ITO 9(3)(4), MUMBAI V. REGALIA BUILDTECH & SERVICES P. LTD, MUMBAI

ITA 7437/MUM/2010

• Counselvise Citation: 743719914 RSA 2010
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ BANSAL
• Assessee Lawyers: MUKESH B ADVANI
• Keywords: Deemed dividend

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI .. , ! ' # , $ ', % BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.7437/MUM/2010 : ASST.YEAR 2007-2008 THE INCOME TAX OFFICER WARD 9(3)(4) MUMBAI. M/S.REGALIA BUILDTECH & SERVICES PRIVATE LIMITED, 301 SHALAKA PLOT NO.32, JUHU ROAD, SANTACRUZ(W) MUMBAI 400 054. PAN : AADCR0404P. ( &' / // / APPELLANT) ) ) ) ) / VS. ( *+&'/ RESPONDENT) &' , ,, , - - - - / APPELLANT BY : SHRI NIRAJ BANSAL *+&' , - , - , - , - / RESPONDENT BY : SHRI MUKESH B.ADVANI ) , .! / / / / DATE OF HEARING : 10.09.2013 /01 , .! / DATE OF PRONOUNCEMENT : 11.09.2013 ' 2 ' 2 ' 2 ' 2 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 23.08.2010 IN RELATION TO THE ASSESSMENT YEAR 2007-2008. 2. THE ONLY ISSUE RAISED IS AGAINST THE DELETION OF ADDITION OF ` 97,72,196 WHICH WAS HELD BY THE ASSESSING OFFICER A S DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE COMPANY RECEIVED LOAN AND ADVANCE OF ` 1,01,65,000 FROM M/S. FASHLINK INTERNATIONAL PRIVATE LIMITED. ON VERIFICATION OF T HE SHAREHOLDING PATTERN OF THE ASSESSEE-COMPANY AS WELL AS M/S.FASH LINK INTERNATIONAL ITA NO.7437/MUM/2010. M/S.REGALIA BUILDTECH & SERVICES PVT.LTD. 2 PRIVATE LIMITED, THE ASSESSING OFFICER OBSERVED THA T ONE DIRECTOR, NAMELY, MR.ANUP SHYAM KARNANI WAS COMMON IN BOTH TH E COMPANIES. CONSIDERING THE AMOUNT OF ACCUMULATED P ROFIT OF M/S.FASHLINK INTERNATIONAL PRIVATE LIMITED, THE ASS ESSING OFFICER MADE ADDITION OF ` 97,72,196 BY TREATING IT AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THE LEARNED CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE ASSESSEE-COMPANY IS NOT A SHAREH OLDER IN M/S.FASHLINK INTERNATIONAL PRIVATE LIMITED BUT ONLY A DIRECTOR WAS COMMON IN BOTH THE COMPANIES. IN DELETING THE ADDIT ION, THE LEARNED CIT(A) RELIED ON THE SPECIAL BENCH ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V. BHAUMIK COLOUR PRIVATE LIMITED [(2009) 120 TTJ (MUM.) (SB) 865] . THE REVENUE IS AGGRIEVED AGAINST THE DELETION OF ADDITION. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE SPECI AL BENCH OF THE TRIBUNAL IN THE CASE OF BHAUMIK COLOUR PRIVATE LIMITED (SUPRA) STRICTLY GOVERNS THE SITUATION, IN WHICH IT HAS BEE N HELD THAT FOR PURPOSES OF INVOKING S. 2(22)(E), 'SUCH SHAREHOLDER ' IN THE CONCERN TO WHICH LOAN IS ADVANCED MUST BE BOTH A REGISTERED SH AREHOLDER AS ALSO BENEFICIAL SHAREHOLDER; LOAN OBTAINED BY ASSESSEE COMPANY IN WHICH N TRUST HAD 20 PER CENT SHAREHOLDING FROM A COMPANY IN WHICH N TRUST HAD 10 PER CENT SHAREHOLDING COULD NOT BE TAX ED AS DEEMED DIVIDEND UNDER S. 2(22)(E) SINCE N TRUST WAS ONLY A REGISTERED SHAREHOLDER AND NOT BENEFICIAL SHAREHOLDER. AS IS O BVIOUS FROM THE FACTS OF THE INSTANT CASE THAT THE ASSESSEE COMPANY , WHICH OBTAINED ITA NO.7437/MUM/2010. M/S.REGALIA BUILDTECH & SERVICES PVT.LTD. 3 LOAN, IS NOT A SHAREHOLDER IN THE OTHER COMPANY, T HERE CAN BE NO QUESTION OF INVOKING SECTION 2(22)(E) UNDER THE PR ESENT CIRCUMSTANCES. IT IS FURTHER RELEVANT TO NOTE THAT THE SAID SPECIAL BENCH ORDER HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT IN CIT V. UNIVERSAL MEDICARE PRIVATE LIMITED[(2010) 32 4 ITR 263 (BOM.)] . IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT THE SPECIAL BENCH ORDER, CONSTITUTING THE FOUNDATION OF THE LEA RNED CIT(A)S DECISION, HAS GOT THE APPROVAL BY THE HONBLE JURIS DICTIONAL HIGH COURT. WE, THEREFORE, UPHOLD THE VIEW TAKEN BY THE L EARNED CIT(A). 5. 3 .4 5 !36 , 6. 78 IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 11 TH DAY OF SEPTEMBER, 2013. ' 2 , /01 9')4 0 , : SD/- SD/- (VIVEK VARMA) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; 9') DATED : 11 TH SEPTEMBER, 2013. DEVDAS* ' 2 , *$.;# < #1. ' 2 , *$.;# < #1. ' 2 , *$.;# < #1. ' 2 , *$.;# < #1./ COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. *+&' / THE RESPONDENT. 3. = () / THE CIT, MUMBAI. 4. = / CIT(A) 20, MUMBAI. 5. #@: *$.$) , , / DR, ITAT, MUMBAI 6. : A / GUARD FILE. ' 2) ' 2) ' 2) ' 2) / BY ORDER, +#. *$. //TRUE COPY// B B B B/ // /7 6 7 6 7 6 7 6 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI