ITO, Ward - 7(2), Kolkata, Kolkata V. M/s. Prakritik Products & Enterprises Pvt. Ltd., Kolkata

ITA 968/KOL/2011

• Counselvise Citation: 96823514 RSA 2011
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: V N PUROHIT
• Keywords: Deemed dividend

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . . , ,, , . . ! ! ! ! . , '# '# '# '# ] [BEFORE SHRI N. VIJAYA KUMARAN, JM & SHRI C. D. RAO, A.M.] $ $ $ $ / I.T.A NO.968/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER/WARD-7(2) -VS.- M/S. P RAKRITIK PRODUCTS & ENTERPRISES (P) LTD. KOLKATA. KOLKATA [PAN : AACCP 7492 E]. [ *+ *+ *+ *+ /APPELLANT ] ]] ] [ -.*+ -.*+ -.*+ -.*+/ // / RESPONDENT ] ]] ] *+ *+ *+ *+ / FOR THE APPELLANT : SHRI S. K. ROY -.*+ -.*+ -.*+ -.*+ / FOR THE RESPONDENT : SHRI V. N. PUROHIT / 0 !# / 0 !# / 0 !# / 0 !# /DATE OF HEARING : 09. 11. 2011 1' 0 !# 1' 0 !# 1' 0 !# 1' 0 !# /DATE OF PRONOUNCEMENT : 18.11.2011 '2 /ORDER . . . . , PER N. VIJAYA KUMARAN, J. M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST ORDER OF LD. CIT(A)-VIII, KOLKATA DATED 25.03.2011 FOR ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER :- (1) THAT LD. CIT(A)-VIII, KOLKATA HAS E RRED IN LAW IN DELETING THE ADDITION OF RS.25,20,000/- MADE BY THE A.O. AS DEEMED DIVIDEND , U/S. 2(22)(E) OF THE I.T. ACT 1961 ON THE GROUNDS THAT DEEMED DIVIDE ND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER AND NOT IN THE HANDS OF THE PERSON OTHER THAN THE SHAREHOLDERS . (2) THAT THE LD. CIT(A)-VII, KOLKATA HAS ERRED IN CONTRADICTING THE VIEW TAKEN BY THE BOARD VIDE CIRCULAR NO.495 DATED 22.09 .1987 IN WHICH THE BOARD HAS STATED THAT DEEMED DIVIDEND WOULD BE TAXE D IN THE HANDS OF A CONCERN, EVEN OTHER THAN A SHAREHOLDER, WHERE ALL THE CONDITIONS ARE SATISFIED. 3. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE GR OUNDS AS WELL AS FINDINGS OF THE ASSESSING OFFICER. [ ITA NO. 968/KOL/2011] 2 4. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS ADMITTEDLY COVERED BY THE DECISION OF THE SPECIAL BENCH, MUMBA I IN THE CASE OF ACIT VS. BHAUMIK COLOUR (P) LTD. [2009] 118 ITD 1 (SB) (MUMBAI) AND THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. 318 ITR 406 (DELHI) 5. THE FACTS THAT THE ASSESSEE-COMPANY HAD SOME LOA N TRANSACTIONS TO THE TUNE OF RS.29.00 LAKHS WITH M/S. ECO PROPERTIES PVT. LIMITED. LD. CI T(A) FOUND THAT ASSESSEE-COMPANY IS NOT A HOLDER OF 10% SHARE CAPITAL IN M/S. ECO PROPERTIES PVT. LIMITED AND THE ADVANCE WAS NOT GIVEN TO A SHAREHOLDER OR TO A CONCERN IN WHICH SUCH A SHARE H OLDER IS A MEMBER OR PARTNER HAVING SUBSTANTIAL BENEFICIAL INTEREST. ON THE ABOVE REASONING, LD. CI T(A) FOUND THAT THE ADDITION MADE BY THE ASSESSING OFFICER AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT IS REQUIRED TO BE DELETED. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE DECISION OF SPECIAL BENCH IN THE CASE OF BHAUMIK COLOUR (P) LTD. (SUPRA) WHEREIN THE TRIBUNA L HELD THAT DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HAND OF THE PERSON WHO IS A SHAREHOLDER OF THE LENDER AND NOT IN THE HANDS OF THE PERSON OTHER THAN THE SHAREHOLDERS. LD. CIT(A) CATEGORICAL LY FOUND THAT ASSESSEE-COMPANY IS NOT A HOLDER OF 10% OR MORE SHARE PROPERTIES IN M/S. ECO PROPER TIES PVT. LIMITED WHICH MADE THE ADVANCE. FURTHER, IT IS ALSO ESTABLISHED THAT ASSESSEE-COMPA NY IS HAVING BELOW 10% SHARE IN M/S. ECO PROPERTIES PVT. LIMITED. UNDER THE ABOVE CIRCUMSTAN CES, WE AGREE WITH THE FINDINGS OF THE LD. CIT(A) AND RESPECTFULLY, FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF BHAUMIK COLOUR (P) LTD. (SUPRA), WE CONFIRM THE ORDER OF LD. CIT(A) 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. '2 '2 '2 '2 #' #' #' #' 3 4 56 3 4 56 3 4 56 3 4 56 !# !# !# !# ORDER PRONOUNCED IN THE COURT ON 18.11.2011. SD/- SD/- [ . .. . 7 7 7 7. .. .'58 '58 '58 '58 , '# '# '# '# ] [ . . . . , ,, , ] [ C. D. RAO ] [ N. VIJAY AKUMARAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER D ATED : 18TH NOVEMBER, 2011. [ ITA NO. 968/KOL/2011] 3 '2 0 -%% 9''/ COPY OF THE ORDER FORWARDED TO: 1. *+ /APPELLANT : INCOME TAX OFFICER, WARD-7(2), AAYAKA R BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069. 2 . -.*+ / RESPONDENT : M/S. PRAKRITIK PRODUCTS & ENTERPRISES (P) LTD. , AZIMGUNJ HOUSE, 7, CAMAC STREET, KOLKATA-700 017. 3. %2 - / CIT, 4. %2 ()/ CIT(A), KOLKATA. 5. 7%4 -%/ DR, KOLKATA BENCHES, KOLKATA [. -%/ TRUE COPY] '2/ BY ORDER, /ASSTT. REGISTRAR [KKC BC %D %E /SR.PS]