS REPLIED BY THE ASSESSEE AND CONSIDERED BY HIM DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED BEFORE HIM THAT M/S MISTY MEADOWS (P) LTD. HAD SHARE PREMIUM ACCOUNT, WHICH WAS NOT AVAILABLE FOR ANY DISTRIBUTION TO THE COMPANY. THE LD ASSESSI NG OFFICER FOUND THAT ACCUMULATED PROFIT AS ON 31/3/2007 UNDER THE HEAD S HARE PREMIUM ACCOUNT AT RS. 99,50,000/- AND P&L ACCOUNT AT RS. 8 6,41,329.39. THE SHARE PREMIUM ACCOUNT REMAINED CONSTANT, THEREFORE, THERE WAS NO QUESTION OF ADVANCING ANY AMOUNT FROM THIS ACCOUNT. DURING THE YEAR, THE ASSESSEE HELD SUFFICIENT PROFIT OF M/S MISTY ME ADOWS (P) LTD. AND FROM WHICH IT HAD ADVANCED RS. 25.25 LACS TO M/S BEN CHMARK INFOTECH PVT. LTD.. THE ASSESSEE ALSO RELIED BEFORE THE ASSES SING OFFICER A DECISION OF HONBLE ITAT, MUMBAI BENCH IN THE CASE OF ACIT VS. ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 5 BHAUMIK COLOUR PVT. LTD. (2009) 118 ITD 1 (MUM) (SB ). AS PER THE ASSESSING OFFICERS FINDING, THE CASE LAW IS NOT SQ UARELY APPLICABLE ON THE ASSESSEES CASE AS THE ASSESSEE IS A REGISTERED SHARE HOLDER IN BOTH THE COMPANIES HAVING MINIMUM SHARE HOLDING AS REQU IRED BY THE LAW TO BE HELD DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. HE FURTHER RELIED ON THE DECISION IN THE CASE OF CIT VS. HOTEL HILTOP, 31 3 ITR 116 OF HONBLE RAJASTHAN HIGH COURT WHEREIN IT HAS BEEN HELD THAT D EEMED DIVIDEND WOULD BE DEEMED DIVIDEND IN THE HANDS OF THE BENEFIC IAL OWNER AND NOT THE CONCERN. THE ASSESSEES ARGUMENT WAS ALSO NOT FOU ND CONVINCING TO THE ASSESSING OFFICER THAT SO CALLED LOAN AND ADVAN CE IS NOT ITSELF A LOAN BUT REPAYABLE ON DEMAND, THE ASSESSEES CASE IS COV ERED U/S 2(22)(E) OF THE ACT. M/S MISTY MEADOWS PVT. LTD. HAVE ACCUMUL ATED PROFIT OF RS. 86,41,329.39 OTHER THAN SHARE PREMIUM RESERVE OF RS . 99,50,000/-. AS SUCH CASE OF THE ASSESSEE IS WITHIN THE FOUR CORNERS OF SECTION 2(22)(E). THEREFORE, THE AMOUNT OF RS. 25,25,000/- ADVANCED B Y M/S MISTY MEADOWS PVT. LTD. TO M/S BENCHMARK INFOTECH PVT. LTD . WAS CONSIDERED TO BE DEEMED DIVIDEND AND MADE THE ADDITION OF RS. 25.25 LACS. IT IS FURTHER HELD THAT RS. 9 CRORES HAD BEEN ADV ANCED BY M/S MANGLAM MULTIPLEX PVT. LTD. TO M/S BENCHMARK INFOTE CH PVT. LTD.. SHRI ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 6 BASANT BANSAL HELD 74% SHARES OF M/S MANGLAM MULTIP LEX PVT. LTD. AND 50% OF M/S BENCHMARK INFOTECH PVT. LTD. DURING THE YEAR 2006-07. SIMILARLY, ROOP BANSAL ALSO HELD 12% OF M/S MANGLAM MULTIPLEX PVT. LTD. AND 50% SHARES OF M/S BENCHMARK INFOTECH PVT. LTD. DURING THE SAID PERIOD. BOTH THE PERSONS HELD MORE THAN 10% SH ARES EACH IN M/S MANGLAM MULTIPLEX PVT. LTD. AND MORE THAN 20% SHARE S IN M/S BENCHMARK INFOTECH PVT. LTD., WHICH HAD RECEIVED THE ADVANCE OF RS. 9 CRORES. ACCUMULATED PROFIT OF M/S MANGLAM MULTIPLEX PVT. LTD. AS ON 31/3/2007 WAS RS. 2,11,71,118.50 AGAINST THE AMOUNT OF 9 CRORES PAID BY M/S MANGLAM MULTIPLEX PVT. LTD. TO M/S BENCHMARK INFOTECH PVT. LTD. WAS CONSIDERED TO BE DIVIDEND PAID TO SHRI BASANT BA NSAL AND SHRI ROOP BANSAL IN EQUAL PROPORTION IN VIEW OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE ASSESSING OFFICER ALSO SOUGHT CLARIF ICATION FROM THE ASSESSEE, WHICH HAS BEEN AVAILED BY HIM. THE IDENTIC AL REPLY WAS ALSO SUBMITTED AGAINST THIS QUERY BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE ASSESSEE SUBMITTED THAT THESE ARE BUSIN ESS TRANSACTIONS BETWEEN THE COMPANIES AND CANNOT BE TREATED AS DEEME D DIVIDEND U/S 2(22)(E) OF THE ACT. THE ASSESSEE RELIED ON THE FOLL OWING CASE LAWS:- (I) CIT VS. BADIANI P.K. (BOM) 076 ITR 369 ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 7 (II) CIT VS. RAJKUMAR (DELHI HIGH COURT) 318 ITR 426 AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSE SSING OFFICER HELD THAT ACCUMULATED PROFIT WAS RS. 15,71,118.50/- CONSIDERED TO BE ADVANCED BY M/S MANGLAM MULTIPLEX PVT. LTD. TO M/S BENCHMARK INFOTECH PVT. LTD., WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFF ICER FOR DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE AND SHRI ROOP BANSAL EQUALLY. ACCORDINGLY HE MADE ADDITION OF RS. 7,85,559/- U/S 2(22)(E) OF THE ACT. IN A.Y. 2008-09, IT WAS NOTICED BY THE ASSESSING OF FICER THAT IN CASE OF M/S MARTIAL BUILDCON PVT. LTD. THAT M/S MIS TY MEADOWS PVT. LTD HAD PAID RS. 8 CRORES TO M/S MARTIAL BUILDCON PVT. LTD. ON 08/3/2008, WHICH HAS BEEN PAID BACK BY M/S MARTIAL BUILDCON PVT . LTD. ON 26/03/2008. SHRI BASANT BANSAL HELD 34% OF M/S MART IAL BUILDCON PVT. LTD. AND 18.80% SHARES OF M/S MISTY MEADOWS PVT. LTD . DURING THE YEAR 2007-08, WHICH MEANS THAT THE ASSESSEE HELD MORE THA N 10% SHARES IN M/S MISTY MEADOWS PVT. LTD. WHICH HAS EXTENDED THE AD VANCE AND HELD MORE THAN 20% SHARES OF M/S MARTIAL BUILDCON PVT. L TD., THE ACCUMULATED PROFIT AS ON 31/3/2008 AT RS. 1,13,26,6 29.58/-. ACCORDINGLY, HE TREATED THE DEEMED DIVIDEND TO THE EXTENT OF ACCUMULATED PROFIT IN THE HANDS OF THE ASSESSEE. A SHOW CAUSE NOTICE ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 8 WAS GIVEN BY THE ASSESSING OFFICER TO THE ASSESSEE, WHICH HAS BEEN REPLIED BY HIM AND CONSIDERED BY THE ASSESSING OFFI CER. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT 99.95 L ACS WAS IN THE SHARE PREMIUM ACCOUNT, WHICH IS NOT AVAILABLE FOR DIVIDEN D. THE LD ASSESSING OFFICER HELD THAT IF THE ASSESSEES CONTENTION IS A CCEPTED EVEN AFTER REDUCING SHARE PREMIUM ACCOUNT FROM THE ACCUMULATED PROFIT, THE REMAINING AMOUNT WOULD BE RS. 13,76,629. THE ASSESSEE S ARGUMENT BEFORE THE ASSESSING OFFICER THAT THESE TRANSACTION S DOES NOT FALL WITHIN THE DEFINITION OF LOAN AND ADVANCES AS THE LOAN IS REPAYABLE ON DEMAND BY THE LENDER. HOWEVER, THESE SUBMISSIONS WERE NOT FO UND CONVINCING TO HIM AS THESE TRANSACTIONS ARE COVERED U/S 2(22(E ) OF THE ACT. THE SUBMISSIONS BEFORE THE ASSESSING OFFICER IS THAT TH ESE TRANSACTIONS ARE BUSINESS TRANSACTIONS BETWEEN M/S MARTIAL BUILDCON ( P) LTD. AND M/S MANGLAM MULTIPLEX PVT. LTD. BUT THE ASSESSING OFFIC ER ASKED TO FILE COPY OF THE SALE DEED OF LAND TO PROVE THE BUSINESS TRAN SACTION MADE BY THESE COMPANIES WERE NOT SUBMITTED IN EITHER CASES. THE ASSESSEE PARTY HAS NOT ADVANCED ANY EVIDENCE TO PROVE THAT T HESE TRANSACTIONS ARE BUSINESS TRANSACTIONS BETWEEN M/S MANGLAM MULTIP LEX PVT. LTD. TO M/S MARTIAL BUILDCON (P) LTD. FOR PURCHASE OF LAND. THE ASSESSEE ALSO ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 9 RELIED UPON VARIOUS CASE LAWS BEFORE THE A.O. ON DEE MED DIVIDEND/BUSINESS TRANSACTIONS. THE CASES ARE AS UN DER:- (I) CIT VS. BADIANI P.K. (BOM) (SUPRA) (II) CIT VS. RAJKUMAR (DELHI HIGH COURT) (SUPRA) THERE WAS ACCUMULATED PROFIT AT RS. 33,42,604/- HAS B EEN CONSIDERED TO BE ADVANCED BY THE M/S MANGALAM MULTIPLEX PVT. L TD. TO M/S MARTIAL BUILDCON PVT. LTD. AND AS SUCH RS. 33,42,604/- HAS BEEN CONSIDERED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE AND SH RI ROOP BANSAL. AS SUCH OF RS. 33,42,604/- I.E. RS. 16,71,302/- WAS A DDED TO THE INCOME OF THE ASSESSEE AS DEEMED DIVIDEND. THE LD ASSESSIN G OFFICER FURTHER NOTICED THAT IN CASE OF M/S MARTIAL BUILDCON PVT. L TD. THAT M/S B&B MERCANTILE PVT. LTD. HAD PAID RS. 80,46,100/- TO M /S MARTIAL BUILDCON PVT. LTD. AS ON 04/02/2008, WHICH HAS BEEN PAID BACK BY M/S MARTIAL BUILDCON PVT. LTD. ON 25/03/2008. SHRI BASANT BANSA L AND SHRI ROOP BANSAL HELD 34% AND 33% SHARES OF M/S MARTIAL BUILD CON PVT. LTD. RESPECTIVELY AND 50% EACH OF M/S B&B MERCANTILE PVT . LTD. DURING THE YEAR 2007-08. AS SUCH SHRI BASANT BANSAL AND SHRI R OOP BANSAL HELD MORE THAN 10% SHARES IN M/S B&B MERCANTILE PVT. LTD . WHICH HAS GIVEN THE LOAN AND HELD MORE THAN 20% SHARES OF M/S MARTI AL BUILDCON PVT. ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 10 LTD., WHICH HAD RECEIVED THE ADVANCE. THEREFORE, THE ASSESSING OFFICER HELD THAT THE AMOUNT OF RS. 80,46,100/- PAID BY M/S B&B MERCANTILE PVT. LTD. TO M/S MARTIAL BUILDCON PVT. LTD. WAS CONS IDERED TO BE DIVIDEND PAID TO SHRI BASANT BANSAL AND SHRI ROOP BANSAL IN EQUAL PROPORTION IN VIEW OF THE PROVISIONS OF SECTION 2(22)(E) OF THE AC T. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD AND ASSESSEE ALSO REPLIED IN RESPONSE TO NOTICE. AFTER CONSIDERING TH E ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THAT THE ASSESSEE HAD REL IED UPON THE DECISION OF ITAT, MUMBAI BENCH (SB) IN CASE OF ACIT VS. BHAUMI K COLOUR PVT. LTD. (SUPRA), WHICH IS NOT SQUARELY APPLICABLE IN T HE CASE OF ASSESSEE AS THE ASSESSEE IS A REGISTERED SHARE HOLDER AND BENEF ICIAL OWNER OF THE SHARE. IN BHAUMIKS COLOUR PVT. LTD. CASE, THE COMMO N SHARE HOLDER IS A TRUST. SHARE CERTIFICATES ARE IN THE NAME OF THE TRU STEES. THUS THE REGISTERED HOLDERS ARE THE TRUSTEES, WHEREAS THE BEN EFICIAL OWNERS ARE THE BENEFICIARIES OF THE TRUST. HENCE, THE PRIMARY C ONDITION FOR INVOKING SECTION 2(22)(E) IS NOT FULFILLED AND CONSEQUENTLY, SECTION 2(22)(E) DOES NOT APPLY TO THE CASE OF ACIT VS. BHAUMIK COLOUR PVT . LTD. (SUPRA) AS HELD BY THE SPECIAL BENCH ITAT, MUMBAI. IN CASE OF B ASANT BANSAL (ASSESSEE), THERE IS NO AMBIGUITY AS HE IS THE REGI STERED SHARE HOLDER OF BOTH THE COMPANIES WITH SHARE HOLDING OF 50% IN M/S B&B MERCANTILE ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 11 PVT. LTD. AND 34% SHARES HOLDING IN M/S MARTIAL BUI LDCOM PVT. LTD.. HE IS ALSO A BENEFICIAL OWNER. IT HAS MORE THAN 20% SHA RES IN THE ADVANCE RECIPIENT COMPANY I.E. M/S MARTIAL BUILDCOM PVT. LT D. AND THE SHARES HELD BY SHRI BASANT BANSAL ARE ENTITLED TO DIVIDEND . HE FURTHER RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF HOTEL HILTOP (SUPRA). HE FURTHER CONSIDERED THE ASSESSEES ARGUM ENT THAT SALE PROCEEDS OF AGRICULTURAL LAND ARE TO BE TREATED CAP ITAL RESERVE AND NOT ELIGIBLE FOR DISTRIBUTION OF DIVIDEND AS THE APPELL ANT IN THE CASE OF SHARE PREMIUM ACCOUNT BUT THE ASSESSING OFFICER HELD THAT THESE PROCEEDS ALSO PART OF THE PROFIT. THEREFORE, THIS IS A CASE O F DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. HE FURTHER CONSIDERED THE ASSE SSEES ARGUMENT THAT THESE TRANSACTIONS BETWEEN BOTH THE COMPANIES WERE BU SINESS TRANSACTIONS AND THE LD ASSESSING OFFICER FOUND THA T THE ASSESSEE FAILED TO FILE THE COPY OF CONSULTATION-CUM-DEVELOPMENT AG REEMENT ENTERED WITH BOTH THE COMPANIES TO SUPPORT THE CLAIM. HE ALS O CONSIDERED THE CASE LAWS SUBMITTED BY THE ASSESSEE, WHICH WAS NOT FOU ND SQUARELY APPLICABLE IN THE CASE OF ASSESSEE PARTICULARLY CIT VS. BADIANI PK AND CIT VS. RAJKUMAR (SUPRA). IT HAS BEEN HELD THAT AMOU NT OF RS. 80,46,100/- ADVANCED BY M/S B&B MERCANTILE PVT. LTD . TO M/S MARTIAL BUILDCON PVT. LTD. AND AS SUCH COVERED U/S 2(22)(E ) OF THE ACT IN THE ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 12 HANDS OF THE ASSESSEE AND SHRI ROOP BANSAL. BEING OF RS. 80,46,100/- I.E. RS. 40,23,050/- HAS BEEN HELD AS D EEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THE SAME HAS BEEN ADDED I N THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL FOR A.Y. 2007-08 BY OBSERVING THAT THE A SSESSEE HAS FILED ADDITIONAL EVIDENCE BEFORE HIM, THE SAME HAS BEEN R EMANDED BACK AND REPORT HAS BEEN CALLED FOR AND THE LD ASSESSING OFF ICER HAS NOT REBUTTED THE SUBMISSION MADE BY THE ASSESSEE, THEREFORE, THE ADDITIONAL EVIDENCE WAS CONSIDERED FOR DISPOSAL OF