DCIT, CIR-12(2), KOLKATA, Kolkata V. Shri Navin Chand Suchanti, Kolkata

ITA 799/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1650 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: S M SURANA
• Keywords: Deemed dividend

Judgement Text

ITA N0.799/KOL/2015 SHRI NAVIN CHAND SUCHANTI A.Y.2 009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.799/KOL/2015 ASSESSMENT YEAR : 2009-10 D.C.I.T., CIRCLE-12 (2), -VERSUS- SHRI NAVIN CHAND SUCHANTI KOLKATA KOLKATA (PAN: AJVPS 1957 L) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SAURABH KUMAR, ADDL. CI T(DR) FOR THE RESPONDENT: SHRI S.M.SURANA, ADVOCATE DATE OF HEARING : 23.08.2017. DATE OF PRONOUNCEMENT : 25.08.2017. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 27.03.2015 OF CIT(A)-4, KOLKATA RELATING TO AY 2009-10. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS :- 1. 'THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION OF DEEMED DIV IDEND IN THE HAND OF THE ASSESSEE AS PER PROVISION OF SECTION 2(22)(E).' 2. 'THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW LD. CIT(A) ERRED IN HOLDING THAT THE ADVANCE AS ADVANCE OF SALARY RELYING ON THE JUDGEMENT OF HON'BLE ALLAHABAD HIGH COURT WHEREAS I N THIS PARTICULAR CASE THE WORD 'ADVANCE' MEANS SUCH ADVANCE WHICH CARRIES WIT H AN OBLIGATION OF REPAYMENT.' 3. THE ASSESSEE IS AN INDIVIDUAL. HE HELD 16.0 6% OF PAID UP SHARE CAPITAL OF THE COMPANY BY NAME M/S. PRESSMAN ADVERTISING LIMITED. THE ASSESSEE WAS ALSO THE DIRECTOR AND AN EMPLOYEE OF THE SAID COMPANY M/S PR ESSMAN ADVERTISING LTD. DURING THE PREVIOUS YEAR, THE ASSESSEE RECEIVED A SUM OF R S.60,39,353/- FROM M/S. PRESSMAN ADVERTISING LIMITED AND HAD SHOWN THE SAME AS ADVA NCE IN HIS BOOKS OF ACCOUNTS. AS PER THE PROVISION OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 (ACT), ANY LOAN OR ITA N0.799/KOL/2015 SHRI NAVIN CHAND SUCHANTI A.Y.2 009-10 2 ADVANCE BY A COMPANY A PERSON WHO HOLDS MORE THAN 1 0% OF THE PAID UP SHARE CAPITAL MAY BE DEEMED TO BE PAYMENT OF DIVIDEND TO THE EXTE NT THE COMPANY POSSESSES ACCUMULATED PROFITS. THE AO WAS OF THE VIEW THAT TH E ADVANCE RECEIVED BY THE ASSESSEE FROM M/S PRESSMAN ADVERTISING LIMITED WAS LIABLE TO BE TREATED AS A DEEMED DIVIDEND BY VIRTUE OF THE PROVISIONS OF SECTION 2(2 2)(E) OF THE ACT. BEFORE THE AO THE ASSESSEE SUBMITTED THAT THE SUM IN QUESTION CANNOT BE CONSIDERED AS LOAN OR ADVANCE BY THE COMPANY TO THE ASSESSEE AND IT WAS ONLY AN A DVANCE SALARY WHICH THE ASSESSEE RECEIVED FROM THE COMPANY FOR THE PURPOSE OF MEETIN G MEDICAL EXPENSES OF HIS SON-IN- LAW WHO HAD TO BE TAKEN TO SINGAPORE FOR TREATMENT FOR CHRONIC ILLNESS. THIS WAS REJECTED BY THE AO AND A SUM OF RS.60,39,353/- WAS TREATED AS DEEMED DIVIDEND AND BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE BY THE AO. 4. BEFORE CIT(A) THE ASSESSEE REITERATED THE SUB MISSIONS AS WERE MADE BEFORE THE AO AND FURTHER BROUGHT TO THE NOTICE OF CIT(A) THAT THE POLICY OF M/S. PRESSMAN ADVERTISING LIMITED FOR GIVING ADVANCE TO THE MANAG ERIAL STAFF FOR THE PURPOSE OF MEETING MAJOR ILLNESS OF FAMILY MEMBERS. THE ASSESS EE ALSO PLACED BEFORE CIT(A) MINUTES OF THE MEETING OF THE BOARDS OF DIRECTORS O F M/S PRESSMAN ADVERTISING LIMITED DATED 18.09.2008 WHEREIN THE REQUEST OF THE ASSESSEE TO PAY FUTURE SALARIES IN ADVANCE TO MEET THE MEDICAL EXPENSES OF HIS SON IN LAW WAS CONSIDERED AND APPROVED. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHYAMA CHARAN GUPTA 337 ITR 511 (ALL) W HEREIN THE HONBLE ALLAHABAD HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL WHEREBY THE TRIBUNAL HELD THAT ADVANCE AGAINST SALARY CANNOT BE TREATED AS DEEMED DIVIDEND . 5. THE CIT(A) ON A CONSIDERATION OF THE ABOVE S UBMISSIONS AND OF THE DECISION REFERRED TO BY THE ASSESSEE WAS OF THE VIEW THAT TH E AMOUNT PAID BY THE COMPANY TO THE ASSESSEE CANNOT BE CONSIDERED AS ADVANCE OR LOAN BU T IT WAS A SALARY WHICH WAS RECEIVED BY THE ASSESSEE FOR THE SERVICES TO BE REN DERED LATER AND THEREFORE CANNOT BE STRICTLY CALLED AN ADVANCE. THE CIT(A) WAS OF THE V IEW THAT ADVANCE IS SOMETHING WHICH IS TO BE RETURNED AND SALARY RECEIVED IN ADVA NCE CANNOT SAID TO BE IN THE NATURE ITA N0.799/KOL/2015 SHRI NAVIN CHAND SUCHANTI A.Y.2 009-10 3 OF ADVANCE IN THE STRICT SENSE OF THE TERM. THE CIT (A) ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHYAMA CHARAN GUPTA (SUPRA) AND HELD THAT THE SUM IN QUESTION CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE H AS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. THE LD. DR RELIED ON THE ORDER OF AO. THE L D. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). HE ALSO BROUGHT TO OUR NOTICE THAT IN THE ASSESSMENT YEAR 2010-11 AND 2011-12 THE ASSESSEE HAS OFFERED TO TAX SALARY OF RS.30 LAKHS WHICH WAS RECEIVED FROM THE COMPANY IN ADVANCE AND THE SAME WAS ALSO B ROUGHT TO TAX BY THE REVENUE AND THEREFORE THERE CANNOT BE ANY LOSS TO THE REVENUE. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT SALARY RECEIVED IN ADVANCE OUGHT TO HAVE BEEN OFFERED TO TAX IN A, Y.2009-10. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND ARE OF THE VIEW THAT ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. THE DECI SION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHYAMA CHARAN GUPTA (SUPR A) CLEARLY SUPPORTS THE CONCLUSION ARRIVED AT BY CIT(A). ON THE FACTS IT CA NNOT BE DISPUTED THAT THE SUM IN QUESTION WAS SALARY RECEIVED IN ADVANCE BY THE ASSE SSEE FOR THE PURPOSE OF MEETING MEDICAL EXPENSES OF HIS SON-IN-LAW. THE FACT THAT T HE SALARY RECEIVED IN ADVANCE WAS NOT OFFERED TO TAX IN A.Y.2009-10 CANNOT BE THE BAS IS TO HOLD THAT SALARY RECEIVED IN ADVANCE WOULD PARTAKE THE CHARACTER OF A DEEMED DIV IDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. FOR THE ABOVE REASONS WE CONFIRM THE ORDER OF CIT(A) AND DISMISS THE APPEAL BY THE REVENUE. ITA N0.799/KOL/2015 SHRI NAVIN CHAND SUCHANTI A.Y.2 009-10 4 9. IN THE RESULT THE APPEAL BY THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 25.08.2017. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SHRI NAVIN CHAND SUCHANTI, RESINGTON MANOR, 5, BA LLYGUNE PARK ROAD, KOLKATA- 700019. 2.D.C.I.T., CIRCLE-12(2), KOLKATA. 3. C.I.T.(A)- 4, KOLKATA 4. C.I.T- 4, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES