DCIT, CIRCLE- 62(1), New Delhi V. Ramesh Kumar Pabbi, New Delhi

ITA 6168/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9864 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 04-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SOHAIL MALIK
• Keywords: Rule of consistency; Retrospective amendment; Deemed dividend; TDS; Set aside; Capital Gains
• Section: 143(3); 2(22)(e); 40(a)(ia); 191; 194J; 13; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.6168/DEL/2017 ASSESSMENT YEAR : 2013-14 DCIT CIRCLE 62(1), NEW DELHI PAN AANPP 5995 Q VS. RAMESH KUMAR PABBI A-41, PHASE-II, MAYAPURI INDUSTRIAL AREA, NEW DELHI-110017 (APPELLANT) (RESPONDENT) A SSESSEE BY SHRI SOHAIL MALIK, SR.D.R. RE VENUE BY SHRI LALIT MOHAN, ADV. DATE OF HEARING: 1 6 /0 3 /202 1 DATE OF PRONOUNCEMENT: 16 /0 3 /202 1 ORDER PER ANIL CHATURVEDI, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 07.07.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 27, NEW DELHI RELATING TO ASSESSMENT YEAR 2013-14. 2. THE RELEVANT FACTS AS CULLED FROM THE MATERIAL ON RECORDS ARE AS UNDER : 3. ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN THE BUSINESS OF WORK CONTRACT FOR GOVT. DEPARTMENTS. ASSESSEE FILED ITA NO. 6168/DEL/2017 A.Y. 2013-14 2 HIS RETURN OF INCOME FOR A.Y. 2013-14 ON 26.09.2013 DECLARING TOTAL INCOME AT RS.1,66,29,190/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 02.03.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.4,14,72,230/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO VIDE ORDER DATED 07.07.2017 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWED GROUNDS: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND OF RS.2,41,5000/- U/S 2(22)(E) BY IGNORING THE FACTS THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE WITH PLAUSIBLE DOCUMENTARY EVIDENCES THAT THE LOAN WAS TAKEN IN THE ORDINARY COURSE OF TRADING ADVANCES AND NO DIRECT NEXUS WAS ESTABLISHED BY THE ASSESSEE BETWEEN THE LOAN ADVANCED TO HIM AND THE TRADE OBLIGATION OF THE LENDER COMPANY M/S RAMSAN COMMUNICATION LTD. WITH THE ASSESSEE. (II) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A)HAS ERRED IN DELETING THE ADDITION MADE U/S 40(A)(IA) OF THE ACT RS. 3,93,035/- BY IGNORING THE FACT THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS ON PAYMENT OF RS.3,93,035/- TOWARDS TESTING CHARGES PAYABLE TO RITES LTD AS MANDATED U/S 194J OF THE I.T. ACT, 1961. (III) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 4. FIRST GROUND IS WITH RESPECT TO THE DELETING OF ADDITION OF DEEMED DIVIDEND MADE U/S 2(22)(E) OF THE ACT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD OBTAINED UNSECURED LOAN OF RS.2,41,50,000/- FROM RAMSAN COMMUNICATIONS LTD. IN WHICH ASSESSEE HAS ITA NO. 6168/DEL/2017 A.Y. 2013-14 3 SUBSTANTIAL INTEREST. THE LOAN WAS ALSO REPAID DURING THE YEAR. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE AFORESAID LOAN NOT BE TREATED AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT TO WHICH THE ASSESSEE MADE THE SUBMISSIONS WHICH WERE NOT FOUND ACCEPTABLE TO AO. AO NOTED THAT NO DIRECT NEXUS COULD BE ESTABLISHED BY THE ASSESSEE BETWEEN THE LOAN ADVANCED AND THE TRADE OBLIGATIONS OF THE ASSESSEE AND ALSO ACCORDING TO HIM ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THAT THE LOAN WAS TAKEN IN THE ORDINARY COURSE OF TRADING ADVANCE. HE THEREAFTER, FOLLOWING THE VARIOUS DECISIONS CITED IN HIS ORDER, HELD THE AMOUNT OF RS.2,41,50,000/- RECEIVED BY THE ASSESSEE AS DEEMED DIVIDEND AND MADE ITS ADDITION U/S 2(22)(E) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER: 20 . I HAVE CONSIDERED THE FACTS STATED BY THE ASSESSEE IN HIS SUBMISSION AND THE GROUNDS RAISED IN APPEAL. 21. GROUND NO(S) 2 TO 2.1 OF GROUNDS OF APPEAL RELATE TO ADDITION OF RS. 2,41,50,000/- REPRESENTING DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE FOREMOST CONTENTION IS THAT SINCE INTEREST WAS PAID OF RS. 3,36,985/- BY M/S S.L. ENTERPRISES, A PROPRIETORSHIP CONCERN TO M/S RAMSAN COMMUNICATIONS LTD. IN RESPECT OF SUM OF RS. 2,41,50,000/- TREATED AS DEEMED DIVIDEND THEREFORE SAID COMPANY WAS COMPENSATED BY WAY OF INTEREST PAID BY THE ASSESSEE AND ASSESSEE IN REAL SENSE DID NOT DERIVE ANY BENEFIT FROM THE FUNDS OF THE COMPANY SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E). IT WAS ALSO STATED THAT THE TRANSACTION WAS EXPANSION OF COMPANYS BUSINESS, AS THE BUSINESS OF APPELLANT WAS SUBSEQUENTLY TO BE TAKEN OVER BY THE COMPANY PROVIDING THE LOAN, THE TRANSACTION WAS A COMMERCIAL TRANSACTION. IN THE CASE OF PRADIP KUMAR MALHOTRA V. CIT 338 ITR 538 IT WAS HELD THAT THE PHRASE BY WAY OF ADVANCE OR LOAN APPEARING IN SECTION 2(22)(E) MUST BE CONSTRUED TO MEAN THOSE ADVANCES OR LOANS, WHICH A SHAREHOLDER ENJOYS FOR SIMPLY ON ACCOUNT OF BEING A PARTNER, WHO IS THE BENEFICIAL OWNER OF SHARES, BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION, WHICH IS BENEFICIAL TO THE COMPANY, RECEIVED FROM SUCH SHAREHOLDER, IN SUCH CASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO BE DEEMED DIVIDEND WITHIN THE MEANING OF THE ACT. IT WAS HELD THAT ITA NO. 6168/DEL/2017 A.Y. 2013-14 4 GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS THUS WOULD COME WITHIN THE PURVIEW OF SECTION 2(22)(E) BUT NOT THE CASES WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY SUCH SHAREHOLDER. IN THE CASE OF ACIT -VS.- M/S. ZENON (INDIA) PVT. LIMITED, A LOAN TAKEN BY THE ASSESSEE WAS TREATED BY THE ASSESSING OFFICER AS DEEMED DIVIDEND UNDER SECTION 2(22)(E), BUT ON APPEAL, IT WAS NOTED THAT INTEREST AT THE RATE OF 9% PER ANNUM WAS PAID BY THE ASSESSEE ON SUCH LOAN, WHICH WAS A CONSIDERATION BENEFICIAL TO THE COMPANY AND THEREFORE ADDITION WAS DELETED BY CIT(A). THIS ORDER WAS UPHELD BY TRIBUNAL IN ORDER DATED 29.6.2015 ITA NO. 1124/KOL/2012 BY RELYING ON THE DECISION IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA). INFACT, BOTH THE ABOVE ORDERS WERE FOLLOWED IN THE CASE OF SANGITA JAIN V. ITO ITA NO. 1817/KOL/2009 AY 2006-07 AND IDENTICAL ADDITION WAS DELETED. THEREFORE HAVING REGARD TO THE AFORESAID JUDICIAL PRONOUNCEMENTS IT IS HELD THAT THERE IS NO CASE MADE OUT FOR TAXABILITY OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 21.1 I AM ALSO IN AGREEMENT WITH SUBMISSION OF THE APPELLANT THAT CASE OF THE APPELLANT IS COVERED UNDER EXCEPTIONS TO SECTION 2(22)(E) OF THE ACT. THE BOMBAY HIGH COURT IN THE CASE OF CIT V. JAYANT H. MODI 232 TAXMAN 737 HAS HELD THAT WHERE LENDING OF MONEY WAS SUBSTANTIAL PART OF BUSINESS OF COMPANY, LOAN ADVANCED BY IT TO ITS SHAREHOLDER DIVIDEND U/S 2(22)(E) IN HANDS OF SHAREHOLDER. 21.2 IT IS NOTED THAT DURING THE FINANCIAL YEAR 2012-13 (ASSESSMENT YEAR 2013-14) M/S RAMSAN COMMUNICATION LTD. HAD UNDER THE HEAD INCOME SHOWN NIL INCOME FROM REVENUE FROM OPERATIONS AND ONLY INTEREST INCOME OF RS. 18,20,197/- HAS BEEN DECLARED . M/S RAMSAN COMMUNICATIONS LTD. HAD NO BUSINESS AS SUCH EXCEPT LENDING MONEY ON WHICH INTEREST WAS RECEIVED. THIS POSITION IS ALSO SUPPORTED BY THE TABULAR CHART HEREUNDER: SR.NO. ASSESSMENT YEAR INTEREST EARNED. OTHER INCOME TOTAL INCOME (PAGE OF PAPER BOOK) (PAGE OF PAPER BOOK) (PAGE OF PAPER BOOK) I) 2008-09 9,86,549 (105) NIL (105) 9,86,549 II) 2009-10 7,51,774 (121) NIL (119) 7,51,774 III) 2010-11 7,06,616 (142) 23,547 (142) (INCOME FROM SALE OF MUTUAL FUND) 7,30,163 (140) IV) 2011-12 9,15,999 NIL 9,15,999 ITA NO. 6168/DEL/2017 A.Y. 2013-14 5 (162) (160) V) 2012-13 17,93,339 (179) NIL (175) 17,93,339 (175) IV) 2013-14 18,20,197 (12) NIL (10) 18,20,197 (10) 21.3 THEREFORE IT IS HELD THAT TRANSACTION BETWEEN SISTER CONCERNS IN NORMAL COURSE OF BUSINESS ARE COMMERCIAL TRANSACTIONS AND THUS OTHERWISE TOO DO NOT CONSTITUTE DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 21.4 IT IS ALSO NOTED THAT A RUNNING ACCOUNT MAINTAINED BY TWO CONCERNS IN THE NORMAL COURSE OF BUSINESS CANNOT BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE DELHI BENCH OF TRIBUNAL IN THE CASE OF ISHWAR CHAND JINDAL V. ACIT IN ITA NO. 4967/D/2012 WHICH WAS AFFIRMED BY HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. ISHWAR CHAND JINDAL, IN ITA NO. 554/2016 DATED 19.12.2016 HAS HELD AS UNDER: 24. IT IS SEEN THAT HERE TOO, THE LEARNED CTT(A) HAS NOT DISPUTED THAT AS PER THE AFORESAID ACCOUNT, RS. 4,27,16,756/-, RS. 86,80,000/- CREDITED ON 10.10.2006 AND 1.4.2006 ARE REVERSAL ENTRIES AND THUS, IF SUCH ENTRIES ARE EXECUTED, THERE WAS AN OPENING BALANCE OFRS. 5,13,96,756/- PAYABLE BY MIL TO MSL. THEREAFTER, THERE WERE FURTHER PAYMENTS MADE FROM 14.8.2006 OF RS. 1,25,50,000/ - TO 28.10.2006 WHEREBY BALANCE INCREASED FROM RS. 5,13,96,756/- TO RS. 6,03,96,756/-. SUBSEQUENTLY, THERE WERE REPAYMENTS MADE BY MIL TO MSL OTHER THAN THE FIGURE OF RS. 54,98,908/- BEING ADVANCE GIVEN FROM 3.9.2007 TO 30.3.2007. IT IS THUS EVIDENT THAT THERE ARE MUTUAL TRANSACTIONS BETWEEN TWO GROUP COMPANIES AND THE ACCOUNT BEING THE TWO COMPANIES IS CURRENT ACCOUNT TRANSACTION. IT IS THUS HELD THAT ONCE THE TRANSACTIONS BETWEEN TWO COMPANIES ARE CURRENT ACCOUNT TRANSACTIONS WHICH ARE ENTERED IN THE ORDINARY COURSE OF BUSINESS, THE SAME CANNOT BE CLASSIFIED AS ADVANCE OR LOAN UNDER SECTION 2(22)(E) OF THE ACT. 25. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NH SECURITIES LTD. VS. DCIT 11 SOT 302 HAS HELD AS UNDER. 37. IN THE LIGHT OF THE DISCUSSION MADE IN PARAGRAPHS ABOVE, IT IS TO BE SEEN THAT PAYMENTS MADE BY A COMPANY THROUGH A RUNNING ACCOUNT IN DISCHARGE OF ITS EXISTING DEBTS OR AGAINST PURCHASES OR FOR AVAILING SERVICES, SUCH PAYMENTS MADE IN THE ORDINARY COURSE OF BUSINESS CARRIED ON BY BOTH THE PARTIES COULD NOT BE TREATED AS DEEMED DIVIDEND FOR THE PURPOSE OF SECTION 2(22)(E). THE DEEMING PROVISIONS OF LAW CONTAINED IN SECTION 2(22)(E) APPLY IN SUCH CASES WHERE THE COMPANY PAYS TO A RELATED PERSON AN AMOUNT AS ADVANCE OR A LOAN AS SUCH AND NOT IN ANY OTHER CONTEXT. THE LAW ITA NO. 6168/DEL/2017 A.Y. 2013-14 6 DOES NOT PROHIBIT BUSINESS TRANSACTIONS BETWEEN RELATED CONCERNS, AND, THEREFORE, PAYMENTS MADE IN THE ORDINARY COURSE OF BUSINESS CANNOT BE TREATED AS LOANS AND ADVANCES. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS CONSIDERED ABOVE, ESPECIALLY IN THE LIGHT OF DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF NAGINDAS M. KAPADIA (SUPRA), WE HOLD THAT PAYMENTS MADE BY A COMPANY IN THE COURSE OF CARRYING ON OF ITS REGULAR BUSINESS THROUGH A MUTUAL, OPEN AND CURRENT ACCOUNT TO A RELATED PARTY DO NOT COME UNDER THE PURVIEW OF SECTION 2(22)(E) OF THE ACT. 26. IN LIGHT OF THE AFORESAID JUDGMENT, IT IS HELD THAT THESE ARE SIMPLE CURRENT ACCOUNT TRANSACTIONS BETWEEN THE TWO GROUP COMPANIES WHICH ARE BUSINESS COMMERCIAL TRANSACTIONS WHICH CANNOT BE REGARDED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT AND HENCE ADDITION MADE IS DELETED. 21.5 THE CBDT IN CIRCULA R NO. 19 /2017 DATED 12.6.2 017 ALSO HELD THAT TRAD E ADVANCES, WHICH ARE IN THE NATURE OF COMMERCIAL TRANSACTIONS WOULD NOT FALL WITHIN THE AMBIT OF THE WORD ADVANCE IN SECTION 2(22)(E) OF THE ACT. SIMILAR VIEW HAS BEEN EXPRESSED IN THE CASE OF CIT V. CREATIVE DYEING AND PRINTING (P) LTD. 318 ITR 476 (DEL). IT WAS HELD THEREIN AS UNDER: THE COUNSEL FOR THE APPELLANT HAS VERY STRENUOUSLY URGED THAT NEITHER THE TRIBUNAL NOR THE JUDGMENT OF THIS COURT IN RAJKUMAR'S CASE(SUPRA) DEALS WITH THAT PART OF THE DEFINITION OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) WHICH STATES THAT DEEMED DIVIDEND DOES NOT INCLUDE AN ADVANCE OR LOAN MADE TO A SHAREHOLDER BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS WHERE THE LENDING OF MONEY IS A SUBSTANTIAL PART OF THE BUSINESS OF THE COMPANY [SECTION 2(22)(E)(II)[ I.E. THERE IS NO DEEMED DIVIDEND ONLY IF THE LENDING OF MONEYS IS BY A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MONEY LENDING. DILATING FURTHER THE COUNSEL FOR THE APPELLANT CONTENDED THAT SINCE M/ S. PEE EMPRO EXPORTS PVT. LTD. IS NOT INTO THE BUSINESS OF LENDING OF MONEY, THE PAYMENTS MADE BY IT TO THE ASSESSEE COMPANY WOULD THEREFORE BE COVERED BY SECTION 2(22)(E)(II) AND CONSEQUENTLY PAYMENTS EVEN FOR BUSINESS TRANSACTIONS WOULD BE A DEEMED DIVIDEND. WE DO NOT AGREE. THE TRIBUNAL HAS DEALT WITH THIS ASPECT AS REPRODUCED IN PARA (9) ABOVE. THE PROVISION OF SECTION 2(22)(E)(II) IS BASICALLY IN THE NATURE OF AN EXPLANATION. THAT CANNOT HOWEVER, HAVE BEARING ON INTERPRETATION OF THE MAIN PROVISION OF SECTION 2(22)(E) AND ONCE IT IS HELD THAT THE BUSINESS TRANSACTIONS DOES NOT FALL WITHIN SECTION 2(22)(E), WE NEED NOT TO GO FURTHER TO SECTION 2(22)(E)(II). THE PROVISION OF SECTION 2(22)(E)(II) GIVES AN EXAMPLE ONLY OF ONE OF THE SITUATIONS WHERE THE LOAN/ ADVANCE WILL NOT BE TREATED AS A ITA NO. 6168/DEL/2017 A.Y. 2013-14 7 DEEMED DIVIDEND, BUT THAT'S ALL. THE SAME CANNOT BE EXPANDED FURTHER TO TAKE AWAY THE BASIC MEANING, INTENT AND PURPORT OF THE MAIN PART OF SECTION 2(22)(E). WE FEEL THAT THIS INTERPRETATION OF OURS IS IN ACCORDANCE WITH THE LEGISLATIVE INTENTION OF INTRODUCING SECTION 2(22)(E) AND WHICH HAS BEEN EXTENSIVELY DEALT WITH BY THIS COURT IN THE JUDGMENT IN RAJ KUMAR'S CASE(SUPRA). THIS COURT IN RAJ KUMAR'S CASE (SUPRA) EXTENSIVELY REFERRED TO THE REPORT OF THE TAXATION ENQUIRY COMMISSION AND THE SPEECH OF THE FINANCE MINISTER IN THE BUDGET WHILE INTRODUCING THE FINANCE BILL. ULTIMATELY, THIS COURT IN THE SAID JUDGMENT HELD AS UNDER: '10.3 A BARE READING OF THE RECOMMENDATIONS OF THE COMMISSION AND THE SPEECH OF THE THEN FINANCE MINISTER WOULD SHOW THAT THE PURPOSE OF INSERTION OF CLAUSE (E) TO SECTION 2(6A) IN THE 1922 ACT WAS TO BRING WITHIN THE TAX NET MONIES PAID BY CLOSELY HELD COMPANIES TO THEIR PRINCIPAL SHAREHOLDERS IN THE GUISE OF LOANS AND ADVANCES TO AVOID PAYMENT OF TAX. 10.4 THEREFORE, IF THE SAID BACKGROUND IS KEPT IN MIND, IT IS CLEAR THAT SUB-CLAUSE (E) OF SECTION 2(22) OF THE ACT, WHICH IS PARI MATERIAL WITH CLAUSE (E) OF SECTION 2(6A) OF THE 1922 ACT, PLAINLY SEEKS TO BRING WITHIN THE TAX NET ACCUMULATED PROFITS WHICH ARE DISTRIBUTED BY CLOSELY HELD COMPANIES TO ITS SHAREHOLDERS IN THE FORM OF LOANS. THE PURPOSE BEING THAT PERSONS WHO MANAGE SUCH CLOSELY HELD COMPANIES SHOULD NOT ARRANGE THEIR AFFAIRS IN A MANNER THAT THEY ASSIST THE SHAREHOLDERS IN AVOIDING THE PAYMENT OF TAXES BY HAVING THESE COMPANIES PAY OR DISTRIBUTE, WHAT WOULD LEGITIMATELY BE DIVIDEND IN THE HANDS OF THE SHAREHOLDERS, MONEY IN THE FORM OF AN ADVANCE OR LOAN. 10.5 IF THIS PURPOSE IS KEPT IN MIND THEN, IN OUR VIEW, THE WORD 'ADVANCE' HAS TO BE READ IN CONJUNCTION WITH THE WORD 'LOAN'. USUALLY ATTRIBUTES OF A LOAN ARE THAT IT INVOLVES POSITIVE ACT OF LENDING COUPLED WITH ACCEPTANCE BY THE OTHER SIDE OF E MONEY AS LOAN: IT GENERALLY CARRIES AN INTEREST AND THERE IS ART OBLIGATION OF REPAYMENT. ON THE OTHER HAND, IN ITS WIDEST MEANING THE TERM ADVANCE MAY OR MAY NOT INCLUDE LENDING. THE WORD 'ADVANCE' IF NOT FOUND IN THE COMPANY OF OR IN CONJUNCTION WITH A WORD 'LOAN' MAY OR MAY NOT INCLUDE THE OBLIGATION OF REPAYMENT. IF IT DOES THEN IT WOULD BE A LOAN. THUS, ARISES THE CONUNDRUM AS TO WHAT MEANING ONE WOULD ATTRIBUTE TO THE TERM 'ADVANCE'. THE RULE OF CONSTRUCTION TO OUR MINDS WHICH ANSWERS THIS CONUNDRUM IS NOSCITUR A SOCNS. THE SAID RULE HAS BEEN EXPLAINED BOTH BY THE PRIVY COUNCIL IN THE OF ANGUS ROBERTSON V. GEORGE DAY (1879) 5 AC 63 BY OBSERVING 'IT IS A LEGITIMATE RULE OF CONSTRUCTION TO CONSTRUE WORDS IN AN ACT OF PARLIAMENT WITH REFERENCE TO WORDS FOUND IN IMMEDIATE CONNECTION WITH THEM' AND OUR SUPREME COURT ITA NO. 6168/DEL/2017 A.Y. 2013-14 8 IN THE CASE OF ROHIT PULP AND PAPER MILLS LTD. V. COLLECTOR OF CENTRAL EXCISE, AIR 1991 SC 754 AND STATE OF BOMBAY V. HOSPITAL MAZDOOR SABHA AIR 1960 SC 610.' 12. THEREFORE, WE HOLD THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE AMOUNTS ADVANCED FOR BUSINESS TRANSACTION BETWEEN THE PARTIES, NAMELY, THE ASSESSEE COMPANY AND M/S. PEE EMPRO EXPORTS PVT. LTD. WAS NOT SUCH TO FALL WITHIN THE DEFINITION OF DEEMED DIVIDEND UNDER SECTION 2(22)(E). THE PRESENT APPEAL IS THEREFORE DISMISSED. 21.6 AS REGARDS THE NOMENCLATURE IN THE BALANCE SHEET, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ARVIND KUMAR JAIN IN ITA NQ. 589/2011 DATED 30.9.2011 HELD AS UNDER: 6 LEARNED COUNSEL FOR THE APPELLANT HAMMERED THE FACT THAT THE AMOUNT WAS SHOWN BY THE ASSESSEE HIMSELF IN HIS BOOKS OF ACCOUNTS AS UNSECURED LOAN AND, THEREFORE, THE ORDER OF THE ASSESSING OFFICER WAS CORRECT. 7. IT IS TRITE LAW THAT MERE NOMENCLATURE OF ENTRY IN THE BOOKS OF ACCOUNTS IS NOT DETERMINATIVE OF THE TRUE NATURE OF TRANSACTION. SEE COMMISSIONER OF INCOME TAX VS. INDIA DISCOUNT CO. LTD. 75 ITR 191 (SC), COMMISSIONER OF INCOME TAX VS PROVINCIAL FARMERS (P) LTD. 108 ITR 219 (CAL) AND KCP LTD. VS. CIT 245 ITR 421 IN THE PRESENT CASE AFTER GOING THROUGH THE RELEVANT EVIDENCE AS WELL AS ACCOUNT MAINTAINED BETWEEN THE PARTIES, IT HAS BEEN ESTABLISHED THAT THE PAYMENT MADE WERE THE RESULT OF TRADING TRANSACTION BETWEEN THE PARTIES AND THE AMOUNT WAS NOT GIVEN BY WAY OF LOAN OR ADVANCE. 21.7 IT IS FURTHER NOTED THAT, SO FAR THE ALLEGED ADVANCES RECEIVED BY THE ASSESSEE FROM RCL ARE CONCERNED, IT WILL BE SEEN FROM THE COPY OF ACCOUNT FURNISHED THAT, THE ASSESSEE COMPANY HAD IN THE INSTANT YEAR RECEIVED RS.2,41,50,000/- WHEREAS THE ASSESSEE HAD ALSO SIMILARLY RECEIVED SUMS IN PROCEDING YEARS IN EXCESS OF ACCUMULATED PROFITS AND AS EVEN IF THE AMOUNT RECEIVED AS A ADVANCE HAS TO BE TREATED AS DEEMED DIVIDEND, THE ADDITION IS UNTENABLE, SINCE THE AMOUNT RECEIVED IN EARLIER YEARS HAS TO BE DEDUCTED WHILE COMPUTING THE ACCUMULATED PROFITS FOR THE INSTANT YEAR. THE COCHIN BENCH OF TRIBUNAL IN THE CASE OF ITO V. GORDHANDAS KHIMJI 11 ITD 158 HAS HELD AS UNDER: 9. WE MAY NOW REFER TO THE DECISIONS CITED. IT WAS HELD BY THE BOMBAY HIGH COURT IN P.K. BADIANIS CASE (SUPRA) THAT SECTION 2(6A)(E ), HEREINAFTER REFERRED TO AS THE SECTION, MUST BE SO INTERPRETED THAT ONCE AN AMOUNT GOES OUT OF THE ACCUMULATED PROFITS AS A LOAN AND THE LOAN IS TO BE DEEMED TO BE DIVIDEND, THE ITA NO. 6168/DEL/2017 A.Y. 2013-14 9 SAME AMOUNT, WHEN REPAID, CANNOT AGAIN BE CAPABLE OF ATTRACTING THE FICTION AND BE DEEMED TO BE DIVIDEND AND THAT TO AVOID THE HAPPENING OF ANY SUCH EVENTUALITY, THE ACCUMULATED PROFITS MUST BE NOTIONALLY REDUCED BY WAY OF ALL LOANS, ETC., WHICH ARE TO BE DEEMED TO BE DIVIDENDS UNDER THE SECTION. TO ILLUSTRATE THE POINT, THE HIGH COURT SAID THAT IF THE ACCUMULATED PROFITS WERE RS.5000 AND A LOAN OF RS. 5,000 WAS ADVANCED TO ONE SHAREHOLDER AND HE REPAYS IT AND IF THIS AMOUNT OF RS. 5,000 IS CREDITED TO THE ACCUMULATED PROFITS AND ANOTHER LOAN OF RS. 5,000 IS ADVANCED TO ANOTHER SHAREHOLDER, THE SECOND ADVANCE CANNOT BE TREATED AS A DEEMED DIVIDEND AS THE ACCUMULATED PROFITS HAD DISAPPEARED BY THE FIRST ADVANCE. SIMILARLY, IT WAS POINTED OUT THAT IF RS. 2,000 IS ADVANCED TO A SHAREHOLDER OUT OF AN ACCUMULATED PROFIT OF RS. 5,000 AND THE SHAREHOLDER REPAYS IT AND AGAIN BORROWS RS. 1,000, THE ACCUMULATED PROFITS WERE REDUCED TO RS.3000 AFTER THE FIRST ADVANCE AND THAT THE SECOND ADVANCE WILL ALSO BE DIVIDEND BECAUSE THERE WAS ENOUGH ACCUMULATED PROFITS TO SUPPORT THE SAME. FINALLY, IT WAS OBSERVED THAT 'THE POSITION WHICH EMERGES IS THAT SECTION 2(6A)( E) REQUIRES THAT WHEN EVERY LOAN IS ADVANCED TO A SHAREHOLDER, THE AMOUNT OF ACCUMULATED PROFITS MUST BE ASCERTAINED. THE AMOUNT MUST BE REDUCED BY ALL DISBURSEMENTS LEGITIMATELY ATTRIBUTABLE TO IT BY WAY OF EXPENSES, DEVELOPMENT REBATE, DIVIDENDS AND DEEMED DIVIDENDS, IF ANY. THE AMOUNT CANNOT BE AUGMENTED BY THE REPAYMENTS OF THE LOAN AND THE AMOUNT OF THE LOAN MUST BE DEEMED TO > BE DIVIDEND TO THE EXTENT OF THE BALANCE REMAINING OUT OF THE ACCUMULATED PROFITS. 10. IN ROSHAN LAIS CASE (SUPRA), IT WAS HELD THAT ACCUMULATED PROFITS WILL NECESSARILY BE COMPRISED OF THE AMOUNT AVAILABLE FOR BEING DISTRIBUTED AS PROFITS, THAT PROFITS CAN ACCUMULATE EVEN WITHIN A SINGLE YEAR, THAT ACCUMULATED MEANS EARNED BIT BY BIT AND ACCUMULATED, AND THAT THE ENTIRE AMOUNT WHICH IS AVAILABLE FOR DISTRIBUTION AS PROFITS ON A PARTICULAR DATE WOULD BE THE ACCUMULATED PROFITS AND ANY AMOUNT PAID AS ADVANCE OR LOAN TO THE SHAREHOLDER TO THE EXTENT OF THIS AMOUNT OF ACCUMULATED PROFITS WILL BE DIVIDEND WITHIN THE MEANING OF SECTION 2(6A)( E). IT IS ALSO HELD THAT THE ACCUMULATED PROFITS CANNOT BE REDUCED BY THE AMOUNT OF DIVIDEND SUBSEQUENTLY DECLARED. 11. IN SMT. TARULATA SHYAMS CASE (SUPRA), IT WAS HELD BY THE SUPREME COURT THAT THE STATUTORY FICTION CREATED BY SECTION 2(6A)( E) WOULD COME INTO OPERATION AT THE TIME OF PAYMENT OF ADVANCE OR LOAN TO A SHAREHOLDER AND TAX IS ATTRACTED TO THE LOAN OR ADVANCE TO THE EXTENT TO WHICH THE COMPANY POSSESSES ACCUMULATED PROFITS THE MOMENT THE LOAN OR ADVANCE IS RECEIVED, AND EVEN IF THE LOAN OR ADVANCE CEASES TO BE OUTSTANDING AT THE END OF THE PREVIOUS YEAR, IT CAN STILL BE DEEMED TO BE DIVIDEND IF THE CONDITIONS OF THE ITA NO. 6168/DEL/2017 A.Y. 2013-14 10 SECTION ARE SATISFIED. IT WAS ALSO OBSERVED THAT THE LANGUAGE OF THE SECTION IS CLEAR AND UNAMBIGUOUS AND THAT THERE IS NO SCOPE OF IMPORTING INTO THE STATUTE WORDS WHICH ARE NOT THERE AND THAT ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COMES WITHIN THE LETTER OF THE LAW, HE MUST BE TAXED, HOWEVER GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. 12. G. NARASIMHANS CASE (SUPRA) WAS A CASE RELATING TO CAPITAL GAINS. IT WAS HELD THAT WHILE COMPUTING THE ACCUMULATED PROFITS IN THE HANDS OF A COMPANY, AMOUNTS OF DEEMED DIVIDEND ASSESSED IN THE HANDS OF THE VARIOUS SHAREHOLDERS IN THE EARLIER ASSESSMENT YEARS SHOULD BE DEDUCTED. THIS DECISION DOES NOT SEEM TO BE RELEVANT AS IT RELATES TO THE ADJUSTMENT OF ASSESSED DEEMED DIVIDENDS, WHILE WE ARE CONCERNED IN THE PRESENT CASE WITH THE ADJUSTMENT OF UNASSESSED DEEMED DIVIDENDS. 13. NONE OF THE DECISIONS REFERRED TO ABOVE ARE DIRECTLY ON THE POINT. BUT THE LINE OF DISCUSSION IN THOSE DECISIONS GIVES SOME INDICATION WITH REGARD TO THE CORRECT POSITION. WE ARE UNABLE TO HOLD THAT LOANS AND ADVANCES WILL BECOME DEEMED DIVIDENDS ONLY WHEN THE DEPARTMENT CHOOSES TO TREAT THE SAME AS SUCH AND BRINGS THE SAME TO TAX AS DIVIDEND. THE SECTION IS NOT WORDED AS AN ENABLING SECTION BY WHICH THE DEPARTMENT CAN TREAT THE LOANS AND ADVANCES AS DEEMED DIVIDENDS. THE SECTION DOES NOT SAY THAT THE AMOUNT WILL BECOME DEEMED DIVIDEND ONLY IF IT HAS BEEN ASSESSED AS SUCH. ON THE OTHER HAND, THE PROVISION IS A CLAUSE IN THE INCLUSIVE DEFINITION, BY WHICH ADVANCES AND LOANS ARE CONSTITUTED AS DIVIDENDS. THE MOMENT AN ADVANCE OR LOAN SATISFYING THE CONDITIONS OF THE SECTION IS MADE, IT WOULD BECOME A DIVIDEND AND IT IS IMMATERIAL WHETHER THE DEPARTMENT HAS ASSESSED THE SAME AS DIVIDEND OR NOT. THE DECISIONS REFERRED TO ABOVE INDICATE THAT THE DEEMED DIVIDEND HAS TO BE WORKED OUT ON THE BASIS OF THE CONDITIONS OBTAINING AT THE TIME WHEN THE LOANS OR ADVANCES ARE MADE. IN THE CASE OF SMT. TARULATA SHYAM ( SUPRA), THE SUPREME COURT OBSERVED THAT THE STATUTORY FICTION CREATED BY THE SECTION WOULD COME INTO OPERATION AT THE TIME OF THE PAYMENT OF ADVANCE OR LOAN. SIMILARLY, THE OBSERVATIONS IN THE CASE OF P.K BADIANI ( SUPRA) WOULD INDICATE THAT THE ACCUMULATED PROFITS SHOULD BE REDUCED BY THE AMOUNT OF LOAN OR ADVANCE, IMMEDIATELY ON MAKING SUCH LOAN OR ADVANCE. ONLY IF THIS IS DONE, THE SUBSEQUENT LOANS OR ADVANCES CAN BE TESTED BY VERIFYING THE ACCUMULATED PROFITS ON THE DATES ON WHICH THEY ARE MADE. AS POINTED OUT IN THE DECISIONS REFER- RED TO ABOVE, THE REPAYMENTS OF THE ADVANCES OR LOANS WILL HAVE NO EFFECT EITHER ON THE ADVANCE OR LOAN TREATED AS DIVIDEND OR ON THE ACCUMULATED PROFITS AS REDUCED BY SUCH ADVANCE OR LOAN. AS SUCH, IT DOES NOT SEEM TO BE NEITHER PRACTICABLE NOR PROPER TO POSTPONE THE WHOLE PROCESS OF ASCER- ITA NO. 6168/DEL/2017 A.Y. 2013-14 11 TAINING THE ACCUMULATED PROFITS TILL THE DEPARTMENT CHOOSES TO TREAT A PARTICULAR ADVANCE AS DEEMED DIVIDEND. IF THE CONTENTION OF THE DEPARTMENT IS ACCEPTED, THEN IF THE ITO IGNORES THE ADVANCES IN EARLIER YEARS AND THEN GOES DOWN ON THE ASSESSEE IN AN ASSESSMENT YEAR IN WHICH HE HAS DRAWN SUBSTANTIAL ADVANCES, IT WILL AMOUNT TO ALLOWING THE DEPARTMENT TO TAKE ADVANTAGE OF ITS OMISSIONS TO ASSESS THE EARLIER LOANS AND ADVANCES AS DEEM-ED DIVIDENDS AND TO ALLOW SUCH OMISSIONS TO BLOAT THE ACCUMULATED PROFITS, SO THAT THE WHOLE OF THE LARGE ADVANCES TAKEN IN THE LAST ASSESSMENT YEAR ARE CONVERTED INTO DEEMED DIVIDENDS. AS RIGHTLY POINTED OUT BY THE COM-MISSIONER (APPEALS), THE ADVANCES OR LOANS IN THE EARLIER ASSESSMENT YEARS SHOULD BE TREATED AS DIVIDEND WHICH THE DEPARTMENT OMITTED TO ASSESS. IF SO, IT FOLLOWS THAT THE ACCUMULATED PROFITS SHOULD BE REDUCED BY THE EARLIER LOANS OR ADVANCES IN SPITE OF THE FACT THAT THEY WERE NOT ASSESSED TO TAX AS DEEMED DIVIDENDS BY THE DEPARTMENT. THE COMMISSIONER (APPEALS) WAS, THEREFORE, FULLY JUSTIFIED IN HOLDING THAT DURING THE ASSESSMENT YEAR UNDER APPEAL ONLY THE ADVANCES OR LOANS TO THE EXTENT TO WHICH THEY ARE BACKED UP BY ACCUMULATED PROFITS AS REDUCED BY EARLIER ADVANCES OR LOANS, CAN BE TREATED AS DEEMED DIVIDENDS. THE APPEAL BY THE DEPARTMENT HAS, THEREFORE, TO FAIL. 21.8 HAVING REGARD TO THE ABOVE FACTS AND JUDICIAL POSITION, THE CONCLUSION OF THE AO TO TAX THE SUMS RECEIVED FROM M/S RAMSAN COMMUNICATION LTD. DURING THE YEAR AS DEEMED DIVIDEND IS BASED ON MISCONCEPTION NOT ONLY IN LAW BUT ALSO ON FACTS AND, AS SUCH THE ADDITION MADE OF RS. 2,41,50,000/- IS THEREFORE DELETED. THE GROUNDS RAISED ARE THUS ALLOWED. 6. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW BEFORE US. 7. BEFORE US, LEARNED DR SUPPORTED THE ORDER OF LOWER AUTHORITIES. LEARNED AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND FURTHER SUBMITTED THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2011-12 AND THE ADDITION WAS DELETED BY THE CO-ORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 01.08.2018 IN ITA NO.6890/DEL/2014. HE POINTED TO COPY OF THE ORDER PLACED IN THE PAPER BOOK. HE THEREAFTER SUBMITTED THAT THERE ARE NO CHANGE IN ITA NO. 6168/DEL/2017 A.Y. 2013-14 12 THE FACTS IN THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEARS. HE THUS SUPPORTED THE ORDER OF CIT(A) 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO THE DELETION OF ADDITION MADE U/S 2(22)(E) OF THE ACT. 9. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD RECEIVED LOAN FROM RAMSAN COMMUNICATIONS LTD. AND THE RECEIPT OF LOAN WAS CONSIDERED AS DEEMED DIVIDEND AND ADDED TO THE INCOME U/S 2(22)(E) BY THE AO. WE FIND THAT CIT(A) BY WELL REASONED AND DETAILED ORDER (THE FINDINGS OF WHICH ARE REPRODUCED HEREINABOVE) HAS DELETED THE ADDITION MADE BY THE AO. BEFORE US, LEARNED DR COULD NOT POINT OUT ANY FALLACY IN THE FINDINGS OF CIT(A). WE FURTHER FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2011-12 WHEREIN THE CO-ORDINATE BENCH OF TRIBUNAL HAD DELETED THE ADDITION BY OBSERVING AS UNDER: 8.1 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT SINCE IT WAS A COMMERCIAL TRANSACTION AND SIMILAR TRANSACTIONS WERE ENTERED INTO IN EARLIER AND SUBSEQUENT ASSESSMENT YEAR AND NO ADDITION HAVE BEEN MADE ON ACCOUNT OF DEEMED DIVIDEND AGAINST THE ASSESSEE, THEREFORE, RULE OF CONSISTENCY DO APPLY. THE ASSESSEE FURTHER CLAIMED THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT TO SELL WITH M/S. RAMSAN COMMUNICATION LIMITED FOR SALE OF THE INDUSTRIAL LAND IN DELHI. THEY WANTED TO SHIFT THEIR BUSINESS TO DELHI, THEREFORE, ADVANCE OF RS.1.12 CRORES WAS TREATED AGAINST THE PURCHASE OF INDUSTRIAL PLOT. THE ASSESSEE DEDUCTED TDS ON THE INTEREST PAID (PB-95), THEREFORE, IT WAS A COMMERCIAL TRANSACTION ENTERED INTO BETWEEN INTO BETWEEN ASSESSEE AND M/S. RAMSAN COMMUNICATION LIMITED. SECTION 2 (22) (E) OF THE IT ACT WAS INSERTED TO BRING WITHIN THE PURVIEW OF TAXATION ALL THOSE AMOUNTS WHICH ARE ACTUALLY A DISTRIBUTION OF PROFITS BUT ARE DISBURSED AS LOAN. FURTHER IT IS PERTINENT TO NOTE, WHEN DIVIDENDS ARE DECLARED BY A COMPANY, IT IS SOLELY THE SHAREHOLDERS, WHO BENEFIT FROM THE TRANSACTION, THUS SECTION 2 (22) (E) OF THE ACT, COVERS ONLY SUCH SITUATION WHERE THE ITA NO. 6168/DEL/2017 A.Y. 2013-14 13 SHAREHOLDER ALONE BENEFITS FROM THE LOAN TRANSACTION, WHEREAS IF THE COMPANY RECEIVES SOME BENEFITS, IT WOULD TERMED AS A COMMERCIAL TRANSACTION. IN THE INSTANT CASE, THE LOAN WAS GIVEN TO THE ASSESSEE FOR FURTHER EXPANSION OF BUSINESS AS THE SAID COMPANY INTENDED TO TAKE OVER THE BUSINESS OF THE ASSESSEE HENCE WOULD BE AN INDIRECT BENEFICIARY FROM SUCH TRANSACTION. FURTHER THE ASSESSEE HAD PAID INTEREST ON THE SAID AMOUNT WHICH HAS BENEFITED THE SAID COMPANY. THUS, IT WAS A COMMERCIAL TRANSACTION BETWEEN THE PARTIES. SIMILAR TRANSACTION WAS ACCEPTED AS COMMERCIAL TRANSACTION BETWEEN THE PARTIES IN EARLIER AS WELL AS SUBSEQUENT YEARS IN WHICH INTEREST HAS ALSO BEEN PAID AND NO ADVERSE INFERENCE HAVE BEEN DRAWN AGAINST THE ASSESSEE, THEREFORE, RULE OF CONSISTENCY DO APPLY WITH THE INCOME PROCEEDINGS AND THE ASSESSING OFFICER WITHOUT BRINGING ANY FURTHER EVIDENCE AGAINST THE ASSESSEE SHOULD NOT HAVE TAKEN A DIFFERENT VIEW AGAINST THE ASSESSEE. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE SQUARELY APPLY TO THE FACTS AND THE CIRCUMSTANCES OF THE CASE. THE ASSESSEE PRODUCE SUFFICIENT EVIDENCE ON THE RECORD TO JUSTIFY THAT IT WAS A COMMERCIAL TRANSACTION BETWEEN THE PARTIES NOT ONLY IN ASSESSMENT YEAR UNDER APPEAL BUT IN PRECEDING AND SUBSEQUENT YEARS, THEREFORE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN INVOKING PROVISION OF SECTION 2 (22) (E) OF THE IT ACT AGAINST THE ASSESSEE FOR MAKING THE ADDITION. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.8,23,964/-. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. BEFORE US, LEARNED DR HAS NOT POINTED ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AS COMPARED TO ASSESSEES OWN CASE IN A.Y. 2011-12. FURTHER IT HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS HAS BEEN SET ASIDE/ STAYED OR OVER RULED BY THE HIGHER JUDICIAL FORUM. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS ASPECT. THUS THE GROUND OF THE REVENUE IS DISMISSED. 11. GROUND NO.2 IS WITH RESPECT TO DELETING THE ADDITION MADE U/S 40(A)(IA) OF THE ACT. ITA NO. 6168/DEL/2017 A.Y. 2013-14 14 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE DEBITED RS.4,82,249/- AS TESTING & INSPECTION CHARGES WHICH INCLUDED PAYMENT OF RS.3,93,035/- TO RITES LTD. HE ALSO NOTICED THAT NO TDS WAS DEDUCTED ON THE PAYMENT OF RS.3,93,035/- TO RITES LIMITED. AO WAS OF THE VIEW THAT THE PROVISION OF SECTION 194J OF THE ACT ARE APPLICABLE AND SINCE ASSESSEE HAS NOT DEDUCTED TDS, THE AMOUNT OF TESTING CHARGES ON WHICH NO TDS WAS DEDUCTED NEEDS TO BE DISALLOWED BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. HE ACCORDINGLY DISALLOWED RS.3,93,035/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO BY FOLLOWING THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIP REPORTED IN 376 ITR 635 DIRECTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE THAT RS.3,93,035/- HAS BEEN DECLARED AS INCOME BY RITES LIMITED AND THEREAFTER DECIDE THE ISSUE IN LINE WITH THE AFORESAID DECISION OF DELHI HIGH COURT. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW BEFORE US. 13. BEFORE US, LEARNED DR SUPPORTED THE ORDER OF AO. ON THE OTHER HAND, LEARNED AR SUPPORTED THE ORDER OF CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 15. THE AO HAD DISALLOWED RS.3,93,035/- U/S 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS BY ASSESSEE. WHEN THE MATTER ITA NO. 6168/DEL/2017 A.Y. 2013-14 15 WAS CARRIED BEFORE CIT(A), CIT(A) REMITTED THE ISSUE TO AO TO VERIFY THE ISSUE IN LINE WITH THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIP (SUPRA), WHEREIN THE HONBLE HIGH COURT HAS HELD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) TO BE DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO.2) ACT 2014. IT HAS FURTHER HELD THAT AS LONG AS THE PAYEE HAS FILED THE RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON SUCH INCOME, THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAULT. BEFORE US, REVENUE HAS NOT POINTED TO ANY FALLACY IN THE FINDINGS OF CIT(A). IN SUCH A SITUATION, WE FIND NO REASON WITH THE ORDER OF CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.2021 SD/- SD/- (SUCHITRA KAMBLE) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 16.03.2021 PY* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI