DCIT 9(2), MUMBAI V. HIMANSHU VIRENDRA SHAH, MUMBAI

ITA 875/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6625 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 875/MUM/2013 ASSESSMENT YEAR: 2009-10 DCIT-9(2), ROOM NO. 218, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI- 400 020 VS. SHRI HIMANSHU VIRENDRA SHAH 30, MONISHA, 67, S.V. ROAD, ANDHERI (W), MUMBAI-400 058 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAHPS 7504 E ASSESSEE BY : SHRI BHUPENDRA SHAH REVENUE BY : SHRI PITAMBER DAS DATE OF HEARING : 23.04.2014 DATE OF PRONOUNCEMENT : 23.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-20, MUMBAI DATED 02.11.2012 FOR THE ASSES SMENT YEAR 2009-10. 2. IN THIS APPEAL, THE REVENUE HAS AGITATED THE DE CISION OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS.3,67,02,918/- MADE BY T HE AO U/S 2(22)(E) OF THE ACT. 3. BRIEFLY STATED, THE IMPUGNED ADDITION OF RS.3,67 ,02,918/- WAS MADE U/S 2(22)(E) OF THE INCOME TAX ACT AS DEEMED DIVIDEND B Y HOLDING THAT THE ASSESSEE HAD CONTROLLING STAKE IN M/S NEELA SYSTEMS LIMITED AND PURE FLOW INDIA PVT. LTD. THE AO NOTED THAT THE ASSESSEE, AN INDIVIDUAL HAVIN G SHARES OF M/S. NEELA INDIA PVT. LTD. TO THE EXTENT OF 46.67% AND M/S. NEELA SYSTEMS LIMITED 51% AND SIMILARLY THE 38.64% STAKE IN PURE FLOW INDIA PVT. LTD. THE ASSES SING OFFICER ON PERUSAL OF THE BALANCE SHEET OF M/S NEELA INDIA PVT. LTD. FOR THE ASSESSMENT YEAR 2010 OBSERVED THAT THE COMPANY HAD GIVEN INTER-CORPORATE LOANS OF RS.3,66,21,394/- AND RS.5,81,525/- TO M/S. NEELA SYSTEMS LIMITED AND PUR E FLOW INDIA PVT. LTD. RESPECTIVELY AND AN AMOUNT OF RS.12,46,51,367/- WAS APPEARING AS RESERVE & ITA NO. 875/MUM/2013 SHRI HIMANSHU VIRENDRA SHAH ASSESSMENT YEAR: 2009-10 2 SURPLUS AS ON 31.03.2009 IN THE BOOKS OF M/S. NEELA INDIA PVT. LTD. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE WAS HAVING A CONTROLLING STAKE IN ALL THE THREE CONCERNS AND HENCE TREATED THE SAID AMOUNT AS DEEMED DIVIDEN D IN THE HANDS OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) DELETED THE IMPU GNED ADDITION MADE BY THE AO ON THE REASON THAT THE SAID TRANSACTION AMOUNTED TO INTER-CORPORATE DEPOSITS/ ADVANCES AND HENCE THE SAME CANNOT BE PRESUMED TO B E DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. AGGRIEVED BY THE IMPUGNED OR DER, THE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS NOT DISPUTED THAT THE ASSESSEE HAS GOT 46.6% SHARE OF N EELA INDIA PVT. LTD., 51% OF NEELA SYSTEMS LTD. AND 38.64% IN PURE FLOW INDIA PV T. LTD. HOWEVER, THIS DOES NOT MEAN THAT THE ASSESSEE IS A RECIPIENT OF LOANS OR A DVANCES AS THERE IS NO DIRECT LOAN OR DEPOSIT GIVEN BY THE COMPANY TO THE SHARE HOLDER S. IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT THE TRIBUNAL IN THE CASE OF BOMBAY OIL INDUSTRIES LIMITED VS. DCIT 28 SOT 383 (MUM) HAS HELD THAT INTER-CORPORATE DEPOSITS ARE DIFFERE NT FROM LOANS AND ADVANCES AND WOULD NOT COME WITHIN T HE PURVIEW OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME TAX ACT. SINCE THE LD.CIT(A) HAS CORRECTLY APPRECIATED THE FACTS AND POSITION OF LAW ON THIS I SSUE FOR DELETING THE IMPUGNED ADDITION, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE SAME. THEREFORE, THE DECISION OF THE LD.CIT(A) ON THIS COUNT IS UPHE LD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF APRIL, 2014. SD/- SD/- (RAJENDRA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.04.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.