DCIT, CHENNAI V. Fleet Management Private Limited, CHENNAI

ITA 686/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6377 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: R K V SUNDAR
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.686/MDS/2017 & '& / ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), CHENNAI - 600 034. V. M/S FLEET MANAGEMENT PVT. LTD., NO.108, FIRST FLOOR, CATHOLIC CENTRE, 64, ARMENIAN STREET, CHENNAI - 600 001. PAN : AAACF 5475 B ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI N. MADHAVAN, JCIT +,)* - . / RESPONDENT BY : SHRI R.K.V. SUNDAR, ADVOCATE / - 0' / DATE OF HEARING : 17.08.2017 12' - 0' / DATE OF PRONOUNCEMENT : 23.08.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9, CHENNAI , DATED 21.12.2016 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2. SHRI N. MADHAVAN, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE- COMPANY IS A BENEFICIAL SHAREHOLDER IN M/S TRANSCOA STAL CARGO & 2 I.T.A. NO.686/MDS/17 SHIPPING LTD. IN FACT, ACCORDING TO THE LD. D.R., THE ASSESSEE HAS RECEIVED ` 5,21,16,692/- AS UNSECURED LOAN FROM M/S TRANSCOAST AL CARGO & SHIPPING LTD. EVEN THOUGH THE ASSESSEE-COM PANY IS NOT A SHAREHOLDER IN M/S TRANSCOASTAL CARGO & SHIPPING LT D., THERE WERE COMMON SHAREHOLDERS IN BOTH THE COMPANIES. THEREFO RE, ACCORDING TO THE LD. D.R., THE ASSESSEE-COMPANY HAS TO BE TRE ATED AS BENEFICIAL SHAREHOLDER, HENCE, THE CIT(APPEALS) IS NOT JUSTIFIED IN REVERSING THE ORDER OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI R.K.V. SUNDAR, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY WAS I NCORPORATED ON 16.03.2001, WHEREAS, M/S TRANSCOASTAL CARGO & SH IPPING LTD. WAS INCORPORATED ON 28.09.2000. WHEN M/S TRANSCOAS TAL CARGO & SHIPPING LTD. WAS INCORPORATED, THE ASSESSEE-COMPAN Y ITSELF WAS NOT IN EXISTENCE. THE ASSESSEE CAME INTO EXISTENCE ONLY FROM 16.03.2001. MOREOVER, ACCORDING TO THE LD. COUNSEL , THE ASSESSEE- COMPANY IS NOT HOLDING ANY SHARES OF M/S TRANSCOAST AL CARGO & SHIPPING LTD. ONLY SHRI J. MANAVALAN HAS INVESTED IN THE SHARES OF BOTH THE ASSESSEE-COMPANY AND M/S TRANSCOASTAL CARG O & SHIPPING LTD. ACCORDING TO THE LD. COUNSEL, MAINLY BECAUSE THERE WAS A COMMON SHAREHOLDER, IT CANNOT BE SAID THAT TH E ASSESSEE IS 3 I.T.A. NO.686/MDS/17 HOLDING ANY BENEFICIAL SHARES IN M/S TRANSCOASTAL C ARGO & SHIPPING LTD., THEREFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOW ED THE CLAIM OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 2( 22)(E) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). AS PER THIS SECTION, DEEMED DIVIDEND CAN BE ASSESSED EITHER IN THE HANDS OF REGISTERED SHAREHOLDER OR IN THE HANDS OF BENEFICIAL SHAREHOLD ER. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE-COMPAN Y IS A BENEFICIAL SHAREHOLDER. FOR THE PURPOSE OF CONSIDE RING A COMPANY AS A BENEFICIAL SHAREHOLDER, THE COMPANY HAS TO INV EST ITS FUNDS IN THE SHARES OF OTHER COMPANY EITHER IN ITS OWN NAME OR IN THE NAME OF SOME OTHER PERSON. IN THIS CASE, THE ASSESSEE-C OMPANY ITSELF CAME INTO EXISTENCE AFTER INCORPORATION OF M/S TRAN SCOASTAL CARGO & SHIPPING LTD. ON THE DATE OF INCORPORATION OF M/S TRANSCOASTAL CARGO & SHIPPING LTD., THE ASSESSEE-COMPANY WAS NOT IN EXISTENCE. EVEN NOW, THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER IN M/S TRANSCOASTAL CARGO & SHIPPING LTD. THEREFORE, IT I S OBVIOUS THAT THE ASSESSEE-COMPANY HAS NOT MADE ANY INVESTMENT IN THE SHARES OF 4 I.T.A. NO.686/MDS/17 M/S TRANSCOASTAL CARGO & SHIPPING LTD. IN THOSE C IRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE- COMPANY CANNOT BE CONSIDERED TO BE BENEFICIAL SHARE HOLDER. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 23 RD AUGUST, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 23 RD AUGUST, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-9, CHENNAI-34 4. PRINCIPAL CIT- 2, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.