APPEAL BEFOR E THE LD CIT(A). AS REGARDS ADDITION OF RS. 25.25 LACS MADE U/S 2(22)(E ) OF THE ACT ON THE GROUND THAT M/S MISTY MEADOWS PVT. LTD. HAD MADE PA YMENT OF RS. 25.25 LACS TO M/S BENCHMARK INFOTECH PVT. LTD. DURI NG THE YEAR UNDER CONSIDERATION, WHICH HAS BEEN RECEIVED BACK ON 22/3/ 2007. IT IS UNDISPUTED THAT SHRI BASANT BANSAL, THE APPELLANT I S HOLDING MORE THAN 10% OF SHARE IN M/S MISTY MEADOWS PVT. LTD. AND IS A LSO HOLDING MORE THAN 20% SHARES IF M/S BENCHMARK INFOTECH PVT. LTD. . AS PER DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. HOTEL HILTOP ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 13 (SUPRA), DEEMED DIVIDEND WOULD BE ADDED IN THE HANDS OF BENEFICIAL OWNER AND NOT IN THE HANDS OF THE CONCERN. THE ASSESS ING OFFICER WAS JUSTIFIED IN CONSIDERING IT IN THE HANDS OF APPELLA NT. THE ASSESSING OFFICER HAS ALSO APPRECIATED THE FACT OF ACCUMULATE D PROFIT IN REMAND REPORT. THE LD ASSESSING OFFICER CONSIDERED THE MOU BETWEEN M/S MISTY MEADOWS PVT. LTD. AND M/S BENCHMARK INFOTECH PVT. L TD. AND HAD NOT REBUTTED THE SUBMISSION OF THE ASSESSEE THAT THESE TRANSACTIONS WERE NOT MADE FOR BUSINESS PURPOSES. HE FURTHER RELIED U PON THE FOLLOWING DECISIONS:- (I) CIT VS. CREATIVE DYEING AND PRINTING P. LTD. (2 009) 318 ITR 476 (DEL). (II) CIT VS. AMBASSADOR TRAVELS PVT. LTD. (2009) 318 ITR 376 (DEL). (III) CIT VS. RAJ KUMAR (2009) 318 ITR 462 (DEL) (IV) PRADEEP KUMAR MALHOTRA S. CIT (2011) 338 ITR 53 8 (CAL). THE LD CIT(A) HELD THAT THESE PAYMENTS WERE NOT LOAN OR ADVANCES FALLEN WITHIN SECTION 2(22)(E) OF THE ACT BUT PAYMEN T FOR PROPOSED PURCHASE OF LAND AND ARE USUAL BUSINESS TRANSACTION . THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 25.25 LACS. ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 14 REGARDING DELETION OF ADDITION OF RS. 7,85,559/-, THE LD CIT(A) HAS HELD THAT AFTER CONSIDERING THE ADDITION EVIDEN CE FILED BEFORE HIM IN FORM OF MOU BETWEEN M/S MANGALAM MULTIPLEX PVT. LTD . AND M/S BENCHMARK INFOTECH PVT. LTD REFLECTED THAT M/S MANG ALAM MULTIPLEX PVT. LTD. ENTERED INTO COLLABORATION OF JOINT DEVELOPMEN T OF THE LAND WITH M/S BENCHMARK INFOTECH PVT. LTD. UNDER THE TERMS OF WHICH A SUM OF RS. 9 CORES WAS PAID TO M/S BENCHMARK INFOTECH PVT. LTD. FOR PAYMENT OF LICENSE FEE/SCRUTINY FEE/OTHER CHARGES. THE COLLA BORATION FOR JOINT DEVELOPMENT IS FURTHER EVIDENCED BY A COPY OF FORM LC-1 FILED TO DIRECTOR TOWN AND COUNTRY PLANNING DEVELOPMENT OF HA RYANA GOVERNMENT WHICH IS AN APPLICATION FOR GRANTING DEV ELOPMENT LICENSE. THE A.O. IN THE REMAND REPORT, HAS VERIFIED THESE FA CTS AND HAS MENTIONED THE SAME. THE A.O. HAS NOT GIVEN ANY ADVER SE COMMENTS ON THESE POINTS AND ALSO PARTICULARLY ON THE CLAIM OF THE AR THAT THESE DOCUMENTS ESTABLISHED THAT THE PAYMENT OF RS. 9 COR ES WAS MADE NOT AS AN ADVANCE OR LOAN BUT FOR THE PURPOSE OF BUSINE SS I.E. FOR JOINT DEVELOPMENT OF LAND BETWEEN M/S MANGALAM MULTIPLEX P VT. LTD. AND M/S BENCHMARK INFOTECH PVT. LTD. THEREFORE, THE LD. CIT( A) DELETED THE ADDITION. ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 15 REGARDING DELETION OF ADDITION OF RS. 13,76,629/-, RS. 16,71,302/- AND RS. 40,23,050/- IN A.Y. 2008-09 THE LD. CIT(A) H AS HELD AS UNDER:- 4.10 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R., REMAND REPORT OF PRESENT A.O., COUNTER COMMENTS OF A.R. AND FURTH ER SUBMISSIONS AS WELL AS MATERIAL AVAILABLE ON RECORD. IN THE REMAND REPORT, AFTER EXAMINATION OF THE ADDITIONAL EVIDENCES, THE A.O. HAS NOT MADE ANY ADVERSE COMMEN TS ON THE ARGUMENT OF THE A.R. THAT THE TRANSACTIONS B ETWEEN (I) M/S MISTY & M/S MARTIAL, (II) M/S MANGALAM AND M/S MARTIAL AND (III) M/S B.B. MERCANTILE AND M/S MARTI AL ARE NOT OF LENDER AND BORROWER WHICH ARE COVERED U/S 2(22)(E) AND ARE RATHER COMMERCIAL BUSINESS TRANSACTIONS. IN BRI EF, A.O. HAS NOT OBJECTED TO THE ARGUMENT OF A.R. THAT M/S M ISTY ENTERED INTO AGREEMENT WITH M/S MARTIAL FOR PURCHASE OF 100 KANALS OF LAND AT AGREED CONSIDERATION OF RS. 4 0 CRORES AGAINST WHICH A SUM OF RS. 8 CRORE WAS GIVEN AS INTI AL PAYMENT BY M/S MISTY TO M/S MARTIAL AND THUS IT WAS NOT AN ADVANCE WITHIN THE MEANING OF SECTION 2(22)9E) BUT WA S INITIAL PAYMENT FOR PURCHASE OF LAND. SIMILARLY THE A.O. HAS ALSO NOT MADE ANY ADVERSE COMMENTS, AFTER CONSIDERI NG THE ADDITIONAL EVIDENCE IN THE FORM OF AGREEMENT, O N THE ARGUMENT OF THE A.R. THAT M/S MANGALAM MADE INITIAL PAYMENT OF RS. 8.4 CRORE FOR PURCHASE OF 100 KANAL S OF LAND FOR TOTAL CONSIDERATION OF RS. 42 CRORES AS PE R THE AGREEMENT FILED (WHEREIN AS RS. 33.42 LAKHS WAS THE ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 16 ACCUMULATED PROFIT OF M/S MANGALAM, RS. 16.71 LAKHS WAS ADDED IN THE HANDS OF BOTH THE ASSESSEES. 4.11 SIMILARLY AFTER EXAMINATION OF ADDITIONAL EVID ENCE BEING AN MOU BETWEEN M/S B.B. AND M/S MARTIAL BY THE A.O., TH E A.O. HAS NOT MADE ANY ADVERSE COMMENTS ON THE ARGUMENT OF A.R. REGARDING PAYMENT BEING IN FURTHER ANCE OF BUSINESS TRANSACTION AS PER THE MOU BETWEEN THE T WO A.O. HAS ALSO MENTIONED THAT THE CASE OF M/S MARTIA L WAS UNDER SCRUTINY AND NO ADVERSE INFERENCE WAS DRAWN BY THE THEN A.O. IN REGARD TO THESE PAYMENTS. 4.12 CONSIDERING THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS DISCUSSED HEREINABOVE, MATERIAL AVAILABLE ON REC ORD INCLUDING THE ADDITIONAL EVIDENCE AND ALSO THE REMA ND REPORT OF THE A.O., IT IS HELD THAT NONE OF THESE T HREE PAYMENTS NAMELY (I) PAYMENT MADE BY M/S MISTY TO M/ S MARTIAL (LEADING TO ADDITION OF RS. 13,76,629/-), ( II) PAYMENT MADE BY M/S MANGALAM TO M/S MARTIAL (LEADIN G TO ADDITION OF RS. 16,71,302/- IN THE CASE OF SHRI BAS ANT BANSAL AND SHRI ROOP BANSAL BOTH) AND (III) PAYMEN T MADE BY M/S B.B. TO M/S MARTIAL (LEADING TO ADDITION OF RS. 40,23,050/- IN EACH OF THE CASE OF SHRI BASANT BANS AL AND SHRI ROOP BANSAL) CAN BE TREATED TO BE COVERED U/S 2(22)9E) OF THE ACT IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED WHILE DECIDING THE SIMIL AR ISSUE IN A.Y. 2007-08 AS ABOVE. ACCORDINGLY, ADDITI ONS OF ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 17 RS. 13,76,629/-, RS. 16,71,302/- AND RS. 40,23,050/ - MADE IN A.Y. 2008-09 ARE HEREBY DELETED. 4. NOW THE REVENUE ARE IN APPEALS BEFORE US. THE LEAR NED C.I.T. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSIN G OFFICER. 5. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD CIT(A). HE FURTHER SUBMITTED THAT WHA TEVER ADVANCES CONSIDERED BY THE LD ASSESSING OFFICER FOR THE PURP OSE OF DEEMED DIVIDEND WERE TRANSACTIONS FOR BUSINESS PURPOSES. AL L THE EVIDENCES HAD BEEN FILED BEFORE THE LD CIT(A). THE LD CIT(A) HAS CA LLED REMAND REPORT FROM THE ASSESSING OFFICER ALSO ON THESE EVI DENCES, WHICH HAS NOT BEEN CONTROVERTED BY HIM THAT THESE TRANSACTION S WERE LOAN AND ADVANCES AS ENVISAGED IN SECTION 2(22)(E) OF THE AC T. EVERY DEBT DOES NOT INVOLVE A LOAN, THE PRINCIPLE THAT HAS BEEN LAI D DOWN IS THAT IN SECTION 2(22)(E) OF THE ACT APPLIES TO GRATUITOUS LOAN OR ADVANCES. HE FURTHER RELIED THE CASE LAWS REFERRED BY THE LD CIT( A) ON PAGE NO. 26 AND 27 OF HIS ORDER AND PRAYED TO DISMISS THE APPEA L OF THE REVENUE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD CIT(A) THOROUG HLY EXAMINED THE ISSUE IN DETAIL AFTER ADMITTED THE ADDITIONAL EVIDE NCE AND CALLING THE REMAND REPORT FROM THE ASSESSING OFFICER. HE HELD T HAT THESE ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 18 TRANSACTIONS MADE BETWEEN THE COMPANIES FOR BUSINESS PURPOSES, WHICH DOES NOT FORM PART OF LOAN AND ADVANCES AS ENVISAGE S IN SECTION 2(22)(E) OF THE ACT. THE LD DR HAS NOT CONTROVERTED THE FINDINGS GIVEN BY THE LD CIT(A). THE CASE LAWS RELIED UPON BY THE A.R . ARE SQUARELY APPLICABLE ON THE CASE OF ASSESSEE, THEREFORE, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF LD CIT(A). ACCOR DINGLY, WE UPHOLD THE ORDER OF LD. CIT(A) 7. IN THE RESULT, BOTH THE REVENUES APPEALS ARE DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/04/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED 23 RD APRIL, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CENTRAL CIRCLE, ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- BASANT BANSAL, GURGAON, HARYANA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ VK;DJ VK;QDRVIHY @ THE CIT(A) ITA 610 & 611/JP/2012_ DCIT VS. BASANT BANSAL 19 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 610 & 611/JP/2012). VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR