Ashish Dham, Delhi V. DCIT, New Delhi

ITA 6607/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5873 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6607/DEL/2014 ASSESSMENT YEAR: 2007-08 SHRI ASHISH DHAM, C-189, 1ST FLOOR, SARVODYA ENCLAVE, DELHI-110017 VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 12(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRATAP GUPTA, CA R ESPONDENT BY : SHRI RAVI KANT GUPTA, SR. DR DATE OF HEARING: 28.05.2018 DATE OF PRONOUNCEMENT : 30.05.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M.: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 30 TH SEPTEMBER, 2014 PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) XV, NEW DELHI FOR ASSESSMENT YEAR 2007-08 AND CHALL ENGES THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) IN UPHOLDING THE DIS ALLOWANCE AMOUNTING TO RS. 10 LAKH U/S 2(22)(E) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED 'THE ACT'). ITA NO. 6607/DEL/2014 ASSESSMENT YEAR 2007-08 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS THE MANAGING DIRECTOR OF M/S GLOBUS INFOCOM LTD. DURING THE COURSE OF AS SESSMENT PROCEEDINGS OF THIS COMPANY FOR ASSESSMENT YEAR 2007-08, IT WAS OB SERVED THAT THIS COMPANY HAD GIVEN A LOAN OF RS. 10 LAKH TO THE ASSESSEE WHO WAS THE MANAGING DIRECTOR OF THE COMPANY AND ALSO HAD A SUBSTANTIAL INTEREST IN THE COMPANY. THE ASSESSING OFFICER REOPENED THE CASE BY HOLDING THAT INCOME HAD ESCAPED ASSESSMENT AS THIS AMOUNT HAD TO BE TREATED AS DEEM ED DIVIDEND U/S 2(22)(E) OF THE ACT. THEREAFTER, AFTER PROVIDING AN OPPORTUNIT Y TO THE ASSESSEE AND CONSIDERING THE SUBMISSIONS MADE IN THIS REGARD, TH E ASSESSING OFFICER HELD THAT THE ASSESSEES CASE WAS SQUARELY COVERED UNDER THE PROVISIONS OF SECTION 2(22)(E) AND, ACCORDINGLY, THE IMPUGNED AMOUNT OF R S. 10 LAKH WAS HELD TO BE TAXABLE AS DEEMED DIVIDEND. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. COMM ISSIONER OF INCOME TAX (A) WHO ALSO UPHELD THE DISALLOWANCE AND NOW TH E ASSESSEE IS BEFORE THE ITAT AND HAS CHALLENGED UPHOLDING OF DISALLOWANCE B Y THE LD. COMMISSIONER OF INCOME TAX (A). 3. THE LD. AR SUBMITTED THAT THE IMPUGNED LOAN WAS GIVEN AS A HOUSING LOAN BY M/S GLOBUS INFOCOM LTD. AND THERE WAS A REL ATIONSHIP OF EMPLOYER AND EMPLOYEE BETWEEN THE COMPANY AND THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT A BOARD RESOLUTION HAD BEEN PASSED APPROVING THE LO AN AND FURTHER THE MEMORANDUM OF THE COMPANY ALSO ALLOWED PROVIDING LO ANS TO THE EMPLOYEES. ITA NO. 6607/DEL/2014 ASSESSMENT YEAR 2007-08 3 IT WAS SUBMITTED THAT THIS LOAN WAS GIVEN IN THE NO RMAL COURSE OF BUSINESS AND FURTHER THAT THE LOAN WAS UTILIZED FOR PURCHASE OF HOUSE AT C-189, SARVODAYA ENCLAVE, NEW DELHI AND THE HOUSE WAS PLEDGED BY THE ASSESSEE WITH STATE BANK OF INDIA FOR LOANS TAKEN BY M/S GLOBUS INFOCOM LTD. IT WAS ALSO SUBMITTED THAT THE LOAN HAD BEEN DULY SQUARED UP BY THE ASSESSEE I N SUBSEQUENT ASSESSMENT YEAR. RELIANCE WAS PLACED ON THE JUDGMENT OF THE H ONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. F. PRAVEEN REPORTED IN 220 C TR 639(MADRAS) AND ALSO ON THE ORDER OF ITAT CHENNAI BENCH IN THE CASE OF ACIT VS. SMT. G. SREEVIDYA IN ITA 1270/MDS/2011 AND IT WAS PLEADED THAT THE DISAL LOWANCE MADE U/S 2(22)(E) OF THE ACT BE DELETED. 4. IN RESPONSE, THE LD. SR. DR PLACED EXTENSIVE REL IANCE ON THE CONCURRENT FINDINGS OF BOTH THE LOWER AUTHORITIES. IT WAS ARG UED BY THE LD. SR. DR THAT THE AMOUNT OF LOAN HAD NOT BEEN GIVEN IN THE ORDINARY C OURSE OF BUSINESS AS WAS BEING CLAIMED BY THE ASSESSEE AND RELIANCE WAS ALSO PLACED ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) WHEREIN THE LD. COMMISSIONER OF INCOME TAX (A) HAD ADJUDICATED THE ISSUE AGAINST THE ASSES SEE AFTER ANALYSING THE FACTUAL MATRIX OF THE CASE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED THAT THE ASSESSEE IS HA VING A SUBSTANTIAL INTEREST IN M/S GLOBUS INFOCOM LTD. WHICH HAS GIVEN THE LOAN TO THE ASSESSEE. IT IS ALSO UNDISPUTED THAT THE ASSESSEE IS THE MANAGING DIRECT OR OF M/S GLOBUS INFOCOM ITA NO. 6607/DEL/2014 ASSESSMENT YEAR 2007-08 4 LTD. IT IS ALSO UNDISPUTED THAT THE ADVANCING OF L OAN IS DULY SUPPORTED BY RESOLUTION OF THE BOARD THROUGH WHICH THE COMPANY H AD SANCTIONED THE LOAN OF RS. 10 LAKH TO THE ASSESSEE FOR 5 YEARS SUBJECT TO PAYMENT OF INTEREST @12% PER ANNUM. HOWEVER, THE ASSESSEE HAS FAILED TO DEMONST RATE THAT THIS LOAN WAS ADVANCED TO HIM IN THE ORDINARY COURSE OF BUSINESS. THE LD. COMMISSIONER OF INCOME TAX(A) HAD DISCUSSED THE FACTUAL MATRIX IN P ARA 6.2 OF THE IMPUGNED ORDER AND IT HAS BEEN NOTED BY THE LD. COMMISSIONER OF INCOME TAX (A) THAT THE IMPUGNED AMOUNT OF LOAN WAS ADVANCED TO THE ASSESSE E ON DIFFERENT DATES BETWEEN 3.5.2006 AND 28.06.2006 WHEREAS THE FIRST I NSTALMENT TOWARDS PURCHASE OF HOUSE PROPERTY AMOUNTING TO RS. 20 LAKH WAS GIVE N ON 12.07.2006 TO M/S RAJEEV ASSOCIATES PVT. LTD. AND THAT THE ASSESSEE H AD MOBILISED A FURTHER AMOUNT IN CASH AMOUNTING TO RS. 9.49 LAKH, RS. 2,93 ,266/- BY CHEQUE AND ANOTHER AMOUNT OF RS. 7 LAKH FROM MRS. KIRANDEEP DH AM. THE LD. COMMISSIONER OF INCOME TAX (A) HAS MADE AN IMPORTAN T OBSERVATION THAT EVIDENTLY THE ASSESSEE WAS IN POSSESSION OF FUNDS F ROM OTHER SOURCES AMOUNTING TO RS. 19.5 LAKH AS AFOREMENTIONED AS ON THE DATE O F GIVING THE FIRST INSTALMENT OF ADVANCE OF RS. 20 LAKH. THE LD. AR HAS NOT ABLE TO NEGATE THIS FINDING OF THE LD. COMMISSIONER OF INCOME TAX (A) BY LEADING ANY C OGENT EVIDENCE TO THE CONTRARY. WE FURTHER FIND THAT THE ASSESSEES RELI ANCE ON THE JUDGMENT OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF COMMISS IONER OF INCOME TAX VS. F. PRAVEEN (SUPRA) IS MISPLACED BECAUSE IN THAT CAS E, THE TRIBUNAL HAD RETURNED A FINDING THAT THERE WAS NO LOAN TO THE ASSESSEE FROM THE COMPANY AND THAT IT WAS ITA NO. 6607/DEL/2014 ASSESSMENT YEAR 2007-08 5 ONLY A BUSINESS TRANSACTION AND, THEREFORE, THE LOA N IN QUESTION WAS NOT A DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. HOWEVER, IN THIS CASE THE FACTS ARE DIFFERENT AND THE ASSESSEE HAS NOT BEEN ABLE TO PRO VE THAT THE LOAN WAS GIVEN TO HIM IN THE NORMAL COURSE OF BUSINESS OF THE COMPANY . THE ORDER IN THE CASE OF ACIT VS. SMT. G. SREEVIDYA (SUPRA) RENDERED BY ITAT CHENNAI BENCH IS ALSO DISTINGUISHABLE ON FACTS AND RELIEF WAS GIVEN TO TH E ASSESSEE ENTIRELY ON THE FACTS OF THAT PARTICULAR CASE. 6. WE FURTHER FIND THAT THE CASE OF THE ASSESSEE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HONBLE APEX COURT IN THE CA SE OF MS P. SARDA VS. CIT REPORTED IN 229 ITR 444 WHEREIN THE HONBLE APEX CO URT HAD HELD THAT THE LOAN OR ADVANCE TAKEN FROM THE COMPANY MAY HAVE BEEN ULT IMATELY REPAID OR ADJUSTED BUT THAT WILL NOT ALTER THE FACT THAT THE ASSESSEE IN THE EYES OF LAW HAD RECEIVED DIVIDEND FROM THE COMPANY DURING THE RELEV ANT ACCOUNTING YEAR. THIS JUDGMENT OF THE HONBLE APEX COURT WAS ALSO FOLLOWE D BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. P.K. ABOOBAKER RE PORTED IN 259 ITR 507 (MADRAS) WHEREIN THE HONBLE MADRAS HIGH COURT WAS ADJUDICATING THE APPLICABILITY OF PROVISIONS OF SECTION 2(22)(E) WIT H RESPECT TO ADVANCE GIVEN TO A SHAREHOLDER FOR PURCHASE OF PROPERTY AND THE HONBL E MADRAS HIGH COURT WENT ON TO HOLD THAT THE LOAN GIVEN FOR PURCHASE OF PROP ERTY WAS TAXABLE U/S 2(22)(E) OF THE ACT . IN THE PRESENT CASE ALSO, IT IS OUR CO NSIDERED OPINION THAT ALTHOUGH THE LOAN MIGHT HAVE BEEN PAID BACK IN SUBSEQUENT AS SESSMENT YEAR, THIS FACT ITA NO. 6607/DEL/2014 ASSESSMENT YEAR 2007-08 6 DOES NOT CHANGE THE NATURE OF THE LOAN IN THE YEAR IN WHICH IT WAS DISBURSED SO AS TO TAKE IT OUT OF THE MISCHIEF OF SECTION 2(22)( E) OF THE ACT. FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO DEMONSTRATE BY LEADIN G COGENT EVIDENCE THAT THE LOAN WAS ADVANCED IN THE NORMAL COURSE OF BUSINESS AND WAS BASED ON CONSIDERATION OF EMPLOYER-EMPLOYEE RELATIONSHIP. A CCORDINGLY, ON FACTS OF THE CASE, WE FIND NO REASON TO INTERFERE WITH THE FINDI NGS OF THE LOWER AUTHORITIES ON THIS ISSUE AND WE DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2018. SD/- SD/- (PRAMOD KUMAR) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH MAY, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR