DCIT 9(1), MUMBAI V. GHARDA CHEMICALS LTD, MUMBAI

ITA 6321/MUM/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4070 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 02-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 07-12-2009
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Keywords: Reopening of assessment; Transfer pricing; Deemed dividend
• Section: 43B; 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUM BAI BEFORE SHRI MAHAVIR SINGH, JM & SHRI ASHWANI TANEJA, AM ITA NO. 6025/MUM/2009 (ASSESSMENT YEAR: 2003-04) GHARDA CHEMICALS LTD. 5/6, JER MANSION, W.P. VARDE MARG, OFF TURNER ROAD, BANDRA (WEST), MUMBAI-400 018. (PAN:AAACG1255E) VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-9(1), MUMBAI. AAYKAR BHAWAN, M. K. MARG, CHURCHGATE, MUMBAI-400020. (APPELLANT) (RESPONDENT) & ITA NO. 6321/MUM/2009 (ASSESSMENT YEAR: 2003-04) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-9(1), MUMBAI. AAYKAR BHAWAN, M. K. MARG, CHURCHGATE, MUMBAI - 400020. VS. GHARDA CHEMICALS LTD. 5/6, JER MANSION, W.P VARDE MARG OFF TURNER ROAD, BANDRA (WEST), MUMBAI - 400 018. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH JOSHI REVENUE BY : SHRI N. K. CHAND, CIT DATE OF HEARING: 06.04.2016 DATE OF PRONOUNCEMENT: 22.04.2016 O R D E R PER MAHAVIR SINGH, JM: THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE DIR ECTED AGAINST THE ORDER OF CIT(A)-15, MUMBAI IN APPEAL NO. CIT(A)-15/IT-150 /DCIT-9(1)/08-09 VIDE ORDER DATED 23.09.2009. ASSESSMENT WAS FRAMED BY DCIT-9( 1), MUMBAI U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2003-04 VIDE HIS ORDER DATED 26.12.2008. FIRST WE TAKE UP ITA NO.6025/MUM/2009 (ASSESSEES A PPEAL). 2 ITA NO. 6321 & 6025/MUM/2009 GHARDA CHEMICALS LTD. ASST. YEAR 2003-04 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAIN ST THE ORDER OF CIT(A) CONFIRMING THE REOPENING OF ASSESSMENT U/S. 147 OF THE ACT. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSE E DID NOT PRESS THIS GROUND. HENCE, THIS ISSUE OF ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER OF CIT(A) IN CONFIRMING THE ACTION OF AO IN DISALLOWING SALES TA X LIABILITY OF RS.2,52,046/- BY INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. LD. CIT(A) HAS ERRED IN NOT GIVING DIRECTION TO THE LD. AO TO ALLOW THE UNPAID SALES TAX LIABILITY OF RS.2,52,046/- IN THE YEAR OF PAYMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 43B OF TH E INCOME TAX ACT, 1961. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AO BE DIRECTED TO ALLOW THE SAID SALE TAX LIABILITY OF RS.2,52,046/-, UNPAID AS ON 31.03.2003 AND DISALLOWED IN ASST. YEAR 2003-04, IN THE YEAR O F PAYMENT UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE AO MADE DISALLOWANCE U/S. 43B OF THE ACT OF SALES TAX LIABILITY OF RS.9, 71,247/- ON THE GROUND THAT THE SAID AMOUNT WAS NOT PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THIS FACT CAME TO THE KNOWLEDGE OF THE AO VIDE ANNE XURE 9 OF TAX AUDIT REPORT WHEREIN THE AUDITOR HAS REPORTED OUTSTANDING SALES TAX LIABILITY OF RS.16,68,486/- AS ON 31.03.2003, OUT OF WHICH A SUM OF RS.6,97,239 /- WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. HENCE, HE DISA LLOWED THE SUM OF RS.9,71,247/-. THE ASSESSEE BEFORE CIT(A) FILED RECONCILIATION OF THE OUTSTANDING SALES TAX LIABILITY IN RESPECT TO SALES TAX PERTAINING TO PUNJAB SALES TAX ACCOUNT AND THEREBY HE HAS DISCLOSED OUTSTANDING AMOUNT AS ON 31.03.2003 AT RS .2,52,046/-. ACCORDINGLY, THE CIT(A) ALSO CONFIRMED THIS AMOUNT FOR THE REASO N THAT THE SUM OF RS.2,52,046/- WAS NOT PAID ON OR BEFORE THE DUE DAT E OF FILING OF RETURN OF INCOME BY THE ASSESSEE. NOW BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS AMOUNT IS NOT ALLOWABLE AS IT WAS NOT PAID BY ASSES SEE ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR AY 2003-04. BUT LD. COUNSEL FOR THE ASSESSEE MADE ALTERNATIVE SUBMISSION THAT THIS AMOUNT SHOULD BE ALLOWED IN THE YEAR OF 3 ITA NO. 6321 & 6025/MUM/2009 GHARDA CHEMICALS LTD. ASST. YEAR 2003-04 PAYMENT. ON THIS, LD. SR. DR ALSO AGREED. ACCORDI NGLY, WE DIRECT THE AO TO ALLOW THIS AMOUNT IN THE YEAR OF PAYMENT MADE BY ASSESSEE SUBJECT TO THE CONDITION THAT THE ASSESSEE MAKES A CLAIM BEFORE AO. THIS GR OUND OF APPEAL OF ASSESSEE IS ADJUDICATED IN TERM OF THE ABOVE. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER OF CIT(A) IS IN RESPECT TO BROUGHT FORWARD LOSSES AND UNABSORBED DE PRECIATION IN EARLIER YEARS TO BE SET OFF AGAINST INCOME UNDER THE HEAD INCOME FRO M OTHER SOURCES. 7. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THIS ISSUE RELATES TO ADJUDICATION OF THE REVENUES ISSUE IN RESPECT TO A DDITION ESTIMATED BY CIT(A) OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT AND THE IS SUE IS ALSO DEPENDENT ON THE OUTCOME OF THAT APPEAL AND THIS ISSUE CAN BE CLUBBE D WITH THE SAME. HENCE, WE WILL DEAL WITH THE ISSUE WHILE DEALING WITH THE APP EAL OF REVENUE. 8. THE NEXT COMMON ISSUES IN THIS APPEAL OF ASSESSE E ARE AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN MAKING DISALL OWANCE OF UNUTILIZED MODVAT CREDIT, DISALLOWANCE OF DEDUCTION U/S. 80HHC OF THE ACT AND TRANSFER PRICING ADJUSTMENT MADE BY TPO VIDE GROUND NOS. 4 TO 7. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT INTERESTED IN PR OSECUTING THESE GROUNDS FOR THE REASON THAT THE ASSESSEES ISSUES ARE ALREADY ALLOW ED BY ITAT WHILE ADJUDICATING REGULAR APPEAL AGAINST ASSESSMENT FRAMED U/S. 143(3 ) OF THE ACT IN ITA NOS. 4405 & 4296/MUM/2007 FOR AY 2003-04 ORDER DATED 16.01.20 15 AND HENCE, THESE GROUNDS HAVE BECOME INFRUCTUOUS. ON THE OTHER HAND , LD. SR. DR HAS RAISED NO OBJECTION TO THE WITHDRAWAL OF THIS GROUND. IN VIE W OF THE ABOVE POSITION, WE DISMISS THESE GROUNDS AS INFRUCTUOUS. NOW, WE ARE COMING TO ITA NO. 6321/MUM/2009 (REVENU ES APPEAL). 9. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING THREE GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.36,12,0 1,249/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME 4 ITA NO. 6321 & 6025/MUM/2009 GHARDA CHEMICALS LTD. ASST. YEAR 2003-04 TAX ACT, 1961 HOLDING THAT THE TRANSACTIONS BETWEEN THE ASSESSEE COMPANY AND M/S. GUJARAT INSECTICIDES LTD (GIL), (A SUBSIDI ARY OF THE ASSESSEE COMPANY WHEREIN THE ASSESSEE COMPANY HOLDS 75% OF S HARES) WERE NORMAL BUSINESS TRANSACTIONS NOT COVERED BY THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961. 2. WHILE DELETING THE SAID ADDITION, THE LD.CIT(A) FAILED TO APPRECIATE THAT LENDING OF MONEY BEING NOT THE BUSINESS OF M/S.GIL, THE SAID TRANSACTIONS ARE NOT COVERED BY THE EXCLUSIONS PROVIDED IN SECTION 2 (22)(E) OF THE INCOME-TAX ACT, 1961. 3. THE LD.CIT(A) FURTHER FAILED TO APPRECIATE THAT ADVANCE FOR THE PURPOSE OF SECTION 2(22)(E) MAY BE EVEN BY WAY OF TRANSFER OF GOODS AND USE OF THE WORK 'ANY PAYMENT' IN THE CONTEXT OF ADVANCE I LOAN, SIG NIFIES THAT EACH OF THE PAYMENTS MADE WHEN THE PAYEE IS NOT ALREADY A CREDI TOR, CONSTITUTES ADVANCE [MD. JINDAL VS. COMMISSIONER OF INCOME-TAX 64 ITR 28 (CAL)] AND HENCE, THE PAYMENTS MADE EVEN IN A RUNNING ACCOUNT WHEN THE PAYEE HAS A DEBIT BALANCE ALL ALONG ARE HIT BY SECTION 2(22)(E) . [COMMISSIONER OF INCOME-TAX VS. P.K.BADIANI 76 ITR 369 (BOM)]. 10. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STA TED THAT THIS ISSUE IS SQUARELY COVERED BY TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR ASST. YEAR 2004-05 IN ITA NO.2012/MUM/2010 DATED 07.01.2011 WHEREIN TRIBUNAL HAS FOLLOWING THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE FO R ASST. YEAR 2002-03 HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR VIDE PARA 4 AND 5 AS UNDER: 4. LEARNED COUNSEL FOR THE ASSESSEE PRODUCED BEFOR E US A COPY OF DECISION OF A CO-ORDINATE BENCH IN ASSESSEE'S OWN CASE FOR THE AS SESSMENT YEAR 2002-03 IN ITA NO.916/M/2010 ORDER DATED 3RD DECEMBER, 2010, W HEREIN, THE TRIBUNAL UPHOLD THE DECISION OF THE CIT(A) DELETING THE ADDI TION MADE UNDER SECTION 2(22)( E), INTER ALIA, OBSERVING AS UNDER:- '11. EVEN ON MERITS THERE IS NO CASE FOR THE REVENU E. IN FACT THE CIT(A) HAS ANALYSED THIS ISSUE ELABORATELY AND CAME TO A C ONCLUSION THAT PROVISIONS OF SECTION 2(22) (E) ARE NOT ATTRACTED I N THE CASE OF NORMAL BUSINESS TRANSACTIONS. THE SAME PRINCIPLE WAS UPHEL D BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR 3 18 ITR 462 WHEREIN THIS ISSUE WAS ELABORATELY DISCUSSED AS UNDER: - 'SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961, SHOW S THAT A PAYMENT WOULD ACQUIRE THE ATTRIBUTES OF A DIVIDEND WITHIN THE MEANING OF THE PROVISION IF THE FOLLOWING CONDITION S ARE FULFILLED : (I) THE COMPANY MAKING THE PAYMENT IS ONE IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED; (II) MONEY SHOULD BE PAID BY THE COMPANY TO A SHAREHOLDER HOLDING NOT LESS THAN TEN PER CENT. OF THE VOTING POWER OF THE COMPANY. IT WOULD MAKE NO DIFFE RENCE IF THE PAYMENT WAS OUT OF THE ASSETS OF THE COMPANY OR OTH ERWISE; (III) THE MONEY SHOULD BE PAID EITHER BY WAY OF AN ADVANC E OR LOAN OR IT MAY BE 'ANY PAYMENT' WHICH THE COMPANY MAY MAKE ON BEHALF 5 ITA NO. 6321 & 6025/MUM/2009 GHARDA CHEMICALS LTD. ASST. YEAR 2003-04 OF OR FOR THE INDIVIDUAL BENEFIT OF ANY SHAREHOLDER OR ALSO TO CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE IS SUBSTANTIALLY INTERESTED; AND (IV) T HE LIMITING FACTOR BEING THAT THESE PAYMENTS MUST BE TO THE EXTENT OF ACCUMULATED PROFITS, POSSESSED BY SUCH A COMPANY. THE IMMEDIATE PRECURSOR TO SECTION 2(22)(E) IS FOUND IN SECTION 2(6A) OF THE I NDIAN INCOME-TAX ACT, 1922. THE PURPOSE OF INSERTION OF SUB-CLAUSE ( E) TO SECTION 2(6A) IN THE 1922 ACT WAS TO BRING WITHIN THE TAX N ET MONIES PAID BY CLOSELY HELD COMPANIES TO THEIR PRINCIPAL SHAREH OLDERS IN THE GUISE OF LOANS AND ADVANCES TO AVOID PAYMENT OF X. THEREFORE, SUB-CLAUSE (E) OF SECTION 2(22) OF THE 1961 ACT, WH ICH IS IN PARI ATERIA WITH SUB-CLAUSE (E) OF SECTION 2(6A) OF THE 1922 ACT, PLAINLY SEEKS TO BRING WITHIN THE TAX NET, ACCUMULATED PROF ITS WHICH ARE DISTRIBUTED BY CLOSELY HELD COMPANIES TO ITS SHAREH OLDERS IN THE FORM OF LOANS. THE PURPOSE BEING THAT PERSONS WHO M ANAGE SUCH CLOSELY HELD COMPANIES SHOULD NOT ARRANGE THEIR AFF AIRS IN A MANNER THAT THEY ASSIST THE SHAREHOLDERS IN AVOIDIN G THE PAYMENT OF TAXES BY HAVING THESE COMPANIES PAY OR DISTRIBUT E, WHAT WOULD LEGITIMATELY BE DIVIDEND IN THE HANDS OF THE SHAREH OLDERS' MONEY IN THE FORM OF AN ADVANCE OR LOAN. THE WORD 'ADVANC E' HAS TO BE READ IN CONJUNCTION WITH THE WORD 'LOAN'. USUALLY A TTRIBUTES OF A LOAN ARE THAT IT INVOLVES THE POSITIVE ACT OF LENDI NG COUPLED WITH ACCEPTANCE BY THE OTHER SIDE OF THE MONEY AS LOAN: IT GENERALLY CARRIES INTEREST AND THERE IS AN OBLIGATION OF REPA YMENT. ON THE OTHER HAND, IN ITS WIDEST MEANING THE TERM 'ADVANCE ' MAYOR MAY NOT INCLUDE LENDING. THE WORD 'ADVANCE' IF NOT FOUN D IN THE COMPANY OF OR IN CONJUNCTION WITH A WORD 'LOAN' MAY OR MAY NOT INCLUDE THE OBLIGATION OF REPAYMENT. IF IT DOES, TH EN IT WOULD BE A LOAN. THUS, ARISES THE CONUNDRUM AS TO WHAT MEANING ONE WOULD ATTRIBUTE TO THE TERM 'ADVANCE'. THE RULE OF CONSTR UCTION WHICH ANSWERS THIS CONUNDRUM IS NOSCITUR A SOCIIS. THE RU LE HAS BEEN EXPLAINED BOTH BY THE PRIVY COUNCIL IN THE CASE OF ANGUS ROBERTSON V. GEORGE DAY [1879] 5 AC 63 BY OBSERVING 'IT IS LE GITIMATE RULE OF CONSTRUCTION TO CONSTRUE WORDS IN AN ACT OF PARLIAM ENT WITH REFERENCE TO WORDS FOUND IN IMMEDIATE CONNECTION WI TH THEM' AND THE SUPREME COURT IN THE CASE OF ROHIT PULP AND PAP ER MILLS LTD. V. COLLECTOR OF CENTRAL EXCISE, AIR 1991 SC 754 AND ST ATE OF BOMBAY V. HOSPITAL MAZDOOR SABHA, AIR 1960 SC 610. THE PRI NCIPLES WITH REGARD TO THE APPLICABILITY OF THE RULE OF CONSTRUC TION ARE BRIEFLY AS FOLLOWS : (I) DOES THE TERM IN ISSUE HAVE MORE THAN ONE MEANING ATTRIBUTED TO IT, I.E., BASED ON THE SETTING OR THE CONTEXT ONE COULD APPLY THE NARROWER OR WIDER MEANING; (II) ARE THE W ORDS OR TERMS USED FOUND IN A GROUP TOTALLY 'DISSIMILAR' OR IS TH ERE A 'COMMON THREAD' RUNNING THROUGH THEM; (III) THE PURPOSE BEH IND INSERTING OF THE TERM. IN THE INSTANT CASE (I) THE TERM 'ADVANCE ' HAS UNDOUBTEDLY MORE THAN ONE MEANING DEPENDING ON THE CONTEXT IN WHICH IT IS USED; (II) BOTH THE TERMS, THAT IS, 'AD VANCE' OR 'LOAN' ARE RELATED TO THE ACCUMULATED PROFITS OF THE COMPANY; AND (III) THE PURPOSE BEHIND THE INSERTION OF THE TERM 'ADVANCE' WAS TO BRING WITHIN THE TAX NET PAYMENTS MADE IN THE GUISE OF LO AN TO 6 ITA NO. 6321 & 6025/MUM/2009 GHARDA CHEMICALS LTD. ASST. YEAR 2003-04 SHAREHOLDERS BY COMPANIES IN WHICH THEY HAVE A SUBS TANTIAL INTEREST SO AS TO AVOID PAYMENT OF TAX BY THE SHARE HOLDERS. THE WORD 'ADVANCE' WHICH APPEARS IN THE COMPANY OF THE WORD 'LOAN' COULD ONLY MEAN SUCH ADVANCE WHICH CARRIES WITH IT AN OBLIGATION OF REPAYMENT. TRADE ADVANCES WHICH ARE IN THE NATUR E OF MONEY TRANSACTED TO GIVE EFFECT TO A COMMERCIAL TRANSACTI ON WOULD NOT FALL WITHIN THE AMBIT OF THE PROVISION OF SECTION 2(22)( E) OF THE ACT. THE ASSESSEE WAS IN THE BUSINESS OF MANUFACTURING CUSTO MIZED KITCHEN EQUIPMENT. THE ASSESSEE WAS ALSO THE MANAGI NG DIRECTOR AND HELD NEARLY 65 ER CENT. OF THE PAID-UP SHARE CA PITAL OF C. A SUBSTANTIAL PART OF THE BUSINESS OF THE ASSESSEE, W HICH WAS NEARLY 90 PER CENT WAS OBTAINED THROUGH C. FOR THIS PURPOSE, C WOULD PASS ON THE ADVANCE RECEIVED FROM ITS CUSTOME RS TO THE ASSESSEE TO EXECUTE THE JOB WORK ENTRUSTED TO THE A SSESSEE. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE MONEY RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF A LOAN GIVEN BY C TO THE ASSESSEE WHO ADMITTEDLY HELD MORE THAN 10 PER CENT. OF THE SHARES IN C. THE ASSESSING OFFICER CONCLUDED THAT T HE MONEY RECEIVED BY THE ASSESSEE WAS DEEMED DIVIDEND WITHIN THE MEANING OF THE PROVISIONS OF SECTION 2(22)(E). THE COMMISSIONER (APPEALS) REVERSED THE ORDER OF THE ASSESSING OFFIC ER. THE TRIBUNAL SUSTAINED THE DECISION OF THE COMMISSIONER (APPEALS ). ON APPEAL: HELD, THAT THE TRADE ADVANCES GIVEN TO THE ASSESSEE BY C COULD NOT BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E ).' 12. THE HON'BLE DELHI HIGH COURT IN FACT FOLLOWED T HE PRINCIPLES ESTABLISHED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NAGINDAS M. KAPADIA 177 ITR 393. THE SAME PRINCIPLE S WERE ALSO REITERATED BY THE HON'BLE DELHI COURT IN THE CASE O F CIT VS. AMBASSADOR TRAVELS P. LTD. 318 ITR 376. IN VIEW OF THESE PRINCIPLES, WE ARE OF THE VIEW THAT THE COMMERCIAL TRANSACTIONS BETWEEN TWO COMPANIES COULD NOT BE BROUGHT WITHIN T HE PURVIEW OF THE PROVISIONS OF SECTION 2(22)(E). ACCORDINGLY ON MERITS ALSO WE FIND NO CASE TO INTERFERE WITH THE ORDER OF THE CIT (A) ON THIS ISSUE. THE GROUNDS 1,2 & 3 ARE THEREFORE REJECT'. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, CO NTENDS THAT THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH IS PER-I NCURRIUM INASMUCH IT DOES NOT TAKE INTO ACCOUNT THE LAW LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. P.K .. BADIANI, 76 ITR 369(BOM), WHICH HOLD THAT EVEN A DEBIT BALANCE IS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF COMPUTING THE DEEME D DIVIDEND UNDER SECTION 2(22)(E). LEARNED D.R.'S CONTENTION I S THAT IT IS NOT AT ALL NECESSARY THAT THE TRANSACTIONS WHICH CAN SUCCE SSFULLY INVOKE THE DEEMING FICTION ENVISAGED UNDER SECTION 2(22)(E ) MUST BE IN THE NATURE OF LOANS OR ADVANCES AND THAT EVEN A DEBIT B ALANCE IN ACCOUNT CAN BE A REASON ENOUGH TO INVOKE SECTION 2( 22)(E) OF THE ACT. HOWEVER, WHEN THE SAID JUDGEMENT OF HON'BLE BO MBAY HIGH COURT WAS PERUSED, WE FIND THAT, QUITE TO THE CONTR ARY WHAT LEARNED D.R. HAS ARGUED, THEIR LORDSHIPS HAVE OBSER VED THAT A DEBIT IN THE ACCOUNT NEEDS TO BE EXAMINED SO AS TO FIND ITS TRUE 7 ITA NO. 6321 & 6025/MUM/2009 GHARDA CHEMICALS LTD. ASST. YEAR 2003-04 NATURE AND ONLY WHEN A DEBIT IN THE NATURE OF LOANS OR ADVANCES, IT CANNOT BE CONSIDERED AS DEEMED DIVIDEND UNDER SE CTION 2(220(E). UPON THIS FACT BEING POINTED OUT TO THE L EARNED D.R., HE DID NOT HAVE MUCH TO SAY EXCEPT TO NEVERTHELESS PLA CE HIS RELIANCE OF HON'BLE HIGH COURT JUDGEMENT. IN VIEW OF THESE F ACTS, AND BEARING IN MIND THE LAW LAID DOWN BY THE HON'BLE BO MBAY HIGH COURT, WE SEE NO MERITS IN THE OBJECTION RAISED BY LEARNED D.R. TO THE ISSUE BEING COVERED BY THE TRIBUNAL'S DECISION IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2002-03(SUPRA). IN OUR CONSIDERED VIEW, THE ISSUE, WHICH IS AGITATED IN TH IS APPEAL, IS SQUARELY COVERED BY THE TRIBUNAL'S DECISION FOR THE ASSESSMENT YEAR 2002-03 AND WE RESPECTFULLY CONCUR WITH THE VI EWS OF OUR DISTINGUISHED COLLOGUES. THE MATERIAL FACTS IN THE YEAR BEING IDENTICAL TO A.Y. 2003-04 AND THE OBJECTION RAISED BY THE LEARNED D.R. BEING DEVOID OF LEGALLY SUSTAINABLE MERITS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). ACCORDI NGLY, WE DISMISS THE APPEAL FILED BY THE REVENUE. 11. SINCE THE ISSUE IS COVERED IN FAVOUR OF ASSESSE E AND LD. CIT, DR COULD NOT CONTROVERT/DISTINGUISH THE AFORESAID FINDING OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS HE REBY UPHELD. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 12. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY AL LOWED AND THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND APRIL, 2 016. SD/- SD/- ( ASHWANI TANEJA ) ( MAHAVIR SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 22ND APRIL, 2016 JD. SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) -15, MUMBAI 4. CIT- , MUMBAI 5. DR, K BENCH ITAT, MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// (ASSTT. REGISTRAR) ITAT, MUMBAI