RNG FINLEASE PRIVATE LIMITED , RAJKOT V. THE PCIT, RAJKOT-1, RAJKOT, RAJKOT

ITA 94/RJT/2022

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 1520 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 07-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Deemed dividend; TDS
• Section: 263; 143(3); 2(22)(e); 13

Judgement Text

आयकर अपील य अ धकरण, राजकोट यायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No. 94/Rjt/2022 ( नधा रण वष / As s e s s m e n t Y e ar 2 01 7 - 1 8 ) M/s RNG Finlease P rivate Limited, P lo t No.2 621/26 22, Ro ad D-2 , Gate-1, Metod a GIDC, Rajko t./ 9/12, Lal Bazar Street, Lal Bazar, Kolkata-700001. बनाम/ Vs. The Principal Co mmissioner of Inco me-Tax, Rajk ot-1, Rajkot. थायी लेखा सं. /जीआइआर सं. /PAN/GI R No. : AAACR90 7 3P (अपीलाथ /Appellant) ( यथ / Respondent) अपीलाथ ओर से / Appellant by : Shri Mehul Ranpura, A.R यथ क ओर से/Respondent by : Shri Sanjeev Jain, CIT. D.R. स ु नवाई क तार ख / D a t e o f H e a r i n g 30/06/2022 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t 01/07/2022 आदेश / O R D E R PER BENCH: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Principal Commissioner of Income Tax -1, Rajkot [Ld. CIT) in short] dated 07/02/2022 arising in the matter of assessment order passed under s. 263 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relevant to the Assessment Year (AY) 2017-18. ITA No.94/RJT/2022 A.Y.2017-18 - 2 - 2. The only issue raised by the assessee is that the learned Principal CIT erred in holding the assessment framed under section 143(3) of the Act as erroneous insofar prejudicial to the interest of Revenue on account of non verification. 3. The facts in brief are that the assessee in the present case is private limited company and engaged in the business of providing Finance and Investment in shares. The assessee is also a shareholder in the companies namely M/s Hi Can Industries Ltd and M/s Radhe Renewable Energy Development Pvt Ltd. holding shares of 37.67% and 23.45% respectively in both the companies. 4. It was observed by the learned PCIT that M/s Radhe Renewable Energy Development vt. Ltd. has given loan of Rs. 32,43,513/- to M/s Hi Can Industries Ltd. which is deemed dividend within the provision of section 2(22)(e) of the Act in the hands of the assessee in the given facts and circumstances. 4.1 However, the Assessing Officer has not verified this fact during the assessment proceedings. Accordingly, the learned PCIT held that the Assessment Order framed by the Assessing Officer u/s 143(3) of the Act, is erroneous insofar prejudicial to the interest of Revenue. 5. Being aggrieved by the order of the learned PCIT, the assessee is in appeal before us. 6. The learned AR before us filed a paper books running from pages 1 to 24 and submitted that M/s Radhe Renewable Energy Development Pvt Ltd. has not given any loan to M/s Hi Can Industries Pvt. Ltd. as alleged by the learned PCIT. As per the Ld. AR M/s. Radhe Renewable Energy Development Pvt. Ltd. has shown the opening loans & advances given to M/s. Hi Can Industries Pvt. Ltd. for ITA No.94/RJT/2022 A.Y.2017-18 - 3 - Rs. 3,21,26,108/- against which it has received interest of Rs. 36,03,904/- including the amount of TDS amounting to Rs. 3,60,391/-. 6.1 The Ld. AR in support of his contention has drawn our attention to page 13 to 14 of paper book where the copies of ledger accounts of M/s Radhe Renewable Energy Development Pvt. Ltd. and M/s. Hi Can Industries Pvt. Ltd. in the respective books of accounts are placed. 7. On the other hand, the learned DR before us vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussions, we note that M/s Radhe Renewable Energy Development Pvt. Ltd. has not advanced any loan to M/s Hi Can Industries Pvt. Ltd. in the year under consideration as alleged by the learned PCIT. There was the opening balance of loan as submitted by the ld. AR for the assessee and M/s Hi Can Industries Pvt. Ltd. has paid interest to M/s. Radhe Renewable Energy Development pvt. ltd. The payment of interest represents the revenue transaction as against the observation of the learned PCIT who held the same as loans and advances. It has been consistently held by the various High Courts and the Tribunals that the business transactions are not covered by the provision of Section 2(22)(e) of the Act. The payments under business transaction are outside the purview of the provision of Section 2(22)(e) of the Act. Under the provisions of section 2(22)(e) of the IT Act, the legislature has used the expression “by way of advances or loans” which shows that it is not all the payments received from the sister company was to be treated as deemed dividend but only the payments which bear the characteristics of loans and advances are to be considered under the provisions of Section 2(22)(e) of the IT Act. ITA No.94/RJT/2022 A.Y.2017-18 - 4 - 8.2 We also note that all the above facts were verified by the Assessing Officer at the time of assessment proceedings. In holding the assessment order as erroneous insofar prejudicial to the interest of Revenue, the twin condition being erroneous in so far prejudicial to the interest of Revenue has to be satisfied. However, in the given facts none of the conditions as specified u/s 263 of the Act has been satisfied. It is for the reason that there was loan advanced by M/s Radhe Renewable Energy Development Pvt. Ltd. to M/s. Hi Can Industries Pvt. Ltd. in the year under consideration. Accordingly, we hold that the order passed u/s 263 of the Act by the learned PCIT is not sustainable. Therefore, we quash the same. Hence, the ground of appeal of the assessee is allowed. 9. In the result, the appeal filed by the assessee is allowed. This Order pronounced in Open Court on 01/07/2022. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot, Dated 01/07/2022 manish