HUBTOWN LTD, MUMBAI V. DCIT CEN CIR 36, MUMBAI

ITA 969/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8114 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 09-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Keywords: Deemed dividend

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BE NCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.969/MUM/2013 ( / ASSESSMENT YEAR : 2009-10 M/S. HUBTOWN LTD., 2 ND FLOOR, HUBTOWN SOLARIS, N.S. PHADKE MARG, ANDHERI (E), MUMBAI-400 069 / VS. THE DY. CIT, CENTRAL CIRCLE-36, AAYAKAR BHAVAN, MUMBAI-400 020 ./ ! ./ PAN/GIR NO. : AAACA 6101D ( ' / APPELLANT ) .. ( #$' / RESPONDENT ) ' % / APPELLANT BY: SHRI VIJAY MEHTA SHRI ANUJ KISNADWALA #$' & % / RESPONDENT BY: SHRI VIJAY KUMAR BORA & '( / DATE OF HEARING : 09.10.2014 )* & '( / DATE OF PRONOUNCEMENT :17.10.2014 +, / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-41, MUMBAI DT.29.11.2012 PERTAINING TO A.Y.2 009-10. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,01,73,176/- MADE BY THE AO U/S. 2(22)(E) OF THE ACT. ITA NO. 969/M/2013 2 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, ON PERUSAL OF THE LEDGER ACCOUNTS OF THE VARIOUS SIST ER CONCERNS OF THE ASSESSEE IN ITS BOOKS FOR THE YEAR, THE AO OBSERVED THAT THE FOLLOWING FACTUAL FIGURES: SR. NO. NAME OF COMPANY FROM WHICH LOAN RECEIVED PERCENTAGE HOLDING LOAN RECD. DURING THE YEAR ACCUMULATED PROFIT OF THE COMPANY GIVING LOAN DEEMED DIVIDEND OFFERED IN EARLIER YEARS DEEMED DIVIDEND FOR THE YEAR 1. PUSPHAK HEALTH CARE SERVICES PVT LTD. 79.60% 10,488,197 15,060 0 15,060 2. SHESHAN HOUSING & AREA DEV. ENG. LTD. 100% 10,343,263 4,682,518 0 4,682,518 3. VISHAL NIRMAN (INDIA) LTD. 50.02% 6,099.119 5,822,092 346,494 5,475,598 4. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE PROVIS IONS OF SEC. 2(22)(E) OF THE ACT SHOULD NOT BE INVOKED IN RESPEC T OF THE AFOREMENTIONED FINDINGS. IT WAS EXPLAINED THAT THE ASSESSEE IS IN THE LINE OF BUSINESS WHERE NUMBER OF SUBSIDIARIES OR GROUP C OMPANIES HAVE INCORPORATED. EACH SUBSIDIARY COMPANY/GROUP COMPAN Y IS A PROJECT SPECIFIC. TRANSACTIONS WITH THESE COMPANIES ARE IN THE NATURE OF CURRENT ACCOUNT AND FOR THE PURPOSE OF THE BUSINESS ADVANCE MENT FOR THE MUTUAL BENEFITS, THEREFORE, THE SAME CANNOT BE TREATED AS DEEMED DIVIDEND. THIS CONTENTION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO WHO WAS OF THE FIRM BELIEF THAT PROVISIONS OF SEC. 2(22)(E) SQUARE LY APPLY ON THE FACTS OF THE CASE. THE AO TREATED THE AMOUNT OF RS. 1,01,73 ,176/- AS TEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. 5. AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE TH E LD. CIT(A) BUT WITHOUT ANY SUCCESS. BEFORE THE LD. CIT(A), THE AS SESSEE RELIED UPON THE DECISION OF THE TRIBUNAL IN ITS OWN CASE FOR ASSESS MENT YEAR 2004-05 IN ITA NO. 4872/M/09 DT. 25.8.2010. THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE TRIBUNAL CHENNAI BENCH IN THE CASE OF FARIDA HOLDINGS ITA NO. 969/M/2013 3 PVT. LTD. 51 SOT 452. THE LD. CIT(A) AFTER CONSID ERING THE FACTS, SUBMISSIONS AND THE JUDICIAL DECISIONS RELIED UPON BY THE ASSESSEE OBSERVED THAT THE DECISION IN ALL THE CASES RELIED UPON BY THE ASSESSEE ARE BASED ON THE FINDING THAT THE AMOUNTS WERE NOT IN T HE NATURE OF LOANS AND ADVANCES AND THAT THE TRANSACTIONS BETWEEN THE COMP ANIES WERE IN THE NATURE OF CURRENT ACCOUNT TRANSACTIONS. THE LD. CI T(A) ACCORDINGLY CONFIRMED THE FINDINGS OF THE AO. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE LD. CIT(A) HAS NOT FOLLOWED THE ORDER OF THE TRIBUNAL F OR A.Y. 2004-05 IN ASSESSEES OWN CASE STATING THAT FACTS ARE DISTINGU ISHABLE. IT IS THE SAY OF THE LD. COUNSEL THAT BEFORE COMING TO THIS CONCLUSI ON, THE LD. CIT(A) NEVER ASKED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM VIS--VIS FACTS OF A.Y. 2008-09. THE LD. COUNSEL FURTHER STATED THAT IF TH E LD. CIT(A) HAD GIVEN THE ASSESSEE AN OPPORTUNITY, THE ASSESSEE WOULD HAV E CLARIFIED THE FACTS AND ISSUES BY FURNISHING NECESSARY DETAILS. 7. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENT ION TO THE RELEVANT DOCUMENTS TO SUBSTANTIATE THE CLAIM THAT THE TRANSA CTIONS BETWEEN THE ASSESSEE AND THE COMPANIES ARE FOR COMMERCIAL REASO NS. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OBJECTED TO THE ADMISSION OF THE ADDITIONAL PLEA VIS--VIS A DDITIONAL EVIDENCES AND STATED THAT FINDINGS OF THE LD. CIT(A) NEED TO BE C ONFIRMED. 9. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CARE FULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNTENABLE FACT THAT THE LD. CIT(A) NEVER ASKED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM VIS--VIS FACTS OF A.Y. 2008-09. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THE MATTER BACK TO THE FILES OF THE LD. CIT(A). THE LD. CIT(A ) IS DIRECTED TO ITA NO. 969/M/2013 4 CONSIDER THE TRANSACTIONS BETWEEN THE ASSESSEE AND THE RELATED COMPANIES AND DECIDE AFRESH WHETHER THE TRANSACTIONS ARE FOR COMMERCIAL REASONS AND IF FOUND CORRECT, THEN THE FINDINGS OF THE TRIB UNAL IN A.Y. 2008-09 WOULD SQUARELY APPLY. THE ASSESSEE IS DIRECTED TO EXPLAIN ITS CASE IN THE LIGHT OF THE FACTS NARRATED BEFORE US VIS--VIS FAC TS OF A.Y. 2008-09. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2014 SD/- SD/- (JOGINDER SINGH ) (N.K. BILLAIYA) + / JUDICIAL MEMBER + / ACCOUNTANT MEMBER MUMBAI; -+ DATED : 17.10.2014 . . ./ RJ , SR. PS +, +, +, +, & && & #'. #'. #'. #'. /.' /.' /.' /.' / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. .12 #' , , / DR, ITAT, MUMBAI 6. 23 4 / GUARD FILE. +, +, +, +, / BY ORDER, $.' #' //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI