ITO, New Delhi V. M/s P.V. Beverages Pvt. Ltd., New Delhi

ITA 895/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4239 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Deemed dividend
• Section: 2(22)(e)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM ITA NO. 895/DEL/2011 A.Y. 2007-08 ITO, WARD 14(1) VS. M/S P.V.BEVERAGES P.LTD. ROOM 209, 2 ND FLOOR 515, ANSAL CHAMB ER II C.R.BLDG. I.P.ESTATE BH IKAJI CAMA PLACE NEW DELHI NEW DELH I 110 066 (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y.KAKKAR, SR.D.R. RESPONDENT BY : NONE O R D E R PER B.C.MEENA, ACCOUNTANT MEMBER THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDE R PASSED BY THE CIT (A)-XVII, NEW DELHI DATED 19.11.2010. 2. THE RETURN OF LOSS WAS SUBMITTED WHICH WAS PROCE SSED AND THERE AFTER IT WAS SELECTED FOR A SCRUTINY THROUGH CASS. THE ASSESSMENT WAS COMPLETED AND ADDITION OF RS. 15,31,287/- WAS MADE ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME TAX ACT, 1961. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF IMPORTING A ND WHOLESALING OF ITA 895/DEL/ 2011 PAGE 2 OF 4 M/S P.V.BEVERAGES P.LTD. AN ENERGY DRINK PHANTOM ENERGY DRINK. THERE WERE TWO MAJOR SHAREHOLDERS HOLDING EQUAL VOTING POWER OF 50% EACH , VIZ., MR.PRAVEEN VATS AND MRS. VANITA VATS. THE ASSESSEE HAS TAKEN A LOAN OF RS. 15,31,287/- FROM M/S P.V.CARGO CARRIERS P.LTD. ONE OF THE DIRECTOR AND SHAREHOLDER OF THE ASSESSEE COMPANY WAS HOLDING THE STAKE OF 99.8% SHARES OF M/S P.V.CARGO CARRIERS P.LTD. SHRI PRAVE EN VATS IS ALSO DIRECTOR AND SHAREHOLDER IN BOTH THE COMPANIES. TH E WIFE OF MR.PRAVEEN VATS SMT. VANITA VATS WAS ALSO DIRECTOR OF THE ASSE SSEE COMPANY AND HOLDING SOME SHARES OF M/S P.V.CARGO CARRIERS P.LT D. THERE WAS AN ACCUMULATED PROFIT AVAILABLE IN THE BALANCE SHEET O F M/S P.V.CARGO CARRIERS P.LTD. 3. WE HAVE HEARD THE LD.D.R. WHEREIN SHE HAS RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF SADHANA TE XTILES MILLS PVT.LTD. VS CIT, 188 ITR 318. WE HAVE CONSIDERED THE PLEADI NGS OF LD.D.R. NONE ATTENDED ON BEHALF OF THE ASSESSEE. AFTER HEARING THE REVENUE AND CONSIDERING THE FACTS ON RECORD, WE HOLD THAT THE L D.CIT(A) HAS GRANTED THE RELIEF TO THE ASSESSEE ON THE BASIS OF DECISION OF HONBLE ITAT MUMBAI SPECIAL BENCH IN THE CASE OF ACIT VS. M/S BHAUMIK COLOUR P.LTD. (2009) 118 ITD 1 WHEREIN THE HONBLE ITAT MUMBAI BENCH HAS HELD AS UNDER. I) WHETHER DEEMED DIVIDEND CAN BE ASSESSED ONLY IN HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN HANDS OF A PERSON OTHER THAN A SHAREHOLDER HELD, YES. ITA 895/DEL/ 2011 PAGE 3 OF 4 M/S P.V.BEVERAGES P.LTD. II) WHETHER EXPRESSION SHAREHOLDER REFERRED TO IN SECTION 2(22)(E) REFERS TO BOTH REGISTERED SHAREHOLDER AND BENEFICIAL SHAREHOL DER AND, THUS, IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT BENEFICI AL SHAREHOLDER THEN PROVISIONS OF SECTION 2(22)(E) WOULD NOT APPLY HE LD, YES. III) WHETHER DEEMED PROVISION OF SECTION 2(22)(E) A S IT APPLIES TO CASE OF LOANS OR ADVANCES BY A COMPANY TO A CONCERN IN WHIC H ITS SHAREHOLDER HAS SUBSTANTIAL INTEREST, IS BASED ON PRESUMPTION THAT LOAN OR ADVANCES WOULD ULTIMATELY BE MADE AVAILABLE TO SHAREHOLDERS OF COM PANY GIVING LOAN OR ADVANCES, AND, THEREFORE, INTENTION OF LEGISLATURE IS TO TAX DIVIDEND ONLY IN HANDS OF SHAREHOLDERS AND NOT IN HANDS OF CONCERN HELD, YES. CONSIDERING THE FACTS AND PLEADINGS OF THE REVENUE WE HOLD THAT THE LD.CIT(A) HAS GRANTED THE RELIEF ON THE BASIS O F DECISION OF HONBLE ITAT MUMBAI BENCH CITED (SUPRA) AND THEREFORE WE UP HOLD THE ORDER OF LD.CIT(A) AND DISMISS REVENUES APPEAL. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL,2011. SD/- SD/- (R.P.TOLANI) (B.C.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 21 ST APRIL, 2011 *MANGA ITA 895/DEL/ 2011 PAGE 4 OF 4 M/S P.V.BEVERAGES P.LTD. COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER DY. REGISTRAR // TRUE COPY //