ITO 8(3)(4), MUMBAI V. YASHAM BIO-SCIENCE P. LTD`, MUMBAI

ITA 7207/MUM/2010

• Counselvise Citation: 720719914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 20-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHINAY KUMAR
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.7207/MUM/2010 (ASSESSMENT YEAR: 2007-08) ITO 8(3)(4), ROOM NO.202, 2ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 ...... APPELLANT VS YASHAM BIO-SCIENCE P. LTD., 501, SHREEJEE DHAM, GILBERT, HILL ROAD, MUMBAI -400 061 ..... RESPONDENT PAN: AAACY 2899 N APPELLANT BY: SHRI ABHINAY KUMAR RESPONDENT BY: NONE DATE OF HEARING: 28.03.2012 DATE OF PRONOUNCEMENT: 21.05.2012 O R D E R PER R.S. PADVEKAR, JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-18 MUMBAI DATED 31.08.2010 FOR THE A.Y. 2007-08. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUN D: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND U/S.2(22)(E) OF THE I.T. ACT AMO UNTING TO ` 65,98,007/-. 2. THE ISSUE IN CONTROVERSY IS IN RESPECT OF ADDITI ON OF THE DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. ITA 7207/M/2010 YASHAM BIO-SCIENCE P. LTD. 2 3. WHEN THIS APPEAL WAS CALLED FOR THE HEARING THE LD. D.R. FOR THE REVENUE WAS PRESENT AND NONE WAS PRESENT FOR THE AS SESSEE. NOTICE OF HEARING HAS BEEN SERVED ON THE ASSESSEE BY THE RPAD . WE DECIDED TO DISPOSE OFF THIS APPEAL ON THE BASIS OF AVAILABLE M ATERIAL ON RECORD. 4. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF IMPORT OF BIO-PRODUCTS. IT WAS NOTICED BY THE A.O. THAT M/ S. YASHAM CHEMPHOR P. LTD. HAS GIVEN ` 65,95,007/- DURING THE YEAR TO THE ASSESSEE COMPANY. IT WAS SEEN BY THE A.O. THAT THE FOLLOWING PERSONS WERE COMMON SHAREHOLDERS IN THE ASSESSEE-COMPANY AS WELL AS M/S. YASHM CHEMPHOR PVT. LTD. (1) SHRI VIVEK D. SAMANT AND (2)SMT. NAMITA V. SAMANT. THE A.O. HAS OBSERVED THAT BOTH THE DIRECTORS WERE HOLDING MORE THAN 10% SHARES IN M/S. YASHM CHE MPHOR PVT. LTD. AND MORE THAN 20% SHARES IN THE ASSESSEE COMPA NY, WHICH HAS RECEIVED LOAN FROM M/S. YASHM CHEMPHOR PVT. LTD. I N THE OPINION OF THE A.O. THE AMOUNT OF LOAN TAKEN FROM M/S. YASHM C HEMPHOR PVT. LTD. WAS TAXABLE IN THE HANDS OF THE ASSESSEE-COMPA NY AS A DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT AS IN BOTH THE COM PANIES, THE SHAREHOLDERS WERE COMMON. THE A.O. BROUGHT TO TAX ` 65,95,007/- AS DEEMED DIVIDEND UNDER THE HEAD INCOME FROM OTHER S OURCES. THE LD. CIT (A) DELETED THE ENTIRE ADDITION FOLLOWING T HE DECISION OF THE HONBLE SPECIAL BENCH OF I.T.A.T. IN THE CASE OF M/ S. BHOUMIK COLOURS PVT. LTD. 27 SOT 270 (MUM)(SB). 5. WE FIND THAT NOWHERE IT IS A CASE OF THE A.O. TH AT THE ASSESSEE COMPANY IS A SHAREHOLDER IN M/S. YASHM CHEMPHOR PVT . LTD. MERELY BECAUSE THE DIRECTORS AND SHAREHOLDERS ARE COMMON I N BOTH THE COMPANIES THAT CANNOT BE THE GROUND TO MAKE THE IMP UGNED ADDITION BY INVOKING THE PROVISIONS OF SEC.56 R.W.S. 2(22)(E ) OF THE ACT. IN M/S. BHOUMIK COLOURS PVT. LTD. (SUPRA) IT IS HELD THAT U NLESS THE BORROWER IS A SHAREHOLDER NO AMOUNT CAN BE TAXED AS DEEMED DIVIDEND. THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF HILLTOP HOTELS 217 CTR (RAJ) 527 IS ALSO IN FAVOUR OF THE A SSESSEE. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT (A). ACCORDI NGLY, THE SAME IS CONFIRMED. ITA 7207/M/2010 YASHAM BIO-SCIENCE P. LTD. 3 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 1ST MAY, 2012. SD/- ( J. SUDHAKAR REDDY ) ACCOUTANT MEMBER SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 21ST MAY, 2012 COPY TO: 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-18, MUMBAI. 4) THE CIT -8, MUMBAI. 5) THE D.R. G BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN