GIRISH VAZIRANI, MUMBAI V. ITO WD 9(2)(1), MUMBAI

ITA 83/MUM/2013

• Counselvise Citation: 8319914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 26-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: VIJAY MEHTA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & VIVEK VARMA , J M ITA NO. 83 / MUM/20 1 3 ( ASSESSMENT YEAR : 200 9 - 10 ) MR. GIRISH VAZIRANI, 201, SINCLAIR CHS 95, HILL ROAD, BANDRA, MUMBAI - 400 050 VS. ITO, WARD - 9(2)(1), MUMBAI PAN/GIR NO. : A A EPV 4598 C ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI VIJAY MEHTA /REVENUE BY : SHRI PAVAN KUMAR BEERLA DATE OF HEARING : 10 TH NOVEMBER , 201 4 DATE OF PRONOUNCEMENT 14 TH NOVEMBER , 2 01 4 O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER CIT(A) DATED 27 - 11 - 2012 , IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF THE I.T. ACT, FOR THE ASSESSMENT YEAR 200 9 - 10 . 2 . THE ASSESSEE IS AGGRIEVED FOR ADDITION MADE U/S.2(22)(E) OF THE ACT AMOUNTING TO RS. 9,50,000/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO HAS MADE ADDITION OF RS. 9,50,000/ - ON ACCOUNT OF DEEMED D IVIDEND U/S.2(22)(E) BY OBSERVING THAT ASSESSEE WAS IN RECEIPT OF THESE AMOUNT FROM M/S JMD MARKETING PVT. LTD. AS LOAN. THE CONTENTION OF ASSESSEE BEFORE THE LOWER ITA NO. 83 / 13 2 AUTHORITIES WAS THAT ASSESSEE WAS HAVING CURRENT ACCOUNT WITH THE COMPANY, WHEREIN ON MOST OF THE OCCASIONS THE ASSESSEE HAS GIVEN MONEY TO THE COMPANY AND ON VERY FEW OCCASIONS, SUCH CREDIT BALANCE HAS BEEN TURNED TO BE DEBIT BALANCE . LEARNED AR DREW OUR ATTENTION TO THE STATEMENT OF ACCOUNT FOR THE WHOLE YEAR WHEREIN WE FOUND THAT EXCEPT THE FEW INSTANCES , THE ASSESSEE WAS ALWAYS HAVING CREDIT BALANCE WITH THE COMPANY, WHICH WAS GIVEN BY ASSESSEE TO THE COMPANY AS A TEMPORARILY ACCOMMODATION. HOWEVER, ONLY ON FEW OCCASIONS THERE WAS DEBIT BALANCE AND PEAK OF WHICH WAS RS. 9,50,000/ - , WHICH WAS ADDED BY THE AO U/S.2(22)(E). 4. LEARNED AR RELIED ON THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF SHRI ASHOK ARYA , PASSED IN ITA NO. 1001/CHD/2010, DATED 23 - 12 - 2013 , WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, IT WAS OBSERVED THAT ASS ESSEE HAS TAKEN ONLY TEMPORARY ADVANCE WHICH HAS BEEN RETURNED TO THE COMPANY WITHIN A WEEK. THE ASSESSEE HAS ALSO GIVEN SIMILAR ADVANCE TO THE COMPANY, THEREFORE, THE TRANSACTIONS ARE ON ACCOUNT OF TEMPORARY LOANS IN THE NATURE OF CURRENT ACCOUNT AND CANN OT BE TERMED AS LOANS OR ADVANCES AS CONTAINED U/S. 2(22)(E). SIMILAR ISSUE HAS ALSO BEEN CONSIDERED BY AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF MADHUR CAPITAL & FINANCE LTD., PASSED IN ITA NO. 580/AHD/2006, DATED 30 - 11 - 2012 FOR A.Y.2000 - 01 , WHEREIN IT WAS HELD THAT CREDIT BALANCE OF ASSESSEE WITH THE COMPANY ON VARIOUS DATES FOR SMALL PART OF THE YEAR WHEN IT TURNED TO BE DEBIT WAS NOT IN THE NATURE OF LOANS AND ADVANCES BY THAT COMPANY TO THE ASSESSEE, HENCE, PROVISIONS OF SECTION 2(22)(E) ARE NOT APP LICABLE. ITA NO. 83 / 13 3 5. WE FOUND THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SHRI SURAJ DEV DADA, REPORTED IN 367 ITR 78 , WHEREIN IT WAS HELD THAT ASSESSEE HAVING RUNNING ACCOUNT WITH THE COMPANY, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WERE NOT ATTRACTED AS THIS PROVISIONS WAS INSERTED TO STOP THE MISUSE BY THE ASSESSEE BY TAKING THE FUNDS OUT OF THE COMPANY BY WAY OF LOANS ADVANCES INSTEAD OF DIVIDENDS AND THEREBY AVOID TAX. 6 . APPLYING THE PROPOSITION OF LAW AS DISCUSSED ABOVE TO THE FACTS OF THE PRESENT CASE, WE FOUND THAT ASSESSEE WAS HAVING DEBIT BALANCE ONLY FOR 17 DAYS OUT OF 365 DAYS. ON ALL OTHER DATES, ASSESSEE WAS HAVING CREDIT BALANCE AND PEAK OF SUCH CREDIT WAS RS. 8,49,700/ - . IT IS ALSO A MATTE R OF RECORD THAT ASSESSEE HAS NOT CHARGED ANY INTEREST IN RESPECT OF TEMPORARY ADVANCE GIVEN TO THE COMPANY. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR BRINGING SUCH TRANSACTION IN THE NET OF THE SECTION 2(22)(E) OF TH E ACT. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 /11/ 201 4 . 14 /11/ 2014 SD/ - SD/ - ( ) ( VIVEK VARMA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 14 / 11 /2014 /PKM , PS ITA NO. 83 / 13 4 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//