N.K.Mohammed Ali & Brothers, Calicut V. DCIT, Calicut

ITA 653/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64735 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 24-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-12-2010
• Court: TRIBUNAL
• Department Lawyers: PRADUMNA KUMAR SINGH
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A NO. 653/COCH/2010 ASSESSMENT YEAR : 2006-07 M/S. N.K. MOHAMMED ALI & BROTHERS, CHEROOTTY ROAD, CALICUT. [PAN: AACFN 9210H] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, CALICUT. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA REVENUE BY SHRI PRADUMNA KUMAR SINGH, JR. DR DATE OF HEARING 24/07/2012 DATE OF PRONOUNCEMENT 10/08/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AG AINST THE ORDER DATED 30-09- 2010 PASSED BY LD CIT(A)-I, KOCHI CONFIRMING THE AS SESSMENT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 2. THE FACTS RELATING TO THE SAME ARE SET OUT I N BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM AND DURING THE COURSE OF ASSESSMENT PROCEEDING , THE AO NOTICED THAT THE ACCOUNT OF FOLLOWING CONCERNS SHOWED CREDIT BALANCES:- (A) M/S KHEMKA ROLLER FLOUR MILLS PVT LTD. (B) M/S PARISONS ROLLER FLOUR MILLS PVT LTD (C) M/S PARISONS AGRO TECH PVT LTD. SINCE THE PARTNERS OF THE ASSESSEE FIRM WERE HOLDIN G VOTING RIGHTS OF NOT LESS THAN 10% AS PRESCRIBED U/S 2(22)(E) OF THE ACT, THE AO TREAT ED THE CREDIT BALANCES AS DEEMED I.T.A. NO. 653 /COCH/2010 2 DIVIDEND AND ASSESSED THE SAME IN THE HANDS OF THE ASSESSEE FIRM. THE ASSESSEE CHALLENGED THE SAME BEFORE LD CIT(A), BUT COULD NOT SUCCEED. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 3. BEFORE US, THE LD COUNSEL FOR THE ASSESSEE CH ALLENGED THE DECISION OF LD CIT(A) ON DIFFERENT GROUNDS. HOWEVER, WE ARE PERSUADED BY TH E DECISION OF THE MUMBAI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ASST CIT VS. B HAUMIK COLOUR (P) LTD REPORTED IN 313 ITR (AT) 146, WHEREIN IT IS HELD THAT THE ASSES SMENT OF DEEMED DIVIDEND CANNOT BE MADE IN THE HANDS OF THE FIRM, IF THE SAID FIRM IS NOT THE SHARE HOLDER OF THE COMPANIES FROM WHICH THE AMOUNT WAS RECEIVED. 4. ACCORDINGLY, A SPECIFIC QUERY WAS RAISED TO THE LD COUNSEL AS TO WHETHER THE ASSESSEE FIRM HOLDS ANY SHARES THROUGH ANY ONE OF I TS PARTNERS. THE LD COUNSEL CATEGORICALLY STATED THAT THE SHARES IN THE ABOVE S AID COMPANIES ARE HELD BY THE PARTNERS IN THEIR INDIVIDUAL CAPACITIES ONLY. HOWE VER, WE NOTICE THAT THIS ASPECT HAS NOT BEEN EXAMINED BY THE TAX AUTHORITIES. IN OUR VIEW, THE SAID FACT REQUIRES VERIFICATION AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE O RDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFIC ER WITH THE DIRECTION TO VERIFY WHETHER THE SHARES IN THE ABOVE SAID COMPANIES ARE HELD BY THE PARTNERS IN THEIR INDIVIDUAL CAPACITIES OR ON BEHALF OF THE FIRM. IF THE SHARES ARE HELD IN THE INDIVIDUAL CAPACITIES OF THE PARTNERS, THE ASSESSMENT OF DEEMED DIVIDEND IS LIABLE TO BE DELETED IN VIEW OF THE DECISION OF THE SPECIAL BENCH REFERRED SUPRA. WE OR DER ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 10-08-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10TH AUGUST, 2012 I.T.A. NO. 653 /COCH/2010 3 GJ COPY TO: 1. M/S. N.K.MOHAMMED ALI & BROTHERS, CHEROOTTY ROAD , CALICUT. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-2, CALICUT. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE.