G.M. ENTERPRISES, MUMBAI V. ITO 20(1)(2), MUMBAI

ITA 6591/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2352 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 29-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI R S SYAL, ACCOUNTANT MEMBER AND SHRI D K AGARWAL, JUDICIAL MEMBER ITA NO 6591/MUM/2009 (ASSESSMENT YEAR: 2006-07) G M ENTERPRISES, PLOT NO.25, MAROL CO-OP. INDUSTRIAL ESTATE, M V ROAD, ANDHERI (EAST), MUMBAI -400 059 PAN: AAACW 2472 M VS INCOME TAX OFFICER -20(1)(2), PIRAMAL CHAMBERS, LAL BAUG, PAREL, MUMBAI -400 012 APPELLANT RESPONDENT APPELLANT BY: MR VIJAY MEHTA RESPONDENT BY: MR MOHD USMAN ORDER PER R S SYAL, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE ARISES OUT OF ORDER OF THE CIT (A) -XXXI MUMBAI DATED 6.11.2009 FOR ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE ACTION OF THE LEARNED CIT (A) IN CONFIRMING THE ADDITION OF RS 35,08,753/ - AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 3. BRIEFLY STATED, THE FACT OF THE CASE ARE THAT, T HE ASSESSEE FIRM SHOWED UNSECURED LOANS AMOUNTING TO RS 47.32 LAKHS IN ITS BALANCE-SHEET, WHICH INTER ALIA INCLUDED LOAN OF RS 35,08,752/- RECEIVED FROM M/S M EWAR EXIMP PVT LTD, A COMPANY IN WHICH PUBLIC IS NOT SUBSTANTIALLY INTE RESTED. THE ASSESSING OFFICER NOTED THAT THE PARTNERS OF THE ASSESSEE FIR M VIZ., SHRI MAHESH GOENKA ITA 6591/M/2009 G M ENTERPRISES 2 AND SHRI MANOJ GOENKA WERE DIRECTORS IN M/S MEWAR E XIMP PVT LTD. ACCORDINGLY, IT WAS HELD THAT THE PROVISIONS OF SEC TION 2(22)(E) WERE ATTRACTED AND AS SUCH ADDITION OF RS 35.08 LAKHS WAS MADE U/S 2(22)(E) OF THE ACT. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT ORDER ON RECORD. IT IS NOTED THAT THE ISSUE RAISED IN THIS APPEAL IS NOW FAIRLY COVERED BY THE ORDER OF THE SPECIAL BENCH IN THE CASE OF ACIT VS BHAUMIK COLOUR PVT LTD (2009) 27 SOT 270 (MUM) (SB), IF THE LOAN IS MADE T O ANY `CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WH ICH HE HAS SUBSTANTIAL INTEREST, THE DIVIDEND IS TAXABLE IN THE HANDS OF S UCH SHAREHOLDER AND NOT THE NON-SHAREHOLDER (`CONCERN). AS ADMITTEDLY, THE ASS ESSEE IS NOT A SHAREHOLDER IN M/S MEWAR EXIMP PVT LTD, BUT ITS PARTNERS ARE SUCH SHAREHOLDERS, THE DEEMING PROVISION U/S 2(22)(E) CANNOT APPLY TO THE ASSESSEE IN QUESTION. WE, THEREFORE, OVERTURN IMPUGNED ORDER ON THIS SCORE AN D ORDER FOR THE DELETION OF THIS ADDITION. 5. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 16TH DAY OF APRIL 2010. SD/- (D K AGARWAL) JUDICIAL MEMBER SD/- (R S SYAL) ACCOUNTANT MEMBER MUMBAI, DATE: 16TH APRIL 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -XXXI, MUMBAI. ITA 6591/M/2009 G M ENTERPRISES 3 4) THE CIT-XI, MUMBAI. 5) THE D.R. G BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI ITA 6591/M/2009 G M ENTERPRISES 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 15.04.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 15.04.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER *