ARYA SHIP BREAKING CORPORAITON, MUMBAI V. ASST CIT 14(3), MUMBAI

ITA 6411/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0960 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Keywords: Question of law; Deemed dividend
• Section: 147; 148

Judgement Text

ITA/6411/MUM/2011,AY.2005 - 06 - ARYA SHIP BREAKING CORPN. 1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL MEMB ER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.6411/MUM/20 11 , / ASSESSMENT YEAR - 2005 - 06 ARYA SHIP BREAKING CORPORATION 43, RAMWADI, KALBADEVI ROAD MUMBAI - 400 002. PAN:AA BFA 1353 R VS ASSTT. COMMISSIONER OF INCOME TAX - 14(3) MU MBAI - 20 . ( / ASSESSEE ) ( / RESPONDENT ) /ASSESSEE BY :SHRI RAKESH JOSHI / REVENUE BY :SHRI ASGHAR ZAIN / DATE OF HEARING : 08 - 04 - 2015 / DATE OF PRONOUNCEMENT : 08 - 04 - 2015 , 1961 254 ( 1 ) ORDER U/S .254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJEDRA,A . M . - CHALLENGING THE ORDER DT. 4/8/2011 OF THE CIT(A) - 25 ,MUMBAI,ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL : THE FOLLOWING GROUNDS OF APPEAL ARE INDEPENDENT OF, AND WITH OUT PREJUDICE TO, ONE ANOTHER: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) 25, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN NOT ADMITTING THE ADDITIONAL GROUNDS OF APPEAL. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL GROUNDS OF APPEAL. 2. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CONFIRMING THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 / 148 OF THE ACT. THE A PPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE REASONS RECORDED UNDER SECTION 148 ARE VAGUE, INSUFFICIENT AND ERRONEOUS IN LAW AND HENCE, THE ISSUE OF NOTICE UNDER SECTION 148 IS BAD IN LAW AND ACCORDINGLY, THE A CTION OF THE CIT(A) IN UPHOLDING THE REOPENING IS BAD IN LAW AND HENCE, REQUIRES TO BE QUASHED. 3. THE CIT(A) ERRED IN UPHOLDING THE ASSESSMENT IN SPITE OF NON ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. THE APPELLANTS CONTEND THAT THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS A STATUTORY NOTICE AND HAS TO BE ISSUED TO GET JURISDICTION TO FRAME AN ASSESSMENT UNDER SECTION 143 (3) AND HENCE, IN THE ABSENCE OF THE SAME, THE ACTION OF THE CIT(A) IN UPHOLDING THE ASSESSMENT IS BAD IN L AW AND HENCE, REQUIRED TO BE QUASHED . ITA/6411/MUM/2011,AY.2005 - 06 - ARYA SHIP BREAKING CORPN. 2 4. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS 1,07,90,417 AS DIVIDEND UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT FOR THE PAYMENTS TO THE APPELLANTS MADE BY ASSOCIATE CONCERNS. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE ADDITION UNDER SECTION 2(22)(E) OF THE ACT INASMUCH AS THERE IS NO PAYMENT MADE BY ASSOCIATE CONC ERNS BY WAY OF ADVANCE OR LOAN TO THE APPELLANTS AND AS SUCH, THE IMPUGNED ADDITION REQUIRES TO BE DELETED. THE CIT(A) HAS NOT CORRECTLY APPRECIATED THE FACTS IN ITS ENTIRETY BEFORE CONFIRMING THE SAID ADDITION AND THEREFORE, REQUIRES TO BE QUASHED. TH E APPELLANTS FURTHER CONTEND THAT (I) HAVING REGARD TO THE LEGISLATIVE INTENT OF ENACTING THE PROVISIONS OF SECTION 2(22)( E), THE IMPUGNED TRANSACTIONS CANNOT BE BROUGHT TO TAX AS DEEMED DIVIDEND UNDER THE PROVISIONS OF SECTION 2(22)( E) OF THE ACT. (II) FROM THE FREQUENCY OF THE TRANSACTIONS UNDER REFERENCE IT WOULD BE EVIDENT THAT THEY ARE AS PER THE BUSINESS REQUIREMENTS OF THE CONCERNS AND HENCE, IN THE NATURE OF MUTUAL, OPEN AND CURRENT ACCOUNT AND INTRA GROUP TRANSFERS. (III) THERE IS NO DEVI CE OR ULTERIOR MOTIVE TO AVOID THE PROVISIONS OF SECTION 2(22)( E). WITHOUT PREJUDICE AND IN THE ALTERNATIVE, THE APPELLANTS CONTEND THAT 'ACCUMULATED PROFITS' AS DEFINED IN EXPLANATION 2 TO SECTION 2(22)(E) HAS NOT BEEN CORRECTLY CALCULATED BY THE ASSE SSING OFFICER AND HAS BEEN ERRONEOUSLY SUSTAINED BY THE CIT(A). THE APPELLANTS CRAVE LEAVE TO ADD TO, ALTER OR AMEND THE AFORESTATED GROUNDS OF APPEAL. ASSESSEE - FIRM ,ENGAGED IN THE BUSINESS OF SHIP BREAKING , FILED ITS RETURN OF INCOME ON 29/10/ 2005 ,DE CLARING TOTAL INCOME OF RS. 6,10,310/ - . ASSESSING OFFICER( AO ) COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 11.4.2007 ,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 29,27,550 / - . LATER ON, THE CASE WAS RE - OPENED BY ISSUING A NOTICE U/S. 148 OF THE ACT .THE AO FINALISED , THE ASSESSMENT U/S.143(3) R . W . S . 147 OF THE ACT ON 31.12.2010 , DETERMINING THE INCOME OF THE ASSESSEE AT RS.1,14,00,727/ - . 3. E FFECTIVE GROUND OF APPEAL IS ABOUT OF RS.1.07 CRORES MADE BY THE AO U/S.2(22)(E) OF THE ACT. D URING THE ASSESSMENT PROCEE DING, THE AO FOUND THAT TWO CLOSELY HELD COMPANIES NAMELY ARYA SHIP BREAKING CO. LTD. AND M.P. RE CYCLING CO. LTD. HAD ADVANCED MONEY TO THE ASSESSEE WITHOUT CHARGING ANY INTEREST, THAT PAWAN ARYA WAS ONE OF THE PARTNERS OF THE ASSESSE E FIRM HAD BENEFICIAL INT EREST, THAT HE WAS ENTITLED TO 50 % OF THE INCOME OF THE CONCERN, THAT HE WAS OF THE BENEFICIAL SHARE HOLDER WITH 45% AND 68.5% OF VOTING POWER IN M/S. ARYA SHIP BREAKING CO. L TD, AND M/S. M.P. RECYCLING CO.LTD.RESPECTIVELY, THAT ALL THE CRITERIA GIVEN FOR TAK I NG LOAN AND ADVANCES GIVEN BY T W O COMPANIES WAS TO BE TREATED A DEEMED DIVIDEDND AS PER THE PROVISIONS OF SECTION 2(22) (E) OF THE ACT. THE ASSESSEE CONTENDE D BEFOR E THE AO THAT ADVANCES TAKEN FROM THE COMPANIES WERE PURELY FOR BUSINESS AND COMMERCIAL TRA NSACTION, THAT THE SAME WAS OUTSIDE THE PURVIEW OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, THAT THOSE COMPANIES HAD NOT GIVEN INTER E ST ON LOANS AND ADVANCES , THAT SHARE HOLDER REFERRED IN SEC.2(22)(E) SHOULD BE BENEFICIAL AS W ELL AS REGISTERED SHARE HOLDER, THAT THE ASSESSEE WAS NOT A REGISTERED SHARE HOLDER OF THE COMPANY AND THEREFORE THE SECTION WAS NOT APPLICABLE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER,THE AO HELD THAT NEITHER THE ASSESSEE NOR THE PAYER COMPANIES WERE ENGAGED IN FINANCING OR MONEY LENDING ACTIVITIES, THAT THE ACT DID NOT ENVISAGE THAT SECTION 2 ( 22)(E) WOULD NOT BE APPLICABLE IN CASE OF THE COMPANY NOT RECEIVING INTEREST ON LOANS AND ADVANCES MADE BY IT. HE RELIED UPON THE DECISION OF WALCHAND & COM PANY (100 ITR 598) OF HONBLE JURISDICTIONAL HIGH ITA/6411/MUM/2011,AY.2005 - 06 - ARYA SHIP BREAKING CORPN. 3 COURT. HE FURTHER HELD THAT THE PROVISIONS OF THE SECTION DID NOT IMPLY THAT THE CONCERN SHOULD BE REGISTERED FOR BENEFICI AL SHARE HOLDER OF THE COMPANY, THAT ALL THE CRITERIA MENTIONED IN THE SECTION WERE F ULFILLED.ACCORDINGLY, THE AO TREATED THE SUM OF RS.1,07,90,417/ - AS DEEMED DIVIDEND TO THE EXTENT OF ACCUMULATED PROFIT AS AGAINST TOTAL LOANS AND ADVANCES OF RS.9.90 CRORES. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FI RST APPELLATE AUTHORITY (FAA).BEFORE HIM IT WAS ARGUED THAT THE DISPUTED TRANSACTIONS WERE NOT IN THE NATURE OF LOANS AND ADVANCES, THAT THE ASSESSEE HAD CURRENT MUTUAL OPEN ACCOUNT WITH BOTH THE COMPANIES, THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SHIP BREAKING, THAT BUSINESS OF BOTH THE PARTIES WAS SAME, THAT THE TRANSACTIONS WERE CARRIED OUT BY BOTH THE PARTIES FOR MUTUAL BUSINESS REQUIREMENTS. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA HELD THAT THE TRANSAC TION IN QUESTION WERE MADE BY TWO CLOSELY HELD PVT.LTD.COMPANIES TO THE ASSESSEE, THAT THE PAYMENTS WERE NOT MADE FOR SUPPLY OF ANY GOODS OR SERVICES, THAT NEITHER THE ASSESSEE NOT THE PROVIDER OF IMPUGNED SUMS WERE ENGAGE IN THE BUSINESS OF FINANCING OR MO NEY LENDING, THAT PARTNERS OF THE ASSESSEE FIRM HAD BENEFICIAL OWNERSHIP/INTEREST/ SUBSTANTIAL INTERES T AS PER THE PROVISIONS OF THE SECTION,THE ASSESSEE HAD GIVEN A NEW NOMENCLATURE TO TH E TRANSACTION IN QUESTION I.E., CURRENT MUTUAL OPEN ACCOUNT, THAT THE TRANSACTIONS WERE LOANS AND ADVANCES, THAT IN BALANCE SHEET AMOUNTS HAD BEEN SHOWN AS UNSECURED LOANS FROM FAMILY AND FRIENDS, THAT CERTIFIED BALANCE SH EET OF M/S. M.P. RECYCLING PVT. LTD. A SUM OF RS.50.85 LACS WAS SHOWN AS LOANS AND ADVANCES AS OUTSTANDI NG AS ON 31.3.2004. T HE FAA RELIED ON THE CASES OF NAVNITLAL C. JAVE RI (56 ITR 198), TARULATA SHYAM (108 ITR 345) AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 6. BEFORE US,AUTHORISED REPRESENTATIVE (AR) STATED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT DELIVERED IN THE CASE OF JIGNESH P. SHAH (INCOME TAX APPEAL NO.197 OF 2013, DATED 20/1/2015) . DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF JIGNESH P. SHAH (SUPRA) FOLLOWING QUESTION OF LAW WAS FRAMED: - WHETHER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL IS RIGHT IN PLACING RELIANCE ON THE JUDGMENT IN THE CAS E OF ACIT VS. M/S. BHAUMIK COLOURS PVT. LTD. WHEREAS IN THE INSTANT CASE, THE ASSESSEE IS A REGISTERED AND BENEFICIAL SHAREHOLDER OF A COMPANY THAT HAS GIVEN LOANS TO A THIRD COMPANY THAT LENT THESE, MONIES TO THE ASSESSEE ? THE HONBLE COURT DELIBERATED UPON THE FACTS OF THE CASE IN FOLLOWING MANNER AND DECIDED THE ISSUE AS UNDER : 6 THE UNDISPUTED FACTS ARE THAT THE ASSESSEE RECEIVED LOAN FROM ONE M/S. NS FINCON PVT. LTD. THE REVENUE SEEKS TO TAX THIS LOAN AS DEEMED DIVIDEND. THE CASE OF THE REVENUE BEFORE US IS THAT ONE M/S. LA FIN FINANCIAL SERVICES PVT. LIMITED HAD ADVANCED MONEY TO M/S. NS FINCON PVT. LTD. WHO IN TURN ADVANCED MONEY TO THE RESPONDENTASSESSEE.THE RESPONDENTASSESSEE A 50% SHARE HOLDER OF M/S. LAFIN FINANCIAL SE RVICES PVT. LIMITED AND IN VIEW THEREOF, LOAN ADVANCED BY M/S. NS FINCON PVT. LTD. TO THE RESPONDENTASSESSEE IS TO BE TREATED AS A DIVIDEND IN THE HANDS OF RESPONDENTASSESSEE. IT IS ALSO AN ADMITTED POSITION THAT THE RESPONDENT ASSESEE IS NOT A SHARE HOLDER IN M/S. NS FINCON PVT. LTD. THE ASSESSING OFFICER BROUGHT TO TAX THE ITA/6411/MUM/2011,AY.2005 - 06 - ARYA SHIP BREAKING CORPN. 4 AMOUNT OF LOAN RECEIVED BY THE RESPONDENTASSESEE FROM M/S. NS FINCON PVT. LTD. AS DEEMED DIVIDEND UNDER SECTION 2 (22)(E) OF THE ACT. 7 ON APPEAL, THE CIT(A) HELD THAT THE LOAN GIVEN BY M/S. NS FINCON PVT. LTD TO THE RESPONDENTASSESSEE IS NOT THE PAYMENT MADE BY IT TO ITS SHARE HOLDER. THUS, SECTION 2 (22)(E) OF THE ACT COULD HAVE NO APPLICATION. THE CIT(A) FURTH ER HELD THAT SECTION 2 (22)(E) OF THE ACT CREATES A FICTION BY BRINGING TO TAX AN AMOUNT AS DIVIDEND WHEN THE AMOUNT SO RECEIVED IS OTHERWISE THEN DIVIDEND. THEREFORE, SECTION 2(22) (E) OF THE ACT HAS TO BE STRICTLY READ. 8 ON FURTHER APPEAL TO THE TRIBUNAL BY THE REVENUE, THE IMPUGNED ORDER PLACED RELIANCE UPON THE DECISIONS OF THIS COURT IN UNIVERSAL MEDICARE (P) LTD. (SUPRA) READ WITH ITS DECISION IN BHAUMIK COLOURS (P) LTD. (SUPRA) AND THE DECISION OF RAJASTHAN HIGH COURT IN CIT V/S. HOTEL HILLTOP 313 ITR 116 TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THUS UPHOLDING THE CONCLUSION THAT DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A SHAREHOLDER OF THE LENDER COMPANY. IN THIS CASE, THE RESPONDENTASSESSEE IS ADMITTEDLY NOT THE SHAREHOLDER OF M/S. NS FINCON (P) LTD. 9 THIS COURT IN THE CASE OF UNIVERSAL MEDICARE (SUPRA) WHILE APPROVING THE DECISION OF THE SPECIAL BENCH OF THE TR IBUNAL IN BHAUMIK COLOURS (SUPRA) INTER ALIA OBSERVED THAT: ALL PAYMENTS BY WAY OF DIVIDEND HAVE TO BE TAXED IN HANDS OF THE RECIPIENT OF THE DIVIDEND NAMELY THE SHARE HOLDER. ... . . CONSEQUENTLY, THE EFFECT OF CLAUSE (E) OF SECTION 2 (22) IS TO BROADEN THE AMBIT OF THE EXPRESSION 'DIVIDEND' BY INCLUDING CERTAIN PAYMENTS WHICH THE COMPANY HAS MADE BY WAY OF A LOAN OR ADVANCE OR PAYMENTS MADE ON BEHALF OF OR FOR THE INDIVIDUAL BENEFIT OF A SHA RE HOLDER. THE DEFINITION DOES NOT ALTER THE LEGAL POSITION THAT DIVIDEND HAS TO BE TAXED IN THE HANDS OF THE SHAREHOLDER. 10 FURTHER, THIS COURT IN THE CASE OF CIT V/S. IMPACT CONTAINERS PVT. LTD. 367 ITR 346 WHILE DEALING WITH T HE ISSUE OF DEEMED DIVIDEND CATEGORICALLY HELD THAT SECTION 2(220(E) OF THE ACT CANNOT BE APPLIED/ INVOKED WHERE THE ASSESEE IS NOT A SHAREHOLDER OF THE LEADING COMPANY. THE OBJECTIVE OF SECTION 2(22)(E) OF THE ACT IS ONLY TO ENSURE THAT THE COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED WOULD NOT DISTRIBUTE ITS PROSPERITY AMONGST SHAREHOLDERS BY CALLING THEM THE LOAN/ ADVANCES, AS TAX WOULD BE PAYABLE IF THE SAME WERE DISTRIBUTED AS DIVIDEND. 11 THE SUBMISSION ON BEHALF OF THE REVENUE MADE BEFORE US IS THAT ONE HAS TO LOOK AT THE SUBSTANCE OF THE TRANSACTION AND THAT IF ONE LOOKS AT THE SUBSTANCE, THEN THE RESPONDENTASSESSEE WOULD BE CHARGEABLE TO TAX. THIS IS NOT ACCEPTABLE AS FISCAL STATUS HAVE TO BE INTERPRETED STRICTLY. WE CAN DO NO BETTER THEN MEET THE SUBMISSION OF THE REVENUE BY INVITING ATTENTION TO THE DECISION OF THE SUPREME COURT IN CIT V/S. VATIKA TOWNSHIP 2015 (1) SCC 1 WHEREIN IT HAS BEEN OB SERVED AS UNDER: 41.2: AT THE SAME TIME, IT IS ALSO MANDATED THAT THERE CANNOT BE IMPOSITION OF ANY TAX WITHOUT THE AUTHORITY OF LAW. SUCH A LAW HAS TO BE UNAMBIGUOUS AND SHOULD PRESCRIBE THE LIABILITY TO PAY TAXES IN CLEAR TER MS. IF THE PROVISION CONCERNED OF THE TAXING STATUE IS AMBIGUOUS AND VAGUE AND AS SUSCEPTIBLE TO TWO INTERPRETATIONS, THE INTERPRETATION WHICH FAVOURS THE SUBJECTS, AS AGAINST THE REVENUE, HAS TO BE PREFERRED. THIS IS A WELL ESTABLISHED PRINCIPLE OF STATUTORY INTERPRETATION, TO HELP FINDING OUT AS TO WHETHER PARTICULAR CATEGORY OF ASSESSEE IS TO PAY A PARTICULAR TAX OR NOT. NO DOUBT, WITH THE APPLICATION OF THIS PRINCIPLE, THE COURTS MAKE ENDEAVOUR TO FIND O UT THE INTENTION OF THE LEGISLATURE. AT THE SAME TIME, THIS VERY PRINCIPLE IS BASED ON FAIRNESS DOCTRINE AS IT LAYS DOWN THAT IF IT IS NOT VERY CLEAR FROM THE PROVISIONS OF THE ACT AS TO WHETHER THE PARTICULAR TAX IS TO BE LEVIED T O A PARTICULAR CLASS OF PERSONS OR NOT, THE SUBJECT SHOULD NOT BE FASTENED WITH ANY LIABILITY TO PAY TAX. THIS PRINCIPLE ALSO ACTS AS A BALANCING FACTOR BETWEEN THE TWO JURISPRUDENTIAL ITA/6411/MUM/2011,AY.2005 - 06 - ARYA SHIP BREAKING CORPN. 5 THEORIES OF JUSTICE LIBERTARIAN THEORY ON THE ONE HAND A ND KANTIAN THEORY ALONG WITH EGALITARIAN THEORY PROPOUNDED BY JOHN RAWLS ON THE OTHER HAND. 41.3 TAX LAWS ARE CLEARLY IN DEROGATION OF PERSONAL RIGHTS AND PROPERTY INTERESTS AND ARE, THEREFORE, SUBJECT TO STRICT CONSTRUCTION, AND ANY AMBIGUITY MUST BE RESOLVED AGAINST IMPOSITION OF THE TAX. . . . . 41.4 AGAIN AS UNITED STATES V. MERRAIM, THE SUPREME COURT CLEARLY STATED AT US PP. 187.88 ON BEHALF OF THE GOVERNMENT IT IS URGED THAT TAXATION IS A P RACTICAL MATTER AND CONCERNS ITSELF WITH THE SUBSTANCE OF THE THING UPON WHICH THE TAX IS IMPOSED, RATHER THAN WITH LEGAL FORMS OR EXPRESSIONS. BUT IN STATUTES LEVYING TAXES THE LITERAL MEANING OF THE WORDS EMPLOYED IS MOST IMPORTANT, FOR SUCH STATUTES ARE NOT TO BE EXTENDED BY IMPLICATION BEYOND THE CLEAR IMPOST OF THE LANGUAGE USED. IF THE WORDS ARE DOUBTFUL, THE DOUBT MUST BE RESOLVED AGAINST THE GOVERNMENT AND IN FAVOUR OF THE TAXPAYER. GOULD V. GOULD L ED P. 213: USP 1 53. 41.5 AS LORD CARINS SAID MANY YEARS AGO IN PARTINGTON V. ATTORNE GENERAL (LR P. 122) .... AS I UNDERSTAND THE PRINCIPLE OF ALL FISCAL LEGISLATION IT IS THIS: IF THE PERSON SOUGHT TO BE TAXED COMES WITHIN THE LETTER OF THE LAW HE MUST BE T AXED, HOWEVER GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. ON THE OTHER HAND, IF THE CROWN, SEEKING TO RECOVER THE TAX, CANNOT BRING THE SUBJECT WITHIN THE LETTER OF THE LAW, THE SUB JECT IS FREE, HOWEVER, A PPARENTLY WITHIN THE SPIRIT OF THE LAW THE CASE MIGHT OTHERWISE APPEAR TO BE. THUS ON STRICT INTERPRETATION OF SECTION 2(22)(E) OF THE ACT, UNLESS THE RESPONDENTASSESSEE IS THE SHAREHOLDER OF THE COMPANY LENDING HIM MONEY, NO OCCASION TO APPLY IT CAN ARISE. 12 IN THE PRESENT FACTS, IT IS AN ADMITTED POSITION THAT RESPONDENTASSESSEE IS NOT A SHAREHOLDER OF M/S. NS FINCON PVT. LTD. FROM WHOM HE HAS RECEIVED LOAN. THEREFORE, NO FAULT CAN BE FOUND WITH THE DECISION OF TH E TRIBUNAL IN HAVING FOLLOWED THE DECISION OF THE HIGH COURT IN UNIVERSAL MEDICARE (SUPRA). THIS VIEW HAS BEEN FURTHER REITERATED BY ANOTHER DIVISION BENCH OF THIS COURT IN IMPACT CONTAINERS (SUPRA) RENDERED ON 4 TH JULY, 2014 . 13 WE ARE OF THE VIEW THAT AS THE ISSUE RAISED BY THE REVENUE STANDS CONCLUDED BY THE ORDER OF THIS COURT, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. ACCORDINGLY, APPEAL DISMISSED. NO ORDER AS TO COSTS. RESPECTFULLY, FOLLOWING T HE ABOVE, WE ARE REVERSING THE ORDER OF THE FAA AS THE ASSESSEE WAS NOT THE BENEFICIARY SHARE HOLDER. EFFECTIVE GROUND OF APPEAL IS DECIDE D IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH ,APRIL,2015. 8 TH APRIL, 20 15 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 08 .04.2015 JV ITA/6411/MUM/2011,AY.2005 - 06 - ARYA SHIP BREAKING CORPN. 6 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5 . DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.