Sh. Vinay Singal, Ludhiana V. ACIT, Ludhiana

ITA 97/CHANDI/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0446 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ASHAWNI KUMAR
• Keywords: Deemed dividend
• Section: 2(22)(e); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! . .., # $, %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 97/CHD/2013 / ASSESSMENT YEAR : 2008-09 SH. VINAY SINGAL, C/O EASTMAN IMPEX, INDL AREA-C SUA ROAD, DHANDARI KALAN, LUDHIANA THE ACIT, CIRCLE-V, KURUKSHETRA ./PAN NO: ADVPS8356H / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. ASHAWNI KUMAR,CA ' ! / REVENUE BY : SH. MANJIT SINGH, SR.DR # $ % /DATE OF HEARING : 28.11.2018 &'() % / DATE OF PRONOUNCEMENT : 28.11. 2018 %'/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 28.12.2012 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-II, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDER PASSED U/S 250(6) OF THE INCOME-T AX ACT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN A S MUCH AS THE LD. CIT(A) WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ADDITION OF RS. 10,60,000/- MADE BY THE LD. ASSESSING OFFICER BY RESORT TO PROVISIONS OF SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961. 2. THAT HE WAS FURTHER NOT JUSTIFIED TO ARBITRARILY UPHOLD A DISALLOWANCE OF RS. 23,92,670/- MADE BY ITA NO. 97/CHD/2013- SH. VINAY SINGAL, LUDHIANA 2 THE LD. ASSESSING OFFICER OUT OF INTEREST ACCOUNT B Y RESORT TO PROVISIONS OF SECTION 36(I)(III). 3. THAT HE WAS ALSO NOT JUSTIFIED TO ARBITRARILY UP HOLD THE DISALLOWANCE OF RS. 10,29,664/- OUT OF INTEREST ACCOUNT BY RESORT THE PROVISIONS OF SECITON14A. 3. GROUND NO.1 IS AGAINST THE CONFORMATION OF ADDITION ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AMOUNTING TO RS. 10,60,000/-. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS REPRODUCED BEFORE US A COPY OF THE ACCOUNT OF THE ASSESSEE WITH THE C OMPANY NAMELY M/S JANPATH ESTATES PVT LTD. IN WHICH THE ASSESSEE ADMI TTEDLY HAS SUBSTANTIAL INTEREST. THE LD. COUNSEL FOR THE ASSESSEE HAS DEM ONSTRATED FROM THE ACCOUNT SHEET THAT IT IS NOT A CASE OF LOAN OR ADVA NCE FROM THE COMPANY AS SUCH, RATHER, THE ASSESSEE WAS HAVING A RUNNING ACC OUNT WITH THE SAID COMPANY AND OFTEN THERE WAS A CREDIT BALANCE OF THE ASSESSEE TOWARDS THE COMPANY. IT WAS ON A PARTICULAR DAY THAT SOME AMOU NT WAS FOUND DEBITED IN THE ACCOUNT OF THE ASSESSEE, HOWEVER, IMMEDIATEL Y WITHIN NEXT 10 DAYS THERE WAS AGAIN A CREDIT BALANCE OF THE ASSESSEE TO WARDS THE COMPANY. IN THE END OF THE YEAR, THERE WAS A CREDIT BALANCE OF RS. 4.26 CRORES OF THE ASSESSEE TOWARDS THE COMPANY. AFTER PERUSAL OF THE ABOVE STATEMENT OF RECORD, WHICH THE LD. DR COULD NOT REBUT, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT A TTRACTED IN THIS CASE. IN VIEW OF OUR ABOVE DISCUSSION, DISALLOWANCE MADE BY THE LOWER AUTHORITIES ON THIS ISSUE IS ORDERED TO BE DELETED. 5 . GROUND NO.2 : VIDE GROUND NO.2, THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF RS. 23,92,670/- MADE BY THE ASSESSI NG OFFICER OUT OF THE ITA NO. 97/CHD/2013- SH. VINAY SINGAL, LUDHIANA 3 INTEREST EXPENDITURE BY RESORT TO THE PROVISIONS OF SECTION 36(I)(III) OF THE ACT. 6. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TOTAL AMOUNT ADVANCED BY THE ASSESSEE WAS RS. 3.79 CORES, WHEREAS, THE ASSESSEES OWN CAPITAL ON THE DATE OF ADVANCEMENT W AS RS. 13.77 CRORES, WHICH MEANS THE ASSESSEE WAS POSSESSED OF SUFFICIEN T FUNDS TO MEET THE AFORESAID INTEREST FREE ADVANCE. A PERUSAL OF THE O RDERS OF THE LOWER AUTHORITIES REVEALS THAT HIS FACT HAS NOT BEEN DISP UTED BY THEM. IN VIEW OF THIS, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT VS. KAPSON ASSOCIATES (2016) 381 ITR 204 (P&H) , AND FURTHER BY THE RECENT DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. JANAK GLOBAL RESOURCES PVT LTD ITA NO. 470/CHD/201 8 ORDER DATED 16.10.2018. ACCORDINGLY, THE DISALLOWANCE MADE B Y THE LOWER AUTHORITIES IS ORDERED TO BE DELETED. 7. GROUND NO.3 : THE ISSUE TAKEN BY THE ASSESSEE IN GROUND NO.3 IS REGARDING DISALLOWANCE OUT OF INTEREST EXPENDITURE U/S 14A OF THE ACT. AS NOTED ABOVE, SINCE THE ASSESSEE HAS DEMONSTRATED THAT HE WAS POSSESSED OF OWN SUFFICIENT FUNDS, HENCE, APPLYING THE SAME ANALOGY AS DISCUSSED ABOVE, NO DISALLOWANCE U/S 14A OF THE ACT ON ACCOUNT OF INTEREST EXPENDITURE IS WARRANTED. ADMITTEDLY THE ASSESSEE H AS NOT CLAIMED ANY OTHER EXPENDITURE IN RESPECT OF ADMINISTRATIVE EXPE NSES; HENCE, NO DISALLOWANCE CAN BE MADE IN THAT RESPECT ALSO. THIS ISSUE IS ALSO ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO. 97/CHD/2013- SH. VINAY SINGAL, LUDHIANA 4 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- ( . . , # $ / B.R.R. KUMAR) %& / ACCOUNTANT MEMBER ( / SANJAY GARG ) / JUDICIAL MEMBER DATED : 28.11 .2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR