ACIT(, Ernakulam V. Synthite properties& Investments Ltd, Cochin

ITA 78/COCH/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65057 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 13-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend

Judgement Text

1 ITA NO. 16/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 16/COCH/2012 (ASSESSMENT YEAR 2005-06) SYNTHITE PROPERTIES & INVESTMENTS LTD VS DY.CIT, CI R.4(1) AJAY VIHAR, M.G. ROAD KOCHI KOCHI 682 016 PAN : AADCS5617F (APPELLANT) (RESPONDENT) I.T.A NO. 78/COCH/2012 (ASSESSMENT YEAR 2005-06) A.C.I.T., CIR.4(1) VS SYNTHITE PROPERTIES & INV EST- KOCHI MENTS LTD, KOCHI 16 (APPELLANT) (RESPONDENT) TAXPAYER BY : SHRI THOMSON THOMAS REVENUE BY : SHRI M ANILKUMAR, CIT SMT. S VIJAYAPRABHA DATE OF HEARING : 12-12-2012 DATE OF PRONOUNCEMENT : 16-12-2012 2 ITA NO. 16/COCH/2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE TAXPAYER AND THE REVENUE A RE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)- II, KOCHI DATED 23-12- 2011 AND PERTAIN TO ASSESSMENT YEAR 2005-06. 2. THE TAXPAYER IS CHALLENGING THE ADDITION OF RS.9 8,81,365 WHICH WAS CONFIRMED BY COMMISSIONER OF INCOME-TAX(A). THE RE VENUE IS CHALLENGING THE DELETION OF ADDITION MADE BY THE ASSESSING OFFI CER TO THE EXTENT OF RS.5,18,46,307 BEING DEEMED DIVIDEND U/S 2(22)(E) O F THE ACT. SINCE BOTH THE APPEALS ARISE OUT OF THE SAME ORDER OF THE COMM ISSIONER OF INCOME- TAX(A), WE HEARD THE SAME TOGETHER AND DISPOSE OF B Y THIS COMMON ORDER. 3. SHRI THOMSON THOMAS, THE LD.REPRESENTATIVE FOR T HE TAXPAYER SUBMITTED THAT THE TAXPAYER RECEIVED RS.98,81,51,78 0 FROM BHARAT SHELL LTD AND OMEGA SERVICES & CONSULTANTS PVT LTD. THESE RE CEIPTS ARE FOR BOOKING ROOMS IN THE HOTELS RUN BY THE TAXPAYER. ACCORDING TO THE LD.REPRESENTATIVE, WHAT WAS RECEIVED BY THE TAXPAYE R IS ONLY RENT FOR THE ROOMS BOOKED BY THE RESPECTIVE PERSONS. SINCE THE BOOKING WAS DONE BY 3 ITA NO. 16/COCH/2012 OMEGA SERVICES & CONSULTANTS PVT LTD TDS WAS DEDUCT ED AT SOURCE BY THEM. HOWEVER, IN THE TDS CERTIFICATE IT WAS MENTI ONED THAT THE TAX WAS DEDUCTED FOR CONTRACT. THEREFORE, THE ASSESSING OF FICER MADE ADDITION OF RS.98,81,365 UNDER THE HEAD CONTRACT. SAME ADDIT ION WAS MADE UNDER THE HEAD ROOM RENT ALSO WHICH WAS ALREADY OFFERED BY THE TAXPAYER. ACCORDING TO THE LD.REPRESENTATIVE, THE DEDUCTOR HA S SHOWN THE TRANSACTION AS CONTRACT IN THE TDS CERTIFICATE. HOWEVER, WHAT WAS RECEIVED BY THE TAXPAYER IS ONLY RENT AND THERE IS NO CONTRACT. TH ERE IS NO CONTRACT BETWEEN THE TAXPAYER AND OMEGA SERVICES & CONSULTANTS PVT L TD OTHER THAN BOOKING THE ROOMS. THE LD.REPRESENTATIVE HAS ALSO FILED CO PIES OF STATEMENT AS APPEARING IN THE BOOKS OF ACCOUNT. 4. ON THE CONTRARY, SHRI ANIL KUMAR, THE LD.DR SUBM ITTED THAT SINCE THE TAXPAYER CLAIMS THAT THERE WAS NO CONTRACT BETWEEN THE TAXPAYER AND OMEGA SERVICES & CONSULTANTS PVT LTD THE ASSESSING OFFICER MAY BE ASKED TO RE-EXAMINE THE MATTER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SPEC IFIC CONTENTION OF THE 4 ITA NO. 16/COCH/2012 TAXPAYER IS THAT THERE WAS NO CONTRACT BETWEEN THE TAXPAYER AND OMEGA SERVICES & CONSULTANTS PVT LTD. WHAT WAS RECEIVED IS ONLY ROOM RENT FOR THE ROOMS BOOKED THROUGH OMEGA SERVICES & CONSULTAN TS PVT LTD. HOWEVER, IN THE TDS CERTIFICATES THE TRANSACTION WA S SHOWN AS CONTRACT. THEREFORE, IT IS NECESSARY TO EXAMINE WHAT IS THE A CTUAL TRANSACTION BETWEEN THE TAXPAYER AND OMEGA SERVICES & CONSULTAN TS PVT LTD. SINCE THE TAXPAYER HAS PRODUCED COPIES OF ACCOUNTS, THE SAME ALSO NEEDS TO BE RE- EXAMINED. ACCORDINGLY, THE ORDERS OF THE LOWER AUT HORITIES ARE SET ASIDE AND THE ISSUE OF ADDITION OF RS. 98,81,365 IS REMIT TED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER AFRESH AND BRING ON RECORD THE NATURE OF TRANSACTION BETWE EN THE TAXPAYER AND OMEGA SERVICES & CONSULTANTS PVT LTD. IT IS ALSO I NCUMBENT UPON THE ASSESSING OFFICER TO FIND OUT WHETHER THERE IS ANY CONTRACT BETWEEN THE TAXPAYER AND OMEGA SERVICES & CONSULTANTS PVT LTD O THER THAN BOOKING OF ROOMS BY OMEGA SERVICES & CONSULTANTS PVT LTD FOR T HEIR CUSTOMERS. THE ASSESSING OFFICER THEREAFTER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF HEARING TO THE TAXP AYER. 5 ITA NO. 16/COCH/2012 6. NOW COMING TO THE DEPARTMENTAL APPEAL, SHRI ANIL KUMAR, THE LD.DR SUBMITTED THAT THE TAXPAYER HAS RECEIVED INTEREST F REE LOAN FROM SYNTHITE INDUSTRIAL CHEMICALS LTD, A GROUP CONCERN. THERE W AS NO MATERIAL TO SUGGEST THAT THE TAXPAYER HAS NOT RECEIVED ANY AMOU NT DURING THE YEAR UNDER CONSIDERATION. THEREFORE, ACCORDING TO THE L D.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A) IS NOT CORRECT IN DEL ETING THE ADDITION MADE BY THE ASSESSING OFFICER. 7. ON THE CONTRARY, SHRI THOMSON THOMAS, THE LD.REP RESENTATIVE FOR THE TAXPAYER SUBMITTED THAT NO AMOUNT WAS RECEIVED DURI NG THE YEAR UNDER CONSIDERATION. AN AMOUNT OF RS.5,18,46,307 WAS THE OPENING BALANCE AS ON 01-04-2004 OUT OF WHICH AN AMOUNT OF RS.16,75,172 W AS REPAID DURING THE YEAR UNDER CONSIDERATION AND LEAVING THE BALANCE OF RS.5,01,71,135 AS ON 31-03-2005. THE LD.REPRESENTATIVE FURTHER SUBMITTE D THAT NO NEW LOAN WAS TAKEN FROM THE HOLDING COMPANY FROM THE TAXPAYER. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOM E-TAX(A) HAS RIGHTLY DELETED THE ADDITION. 6 ITA NO. 16/COCH/2012 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTION OF THE TAXPAYER IS THAT NO AMOUNT WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION. IF NO AMOUNT WAS RECEIVED DURING TH E YEAR UNDER CONSIDERATION THERE CANNOT BE ANY ADDITION AT ALL. THE ONLY CONTENTION OF THE LD.DR IS THAT NO MATERIAL IS AVAILABLE TO SHOW THAT THE TAXPAYER HAS NOT RECEIVED ANY FUNDS DURING THE YEAR UNDER CONSIDERAT ION. THE DEPARTMENT CANNOT ACCEPT THE TAXPAYER TO PROVE THE NEGATIVITY AND THERE CANNOT BE ANY MATERIAL TO SHOW THAT THE TAXPAYER HAS NOT RECEIVED ANY AMOUNT. MATERIAL WOULD BE AVAILABLE PROVIDED THE TAXPAYER HAS RECEIV ED ANY AMOUNT DURING THE YEAR UNDER CONSIDERATION. AS RIGHTLY POINTED O UT BY THE COMMISSIONER OF INCOME-TAX(A), THE OUTSTANDING LOAN AS ON 01-04- 2004 WAS RS.5,18,46,307. IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THAT THE TAXPAYER HAS RECEIVED ANY MONEY DURING THE YEAR UNDER CONSID ERATION, THIS TRIBUNAL IS OF THE OPINION THAT THE COMMISSIONER OF INCOME-T AX(A) HAS RIGHTLY DELETED THE ADDITION. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. THEREFORE, THE SAME IS CON FIRMED. 7 ITA NO. 16/COCH/2012 9. IN THE RESULT, APPEAL OF THE TAXPAYER IS ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DECEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 21 ST DECEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH