TCG Urban Infrastructure Holdings Pvt. Ltd, Kolkata V. PCIT-1, Kolkata, Kolkata

ITA 667/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1574 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: A K TIBREWAL
• Keywords: Opportunity of being heard; Audit objection; Deemed dividend
• Section: 143(3); 263

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 667 / KOL / 2017 ASSESSMENT YEAR :2012-13 TCG URBAN INFRASTRUCTURE HOLDINGS PVT LTD. GR. FLOOR, BLDG BETTA, BENGAL INTELLIGENT PARK, BOCK EP & GP, SALT LAKE ELECTRONICS COMP. SECTOR V, KOLKATA-91 [ PAN NO.AADCS 8821 M ] V/S . PR. COMMISSIONER OF INCOME TAX-1, -7, CHOWRINGHEE SQUARE, 7 TH FLOOR, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K.TIBREWAL, FCA /BY RESPONDENT SHRI G. MALLIKARJUNA, CIT-DR /DATE OF HEARING 27-07-2017 !' /DATE OF PRONOUNCEMENT 30-08-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE RELATIN G TO ASSESSMENT YEAR 2012-13. THE ASSESSEE IS AGAINST THE ORDER PASSED B Y COMMISSIONER OF INCOME TAX-1, KOLKATA UNDER THE PROVISION OF U/S 26 3 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 1 5.02.2017. THE ASSESSEE HAS FILED FOLLOWING GROUNDS:- 1. THAT THE ORDER PASSED BY LD. PRINCIPAL COMMISSIO NER OF INCOME TAX - 1, KOLKATA UNDER SECTION 263 OF THE INCOME TAX ACT, 19 61 SETTING ASIDE THE ASSESSMENT ORDER DATED 21ST MARCH, 2015 PASSED BY T HE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 2(2), KOLKATA U NDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 IS WITHOUT JURISDICTION, A GAINST LAW AND FACTS OF THE CASE AND THEREFORE ILLEGAL AND IS LIABLE TO BE QUAS HED. 2. THAT THE LD. PRINCIPAL COMMISSIONER OF INCOME TA X - 1, KOLKATA ERRED IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE INCO ME TAX ACT, 1961 ON THE ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 2 BASIS OF AUDIT OBJECTION AND SETTING ASIDE THE AFOR ESAID ORDER DATED 21 ST MARCH, 2015 PASSED UNDER SECTION 143(3) OF THE ACT. 3. THAT THE ASSESSMENT ORDER DATED 21ST MARCH, 2015 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 2(2), KOLKATA UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT AND THEREFORE LD. PRINCIPAL COMMISSIONER OF INCOME TAX - 1, KOLKATA E RRED IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE INCOME TAX AC T, 1961 SETTING ASIDE THE AFORESAID ORDER DATED 21ST MARCH, 2015 PASSED UNDER SECTION 143(3) OF THE ACT. 4. THAT THE LD. PRINCIPAL COMMISSIONER OF INCOME TA X - 1, KOLKATA ERRED IN SETTING ASIDE THE ORDER DATED 21ST MARCH, 2015 PASS ED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 BY INVOKING THE PROVISI ONS OF SECTION 263 OF THE ACT BY ARBITRARILY ALLEGING THAT THE JOURNAL ENTRIE S FOR INTEREST PROVISIONS OF RS.3,03,55,433 AND RS.1,24,85,798 MADE ON OUTSTANDI NG LOANS FROM MLS TCG FACILITIES MANAGEMENT SERVICES PVT LTD AND MLS TCG SOFTWARE PARKS PVT. LTD ARE DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. 5. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE IMPUGNED ORDER PASSED BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX - 1, KOLKATA IS PERVERSE AND IS LIABLE TO BE QUASHED. SHRI A.K. TIBREWAL, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI G. MALLIKRJUNA, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. THE EFFECTIVE ISSUE RAISED BY ASSESSEE IN ALL TH E GROUNDS OF APPEAL IS THAT LD. PR. CIT IN HIS ORDER PASSED U/S 263 OF THE ACT ERRED IN HOLDING THE ORDER OF ASSESSING OFFICER AS ERRONEOUS IN SO FAR P REJUDICIAL TO THE INTEREST OF REVENUE. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN BUSINESS OF REAL ESTATE, HIRING OF EQUIP MENT, FINANCING AND CONSULTANCY. IN THE INSTANCES CASE THE ASSESSMENT W AS FRAMED U/S. 143(3) OF THE ACT VIDE ORDER DATED 2.1.03.2015 AFTER MAKING C ERTAIN ADDITIONS / DISALLOWANCE TO THE TOTAL INCOME OF ASSESSEE AT 9,32,25,610/- ONLY. SUBSEQUENTLY LD. CIT IN HIS ORDER PASSED U/S 263 OB SERVED CERTAIN INFIRMITY IN THE ORDER OF AO ON THE BASIS OF THE FOLLOWING:- I) THE ASSESSEE IS HOLDING 100% SHARES OF M/S TCG F ACILITIES MANAGEMENT SERVICES PVT. LTD. (TCGFMSL FOR SHORT). THE ASSESSEE DURING THE YEAR HAS RECEIVED A LOAN OF 3,03,55,433/- FROM TCGFMSL. THERE WAS AN ACCUMULATED PROFIT AVAILABLE WITH TCGF MSL AS ON ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 3 31.03.2012 FOR 13,09,50,759/- ONLY. IT WAS ALSO OBSERVED THAT TCGFMSL IS NOT INTO MONEY LENDING BUSINESS. ACCORDI NGLY, LD. CIT WAS OF THE VIEW THAT LOAN TAKEN BY ASSESSEE ATTRACT S WITH THE PROVISION OF 2(22)(E) OF THE ACT AND ACCORDINGLY SAME SHOULD BE TREATED AS DEEMED DIVIDEND INCOME OF THE ASSESSEE. II) SIMILARLY, ASSESSEE WAS HOLDING 65% SHARES OF T CG SOFTWARE PARK PVT. LTD (FOR SHORT TCGPPL). THE ASSESSEE DURING TH E YEAR HAS TAKEN A LOAN OF 1,24,85,798/- ONLY FROM TCGPPL. THERE WAS AN ACCUMU LATED PROFIT IN THE BOOK OF TCGFMSL AS ON 31.03.2012 FOR 6,85,70,941/-. IT WAS ALSO OBSERVED THAT TCGFMSL WAS NOT INTO THE MON EY LENDING BUSINESS. ACCORDINGLY, LD. CIT WAS OF THE VIEW THE PROVISION OF SEC. 2(22)(E) OF THE ACT IS ATTRACTED AND THEREFORE THE AMOUNT OF LOAN RECEIVED BY THE ASSESSEE SHOULD BE TREATED AS DEEME D DIVIDEND INCOME OF THE ASSESSEE. THE LD. CIT U/S 263 OF THE ACT OBSERVED THAT AO FAI LED TO MAKE ANY ENQUIRY WITH REGARD TO PROVISION OF SEC. 2(22)(E) OF THE AC T AND ACCORDINGLY NO ADDITION WAS MADE BY AO IN HIS ASSESSMENT PROCEEDINGS. IN VI EW OF ABOVE, LD. CIT U/S 263 ISSUED SHOW SHOW-CAUSE NOTICE VIDE LETTER N O. PR.CIT-1/KOL/TCG URBAN INFRA/SCN/DCIT, CIR-3(1)/2016-17/12589 DATED 27.01.2017 FOR TREATING THE ORDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICI AL TO THE INTEREST OF REVENUE. IN COMPLIANCE THERETO, ASSESSEE SUBMITTED THAT IN B OTH THE CASES, ASSESSEE HAS TAKEN LOAN IN EARLIER YEARS AND IN THE YEAR UND ER CONSIDERATION THE LOAN AMOUNT WAS INCREASED BY THE AMOUNT OF INTEREST EXPE NSES TO BE PAID TO TCGFMSL AND TCGFPPL BY 3,03,55,433/- AND 1,24,85,798/- ONLY RESPECTIVELY. 4. THE ASSESSEE ALSO SUBMITTED THAT THE ABOVE ENTRI ES FOR 3,03,55,433/- AND 1,24,85,798/- ARE REPRESENTING THE JOURNAL ENTRIES. AS SUCH, NO LOAN WAS RECEIVED BY ASSESSEE FROM THE ABOVE STATED COMPANIE S DURING THE YEAR UNDER CONSIDERATION. ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 4 HOWEVER THE LD. CIT DISREGARDED THE CONTENTION OF T HE ASSESSEE AND HELD THE ORDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL T O THE INTEREST OF REVENUE BY OBSERVING AS UNDER:- 12. IT MAY BE FURTHER NOTICE, THAT IN ORDER TO PROV IDE CLARITY ON THE ISSUE OF ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE, A NEW EXPLANATION HAS BEEN INSERTED TO CLARIFY THAT AN OR DER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER. A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH, SHOULD HAVE BEEN MADE; B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH A NY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION, PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY O THER PERSON. THIS AMENDMENT TAKES EFFECT FROM 1-6-2015. 13. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE AFORESAID DECISIONS OF HON'BLE SUPREME COURT AND HON'BLE HIGH COURT AND IN ACCORDANCE WITH THE AMENDMENT MADE IN SECTIO N 263 OF THE ACT WITH EFFECT FROM 01.06.2015, I HOLD THAT THE IMPUGNED AS SESSMENT ORDER DATED 21.03.2015 PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THEE REVENUE. I FURTHER HOLD, AFTER GI VING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, THAT THE IMPUGNED ASSES SMENT ORDER DATED 21.03.2015 IS LIABLE TO SET-ASIDE. THEREFORE, I SET ASIDE THE SAID ASSESSMENT TO FRAME THE ASSESSMENT AFRESH AFTER CONSIDERING THE A FORESAID OBSERVATIONS, HON'BLE SUPREME COURT AND HON'BLE HIGH COURT DECISI ONS AND THE PROVISIONS OF SEC. 2(220(E) OF IT ACT, 1961. 14. IN THE RESULT, THE ASSESSMENT ORDER 143(3) DATE D 21.03,2015 FOR AY 2012- 13 IS SET-ASIDE TO THE FILE OF THE ASSESSING OFFICE R WITH A DIRECTION TO PASS A FRESH ASSESSMENT ORDER AFTER CONSIDERING THE AFORES AID OBSERVATIONS AND AS PER LAW AND AFTER GIVING AN OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. BEING AGGRIEVED BY THIS ORDER OF LD. CIT ASSESSEE CAME IN APPEAL BEFORE US. 5. BEFORE US LD. AR FOR THE ASSESSEE SUBMITTED THAT NO LOAN WAS TAKEN BY ASSESSEE DURING THE YEAR FROM THE AFORESAID COMPANI ES. THE LOAN WAS TAKEN BY ASSESSEE FROM THE AFORESAID COMPANY IN EARLIER Y EARS AND THE BALANCE WAS BROUGHT FORWARD IN THE YEAR UNDER CONSIDERATION. TH E ASSESSEE DURING THE YEAR HAS CREDITED BOTH THE LOAN ACCOUNTS FOR THE IN TEREST CHARGED BY THE COMPANIES. FOR THE PURPOSE OF INTEREST ONLY JOURNAL ENTRIES WERE MADE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. LD. AR FURTHER SU BMITTED THAT THE AMOUNT OF ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 5 LOAN WAS REPAID DURING THE YEAR. LD. AR IN SUPPORT OF ASSESSEES CLAIM HAS PRODUCED THE COPIES OF CONFIRMATION AS WELL AS LEDG ER OF BOTH THE COMPANIES WHICH ARE PLACED ON RECORD. HE ALSO CLAIMED THAT AL L THE AFORESAID DOCUMENTS WERE DULY FURNISHED TO AO AT THE TIME OF ASSESSMENT PROCEEDINGS. LD. AR FURTHER SUBMITTED THAT LOAN AMOUNT OF BOTH THE PART IES WERE INCREASED ON ACCOUNT OF INTEREST CHARGED BY THE COMPANY. HOWEVER , THE INTEREST CHARGED BY THE COMPANIES CANNOT BE TERMED AS LOAN RECEIVED BY THE ASSESSEE. ACCORDINGLY, THE QUESTION OF TREATING THE SAME (INT EREST) AS LOAN VIZ-A-VIZ AS DEEMED DIVIDEND INCOME U/S 2(22)(E) OF THE ACT DOE S NOT ARISE. LD. AR IN SUPPORT OF ASSESSEES CLAIM HAS RELIED ON THE ORDER OF THIS CO-ORDINATE BENCH IN THE CASE OF SMT. SANGITA JAIN VS. ITO IN ITA NO. 1817/KOL/2009 DATED 11.03.2016 WHEREIN IT WAS HELD AS UNDER:- 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ONE OF THE MAIN CONTENTIONS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US IS THAT THE LOAN IN QUEST ION TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) BY THE AUTHO RITIES BELOW WAS TAKEN BY THE ASSESSEE FROM M/S. SURYA BUSINESS PVT. LIMITED ON INTEREST AND SINCE THE SAID COMPANY WAS COMPENSA TED BY WAY OF INTEREST PAID BY THE ASSESSEE ON LOAN, THE ASSES SEE IN REAL SENSE DID NOT DERIVE ANY BENEFIT FROM THE FUNDS OF THE COMPANY SO AS TO ATTRACT THE PROVISIONS OF SECTION 2(22)(E) . ALTHOUGH THE LD. D.R. HAS VEHEMENTLY OPPOSED THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE BY SUBMITTING THAT THE PAY MENT OF INTEREST ALONE CANNOT BE CONSIDERED FROM THE BENEFI T ANGLE AS ENVISAGED UNDER SECTION 2(22)(E), IT IS OBSERVED TH AT THE JUDICIAL PRONOUNCEMENTS CITED BY THE LD. COUNSEL FOR THE ASS ESSEE CLEARLY SUPPORT THE CASE OF THE ASSESSEE. 6. IN THE CASE OF PRADIP KUMAR MALHOTRA REPORTED IN 338 ITR 538 CITED BY THE LD. COUNSEL FOR THE ASSESESE, IT W AS HELD BY THE HONBLE CALCUTTA HIGH COURT THAT THE PHRASE BY WAY OF ADVANCE OR LOAN APPEARING IN SECTION 2(22)(E) MUST BE CONS TRUED TO MEAN THOSE ADVANCES OR LOANS, WHICH A SHAREHOLDER ENJOYS FOR SIMPLY ON ACCOUNT OF BEING A PARTNER, WHO IS THE BENEFICIA L OWNER OF SHARES, BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUC H SHAREHOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION, WHIC H IS BENEFICIAL TO THE COMPANY, RECEIVED FROM SUCH SHARE HOLDER, IN SUCH CASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO B E DEEMED DIVIDEND WITHIN THE MEANING OF THE ACT. IT WAS HELD THAT GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS THUS WOULD COME WITHIN THE PURVIEW OF SECTION ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 6 2(22)(E) BUT NOT THE CASES WHERE THE LOAN OR ADVANC E IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY B Y SUCH SHAREHOLDER. IN THE CASE OF ACIT VS.- M/S. ZENON ( INDIA) PVT. LIMITED, A LOAN TAKEN BY THE ASSESSEE WAS TREATED B Y THE ASSESSING OFFICER AS DEEMED DIVIDEND UNDER SECTION 2(22)(E), BUT THE LD. CIT(APPEALS) DID NOT APPROVE THE ACTION OF THE ASSESSING OFFICER AFTER HAVING NOTICED THAT INTEREST AT THE R ATE OF 9% PER ANNUM WAS PAID BY THE ASSESSEE ON SUCH LOAN, WHICH, ACCORDING TO HIM, WAS A CONSIDERATION RECEIVED FROM HER SHARE HOLDERS, WHICH WAS BENEFICIAL TO THE COMPANY AND THE ORDER O F THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE WAS UPHE LD BY THE TRIBUNAL VIDE ITS ORDER DATED 29.06.2015 PASSED IN ITA NO. 1124/KOL/2012 BY RELYING ON THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SU PRA). KEEPING IN VIEW THE SAID DECISION OF THE HONBLE CALCUTTA H IGH COURT WHICH HAS BEEN FOLLOWED BY THE COORDINATE BENCH OF THIS T RIBUNAL IN THE CASE OF M/S. ZENON (INDIA) PVT. LIMITED (SUPRA), WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINE D BY THE LD. CIT(APPEALS) UNDER SECTION 2(22)(E) ON ACCOUNT OF L OAN RECEIVED BY THE ASSESSEE FROM M/S. SURYA BUSINESS PVT. LIMIT ED ON WHICH CONSIDERATION IN THE FORM OF INTEREST WAS PAID BY T HE ASSESSEE TO THE BENEFIT OF THE COMPANY IS NOT SUSTAINABLE. WE, THEREFORE, DELETE THE SAME AND ALLOW GROUNDS NO. 1 & 2 OF THE ASSESSEES APPEAL. 7. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 OF THE ASSESSEES APPEAL RELATING TO THE DISALLOWANCE OF R S.28,267/-, RS.11,869/- AND RS.38,353/- MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) OUT OF TRAVELLING & CONVEYANCE, TELEPHONE EXPENSES AND SALES PROMOTION EXPENSES RES PECTIVELY, IT IS OBSERVED THAT THESE DISALLOWANCES TO THE EXTE NT OF 10% OUT OF CORRESPONDING EXPENSES WERE MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) FOR THE INVOLVEME NT OF PERSONAL ELEMENT. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT PROPER RECORD IN THE FORM OF LOG BOOK, CALL REGISTER, ETC. IS MAINTAINED BY THE ASSESSEE IN ORDER TO SHOW THAT ALL THE EXPENSES INCURRED UND ER THESE THREE HEADS ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS. KEEPING IN VIEW THIS FAILURE OF THE ASSES SEE AND HAVING REGARD TO THE NATURE OF EXPENSES CLAIMED, WE FIND O URSELVES IN AGREEMENT WITH THE AUTHORITIES BELOW THAT THE INVOL VEMENT OF PERSONAL ELEMENT IN THESE EXPENSES CANNOT BE RULED OUT AND SINCE THE DISALLOWANCE MADE AT 10% FOR SUCH PERSONA L ELEMENT, IN OUR OPINION, IS QUITE FAIR AND REASONABLE, WE FI ND NO JUSTIFIABLE REASON TO INTERFERE WITH THE SAME. GROUND NO. 3 OF THE ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. IN VIEW OF ABOVE THE LD. AR REQUESTED THE BENCH TO QUASH THE ORDER OF LD. CIT PASSED U/S 263 OF THE ACT. ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 7 6. ON THE OTHER HAND, LD. DR SUBMITTED THAT IT IS N OT CLEAR WHETHER THE LOAN WAS TAKEN IN EARLIER YEAR OR DURING THE YEAR. IF IT WAS TAKEN DURING THE YEAR THEN IT HAD TO TAXED UNDER THE PROVISION OF SEC. 2( 22)(E) OF THE ACT AND VICE VERSA. HE VEHEMENTLY RELIED ON THE ORDER OF LD. CIT . 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; IN CLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. WE F IND THAT LD. CIT(A) TREATED THE ORDER OF AO AS ERRONEOUS IN SO FAR AS P REJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT ASSESSEE HAS TAKEN LOAN FROM THE AFORESAID TWO PARTIES WHICH NEEDS TO BE TREATED AS DEEMED DIVIDEN D INCOME U/S.2(22)(E) OF THE ACT. ON PERUSAL OF LD. CIT-A ORDER, WE NOTE THAT THE ASS ESSEE HAS CLAIMED THAT AO HAS CONDUCTED ENQUIRY DURING THE ASSESSMENT PROCEED INGS. THE RELEVANT SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT READS AS UNDER:- 4. THE ASSESSEE COMPANY, DURING THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR 2012-13 DID NOT RECEIVE ANY SUM BY WAY OF LOAN OR ADVANCE FROM M/S TCG FACILITIES MANAGEMENT SERVICES PVT. LTD AND M/S TCG SOFTWARE PARKS PT LTD. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS THE ASSESSEE COMPANY PRODUCED AND FURNISHED COPY OF THE LEDGER ACCOUNT OF THE SAID TWO PARTIES AND EXPLAINED THAT IT DID NOT RECE IVE ANY AMOUNT FROM THE AFORESAID PARTIES DURING THE RELEVANT PREVIOUS YEAR . WE ARE ENCLOSING THE COPIES OF THE LEDGER ACCOUNT OF THE TWO PARTIES REC ORDED IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY ALONG WITH THE CONFIRMATION LETTERS DULY SIGNED BY BOTH THE PARTIES. ON PERUSAL OF THE LEDGER ACCOUNT AND CONFIRMATION LETTER IN RESPECT OF LOAN FROM THE SAI D PARTY IT WOULD BE FOUND THAT THE ASSESSEE COMPANY, DURING THE RELEVANT PREVIOUS YEAR MAD E PAYMENTS TO THE SAID TWO COMPANIES BY WAY OF REPAYMENT OF THE L OANS BORROWED BY IT FROM THEM IN EARLIER YEARS. THE AMOUNTS OF RS.3,03,55,43 3 AND RS.1,24,85,798, REFERRED TO IN THE NOTICE UNDER SECTION 263 OF THE ACT, ARE INTEREST PROVISIONS SONLY MADE DURING THE PREVIOUS YEAR. HOWEVER WE NOTE THAT THE LD. CIT-A HAS NOT COMMENTE D ON THE SUBMISSION OF ASSESSEE RATHER JUST CONCLUDED THAT ASSESSING OFFIC ER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOT CONDUCTED ANY ENQUIR Y WITH REGARD TO LOAN TAKEN BY THE ASSESSEE. THEREFORE THE INCOME OF ASSE SSEE HAS BEEN ASSESSED BY THE AO WITHOUT CONSIDERING THE ASPECT OF DEEMED DIVIDEND ON THE LOAN TAKEN BY IT UNDER SECTION 2(22)(E) OF THE ACT. THUS THE CIT UNDER SECTION 263 ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 8 OF THE ACT HELD THE ORDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE DUE TO NON-ENQUIRY OF THE LOAN TAKEN BY IT. 7.1 NOW, THE ISSUE BEFORE US ARISES WHETHER THE LOA N TAKEN BY THE ASSESSEE DURING THE YEAR IS AMOUNTING TO DEEMED DIVIDEND INC OME IN PURSUANCE TO THE PROVISION OF SEC. 2(22)(E) OF THE ACT. THE ASSESSEE IN THE INSTANT CASE CLAIMED THAT IT HAS NOT BEEN RECEIVED ANY LOAN DURING THE Y EAR UNDER CONSIDERATION RATHER THE LOAN AMOUNT WAS INCREASED OF THE AFORESA ID TWO COMPANIES ON ACCOUNT OF INTEREST CHARGED BY THE COMPANIES ON TH E AMOUNT OF LOAN GIVEN TO THE ASSESSEE IN THE EARLIER YEARS. 7.2. NOW THE ISSUE IS WELL SETTLED THAT IF THE AMOU NT OF LOAN IS INCREASED ON ACCOUNT OF INTEREST CHARGES THEN IT CANNOT BE AMOUN T AS LOAN RECEIPT BY THE ASSESSEE. THUS, THE PROVISION OF SEC. 2(22)(E) OF T HE ACT CANNOT BE ATTRACTED. IN THIS CONNECTION, WE RELIED ON THE ORDER OF THE C O-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. SANGITA JAIN (SUPRA) AS DISCUSSED ABOVE. HOWEVER THE LD. CIT IN HIS IMPUGNED ORDER U/S 263 H AS ALLEGED THAT AO HAS NOT CARRIED OUT ANY VERIFICATION FOR THE AMOUNT OF LOAN INCREASED DURING THE YEAR. NOW THE FACT NEEDS TO BE ASCERTAINED WHETHER THE AMOUNT OF LOAN INCREASED DURING THE YEAR IS DUE TO THE AMOUNT OF I NTEREST OR ANY FRESH LOAN HAS BEEN TAKEN BY ASSESSEE. IN THIS REGARD, WE FIND THAT THE NECESSARY DETAILS WERE DULY FURNISHED BY THE ASSESSEE DURING ASSESSME NT PROCEEDINGS AS DISCUSSED. THUS IT CANNOT BE ALLEGED THAT NO ENQUIR Y WAS CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF AB OVE WE HOLD THAT THE AO CONSCIOUSLY HAS NOT MADE ANY ADDITION ON ACCOUNT OF DEEMED DIVIDEND INCOME. OUR VIEW GETS STRENGTHENED BY THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ITO V. D.G. HOUSING PROJECTS LTD. [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 32 (MAG.) (DELHI) , WHEREBY THE HON'BLE HIGH COURT HELD AS UNDER : ' 16. THUS, IN CASES OF WRONG OPINION OR FINDING ON M ERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECES SARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORD ER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT S USTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND TH E MATTER TO THE ITA NO.667/KOL/2017 A.Y. 2012-13 TCG URBAN IINFRA. HOLDINGS P. LTD. VS. PR. CIT-1 K OL. PAGE 9 ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RE CORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LAC K OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUI RY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUC TED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MAD E BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIF IED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FO R A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITH OUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS I S A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTIO N UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND D ECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSI NG OFFICER TO DECIDE THE ASPECT/QUESTION. ' WE SEE, IN THE PRESENT CASE, THE LD CIT HIMSELF HAS NOT GIVEN ANY CONCRETE FINDING AS TO THE MERITS OF THE CASE AND HAS DIRECT ED THE ASSESSING OFFICER TO MAKE FURTHER ENQUIRY. IN VIEW OF THIS, WE HOLD THAT THE ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT BY THE LD CIT IS NO T AS PER LAW. WE QUASH THE SAME. HENCE, THIS GROUND OF ASSESSEES APPEAL IS AL LOWED. 9. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 30 /08/2017 SD/- SD/- ($%&) ( %&) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (%)*- 30 / 08 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-TCG URBAN INFRASTRUCTURE HOLDINGS PVT. LTD GR. FLOOR, BLDG. BETA, BENGAL INTELLIGEN T PARK BLOCK EP & GP, SALT LAKE ELECTRONICS COMP. SECTOR-V, KO LKATA-91 2. /RESPONDENT-PR. CIT-1, P-7, CHOWRINGHEE SQUARE, 7 TH FLOOR, KOLKATA-69 3.)2)3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5.789$$3 , 3 , / DR, ITAT, KOLKATA 6.9;<=> / GUARD FILE. BY ORDER/ %, /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3 ,