IAG Promoters & Developers Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 6302/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0251 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: V S RASTOGI
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI G.C. GUPTA , VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 6302 /DEL/201 3 ASSESSMENT YEAR: 2005 - 06 IAG PROMOT E RS AND DEVELOPERS VS. ASSTT. COMMISSIONER OF PVT. LTD., M - 11, MIDDLE CIRCLE, INCOME TAX, CENTRAL CIRCLE - 23, CANNAUGHT CIRCUS, NEW DELHI. NEW DELHI. (PAN:AAACI7995R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. V.S. RASTOGI, AR DEPARTMENT BY: SH. T. VASANTHAN, SR. DR DATE OF HEARING: 07.05.2015 DATE OF PRONOUNCEMENT: 10.06.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 FILED BY THE ASSESSEE COMPANY AGAINST THE ORDER OF LEARNED CIT(A), DATED 26.08.2013 ON THE FOLLOWING GROUNDS OF APPEAL: I. THAT THE ORDERS PASSED BY THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEAL S) - XXXIII, NEW DELHI ARE BAD IN LAW AND VOID AB - INITIO. II. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) - XXXIII, NEW DELHI ERRED IN CONFIRMING THE ADDITION OF RS.L,73,262/ - AS DEEMED DIVIDEND U/S 2(22)(E ) OF THE IT ACT. III. THAT BOTH THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) - XXXIII, NEW DELHI MISREAD THE DIRECTIONS GIVEN BY THE HON' BLE INCOME TAX APPELLATE TRIBUNAL IN THEIR ORDER DATED 06.04.2010 IN ITA NO. 3556/DEL/09 FOR MAKING T HE FRESH ASSESSMENT AND RESULTANTLY TREATING THE SUM OF RS. L,73,262/ - AS DEEMED DIVIDEND U/S 2(22)(E) OF THE IT ACT ALL OVER AGAIN. 2 IV. THAT BOTH THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) - XXXIII, NEW DELHI ERRED IN CONFIRMING THE ADD ITION OF RS.173262/ - ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) DESPITE THE FACT THAT M/S IAG PROMOTERS AND DEVELOPERS PVT. LTD IS NOT A SHAREHOLDER OF M/S COUNTRYWIDE PROMOTERS PVT. LTD , THE ADDITION OF RS. L,73,262/ - AS DIVIDEND U/S 2(22)(E) OF THE IT ACT WAS UNWARRANTED IN VIEW OF THE JUDGMENT OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN CIT VS. ANKITECH PVT. LTD 2011 11 TAXMANN.COM 100 DELHI. V. THE APPELLANT CRAVES PERMISSION TO ADD, AMEND, ALTER OR VARY ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE D ATE OF HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 WAS FIL E D ON 31 ST OCTOBER, 2005, DECLARING TOTAL INCOME AT RS. 39,04,210/ - . THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 11, NEW DELHI ON 28.12.2007 AT A TOTAL INCOME OF RS. 8,98,94,480/ - . WHILE DOIN G SO, THE ASSESSMENT OFFICER MADE ADDITION S OF R S. 84,993/ - AND RS. 1,73,261/ - ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. THE SHORT FACTS LEADING TO THESE ADDITIONS ARE THAT THE APPELLANT COMPANY RECEIVED LOANS OF RS. 23 LAKHS AND RS. 4.01 CRORES FROM M/S TRIANGLE BUILDERS & PROMOTERS PVT. LTD. AND M/S COUNTRYWIDE PROMOTERS PVT. LTD. RESPECTIVELY. THE APPELLANT REFLECTED THESE TRANSACTIONS IN ITS BALANCE SHEET AS LOAN RECEIVED DURING THE YEAR. THE ASSESSING OFFICER WAS OF THE OPINION T HAT THESE ARE COVERED BY THE SCOPE OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT TO THE EXTENT OF ACCUMULATED PROFITS OF RS. 84,993/ - AND RS. 1,73,261/ - RESPECTIVELY. ON APPEAL, THE CIT(A) UPHELD THE ADDITION OF A RS. 1,73,261 / - , HOWEVER, DELETED THE A DDITION OF RS. 84,993/ - . AGGRIEVED BY THIS 3 ORDER, THE APPELLANT FILED AN APPEAL BEFORE THE ITAT, DELHI B ENCH, WHO VIDE ORDER DATED 06.04.2010 IN ITA N O . 3556/DEL/2009 SET ASIDE THE ISSUE OF ADDITION OF RS . 1,73,262/ - UNDER SECTION 2(22)(E) OF THE ACT TO TH E FILE OF ASSESSING OFFICER FOR RE - EXAMINATION. PURSUANT TO THIS DIRECTION OF THE TRIBUNAL, THE ORDER UNDER SECTION 143(3) READ WITH SECTION 254 OF THE ACT WAS PASSED VIDE ORDER DATED 29.12.2011, WHEREIN THE ADDITION OF RS. 1,73,262/ - WAS AGAIN MADE ON THE GROUND THAT THE APPELLANT HAD FAILED TO FURNISH THE STATUS OF THE ADDITION MADE IN M/S FRAGRANCE CONSTRUCTION PVT. LTD. AGGRIEVED BY THIS ADDITION, AN APPEAL WAS FILED BEFORE THE CIT(A) WHO VIDE ORDER DATED 26.08.2013 DISMISSED THE APPEAL. AGGRIEVED BY TH AT ORDER OF CIT(A), THE APPELLANT HAD COME UP BEFORE US WITH THE PRESENT APPEAL. 3. THE LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY ARGUED THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT HAVE NO APPLICATION TO THE CASE , INASMUCH AS, THE APPELLANT IS NOT A SHAREHOLDER OF M/S COUNTRYWIDE PROMOTERS PVT. LTD. HAVING AN INTEREST OF 10% PER ANNUM IN THE SAID COMPANY. IN SUPPORT OF THIS, THE APPELLANT FILED A LIST OF SHAREHOLDERS OF M/S COUNTRYWIDE PROMOTERS PVT. LTD. VIDE PAGE 16 OF THE PAPER BOOK. WHEN THE APPELLANT COMPANY IS NOT A REGISTERED SHAREHOLDER OF M/S COUNTRYWIDE PROMOTERS PVT. LTD., THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT HAVE NO APPLICATION TO THE APPELLANT. IN SUPPORT OF THIS, THE LEARNED AR HAS RELIED UPON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANKITECH PVT. LTD, 340 ITR 14 (DEL.) 4. ON THE OTHER HAND, THE LEARNED DEPARTMENT AL REPRESENTATIVE STRONGLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW . 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . UNDISPUTEDLY, THE APPELLANT IS NOT A SHAREHOLDER OF M/S COUNTRYWIDE PROMOTERS PVT. LTD. IT IS TRITE LAW THAT THE PROVISIONS OF SECTION 2(22)(E) HAVE NO APPLICATION TO NON - REGISTERED SHAREHOLDER S . THE HON BLE APEX COURT IN THE CASE OF CIT VS. C. P. SARATHY MUDALIAR (1972) 83 ITR 170 (SC) WHILE CONSTRUING THE PROVISIONS OF SECTION 2(6A)(E) OF THE ACT, 1922 WHICH ARE IN PARI MATERIA WITH THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME - TAX ACT, 1961, HELD THAT THE PROVISIONS GOVERNING THE DEEMED DI VIDEND CAN BE MADE APPLICABLE ONLY IN THE HANDS OF THE REGISTERED SHAREHOLDERS. SINCE, ADMITTEDLY, IN THE PRESENT CASE, THE APPELLANT IS NOT A SHAREHOLDER OF M/S COUNTRYWIDE PROMOTERS PVT. LTD. THE AMOUNT OF RS. 1,73,262/ - CANNOT BE TAXED IN THE HANDS OF T HE APPELLANT COMPANY. HENCE THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6 . IN THE RESULT, THE APPEAL IS ALLOWED. THE DECISION IS PRONOU NCED IN THE OPEN COURT ON 1 0 T H JUNE , 2015. S D / - S D / - ( G.C. GUPTA ) (INTURI RAMA RAO) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 1 0 T H J U N E , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI