DCIT, Cir-14(2) (TDS), Hyderabad V. M/s. MTAR Technologies (P) Ltd., Hyderabad

ITA 808/HYD/2011

• Counselvise Citation: 80822514 RSA 2011
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: A V RAGHURAM
• Keywords: Question of law; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' , HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.808/HYD/2011 : ASSESSMENT Y EAR 2006-07 DY. COMMISSIONER OF INCOME- TAX CIRCLE 14(2)(TDS), HYDERABAD V/S. M/S. MTAR TECHNOLOGIES (P) LTD., HYDERABAD ( PAN HYDMO 2650 E ) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : SHRI A.V.RAGHURAM O R D E R PER G.C.GUPTA, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEA R 2006- 07 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONE R OF INCOME- TAX(APPEALS). 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER:- 1. THE ORDER OF CIT(A) IS CONTRARY TO LAW, AS PER MATERIAL ON RECORD. 2. THE CIT(A) SHOULD HAVE UPHELD THE ORDER OF THE A SSESSING OFFICER. 3. THE CIT(A) HAS ERRED IN ALLOWING ASSESSEES APPE AL RELYING ON THE ORDER OF THE ITAT, HYDERABAD BENCH, IN ITA NOS.1162, 1163, 1166 & 787/HYD/2008, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003-04 2004-05 & 20 05- 06 (THE SAID ORDER), IN VIEW OF THE FACT THAT SUBST ANTIAL QUESTION OF LAW IS INVOLVED IN THE SAID ITAT ORDERS AND THE REVENUE HAS APPEALED AGAINST IT, WHICH IS STILL PEN DING BEFORE THE HONBLE HIGH COURT OF A.P. ITA NO.808 /HYD/11 M/S. MTAR TECHNOLOGIES (P) LTD., HYDERABAD 2 4. THE CIT(A) HAS ERRED IN ALLOWING THE ASSESSEES APPEAL RELYING ON THE SAID ORDER, WHEREIN ITAT ERRONEOUSL Y HELD THAT THE PAYMENT OF ADVANCE TO NON-SHAREHOLDERS DO NOT REQUIRE TAX DEDUCTION AT SOURCE UNDER SECTION 194 O F THE INCOM E TAX ACT AND THE RESPONDENT ASSESSEE CANNOT BE TREATED AS DEFAULTER UNDER SECTION 201 OF THE INCOM E TAX ACT TO ATTRACT INTEREST UNDER SECTION 201(1A) OF TH E INCOM E TAX ACT. 5. THE CIT(A) HAS ERRED IN ALLOWING ASSESSEES APPE AL RELYING ON THE SAID ORDER, WHEREIN THE ITAT ERRED IN HOLDIN G THAT SECTION 194 OF THE INCOME TAX ACT DOES NOT REQUIRE TDS, WHEN THE PAYMENT IS MADE TO NON-SHAREHOLDERS. 6. THE CIT(A) HAS ERRED IN ALLOWING ASSESSEES APPE AL RELYING ON THE SAID ORDER WHEREIN THE ITAT ERRONEOUSLY HELD THAT THE SUBJECT AMOUNT OF LOANS TRANSFERRED BY THE RESP ONDENT ASSESSEE TO ITS SISTER CONCERN CANNOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE RECIPIENT AND THE PROV ISIONS OF NEITHER SECTION194 NOR SECTION 201/SECTION 201(1A) CAN BE APPLIED TO THE CASE OF THE RESPONDENT ASSESSEE. 7. THE CIT(A) HAS ERRED IN ALLOWING ASSESSEES APPE AL RELYING ON THE SAID ORDER, WHEREIN THE ITAT ERRONEOUSLY DID NOT APPRECIATE THE PRECEDENTS CITED BY THE REVENUE AND ERRONEOUSLY HELD THAT THE SAID PRECEDENTS CANNOT BE APPLIED TO THE FACTS OF THE CASE. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REL IED ON THE ORDER OF THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN THE GROUNDS OF APPEAL O F THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISIO N OF THE HYDERABAD BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E ASSESSMENT YEARS 2003-04 TO 2005-06 IN ITA NO.1162-1163 AND 1166/HYD /2008 DATED 13 TH APRIL, 2010, WHEREIN IDENTICAL ISSUE WAS DECIDED I N FAVOUR OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IDENTICAL ISSUE IN THE GROUNDS OF APPEAL OF THE REV ENUE FOR THE RELEVANT ASSESSMENT YEAR, 2006-07, WAS DECIDED BY THE HYDERA BAD BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASS ESSMENT YEARS 2003- ITA NO.808 /HYD/11 M/S. MTAR TECHNOLOGIES (P) LTD., HYDERABAD 3 04 TO 2005-06 VIDE ORDER DATED 13 TH APRIL, 2010, CITED SUPRA, IN FAVOUR OF THE ASSESSEE AND THE REVENUES APPEALS FOR THOSE YE ARS WERE DISMISSED. WE FIND THAT THE TRIBUNAL HAS HELD THAT SUBJECT AMO UNT OF LOANS TRANSFERRED BY THE ASSESSEE TO ITS SISTER CONCERN C OULD NOT BE TREATED AS DEEMED DIVIDEND AND THAT THE PROVISIONS OF S.194 OF THE ACT DO NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE AND THAT THE ASSESSEE COULD NOT BE TREATED AS DEFAULTER UNDER S.201 OF TH E ACT. FACTS OF THE CASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YE AR 2006-07 BEING IDENTICAL WITH THE FACTS OF THE CASE OF THE ASSESSE E IN THE EARLIER ASSESSMENT YEARS 2003-04 TO 2005-06, AND WE BEING IN AGREEMENT WITH THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS 2003-04 TO 2 005-06 (SUPRA), DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND CONS EQUENTLY GROUNDS OF THE REVENUE IN THESE APPEALS ARE REJECTED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH SEPTEMBER, 2011 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 9 TH SEPTEMBER, 2011 COPY FORWARDED TO: 1. M/S. MTAR TECHNOLOGIES (P) LTD., NO.18, TECHNOCRATS INDUSTRIAL PARK, BALANGAR, HYDERABAD 2. DY. COMMISSIONER OF INCOME-TAX, CIORCLE 14(2)(TD S), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD . 4. COMMISSIONER OF INCOME - TAX I, HYDE RABAD 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S .