The Deputy Commissioner of Income Tax, Central Circle, Panaji., Panaji V. M/s Britto Amusement Pvt. Ltd., Panaji

ITSSA 3/PAN/2016

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2283 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Deemed dividend
• Section: 260A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER IT (SS) A NO. 03 /P A N/201 6 (ASST. YEAR : 200 8 - 0 9 ) DCIT, CENTRAL CIRCLE, PANAJI GOA. VS. M/S. BRITTO AMUSEMENT PVT. LTD., 184 - 189, VAINGUINIM VALLEY, MACHADOS COVE, DONA PAULA, GOA . PAN NO. AABCB 1813 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDIP BHANDARE C A DEPARTMENT BY : SHRI R.N. SIDDAPPAJI - D R DATE OF HEARING : 28 / 0 7 /201 6 . DATE OF PRONOUNCEMENT : 28 / 0 7 /201 6 . O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , PANAJI , DATED 30 / 1 0/201 5 . 2. GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND OF 70,13,284/ - UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER OBSERVED THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERAT ION M/S. GOA GOLF CLUB PVT. LTD. HAS ADVANCED LOAN TO M/S. BRITTO 2 IT(SS)A NO. 03/PAN/2016 AMUSEMENTS PVT. LTD. I.E. ASSESSEE OF 11,71,91,062/ - . M/S. GOA GOLF CLUB PVT. LTD . WAS HAVING SHARE HOLDING OF 48% APPROXIMATELY IN M/S. BRITTO AMUSEMENTS PVT. LTD. THE OTHER SHAREHOLDERS OF M/S. BRITTO AMUSEMENTS PVT. LTD. HOLDING A SHARE OF MORE 10% EACH ARE DR.WILLIAM BRITTO AND HIS WIFE MRS. MURIEL BRITTO . THEREFORE, HE HELD THAT THE ADVANCE TO THE EXTENT OF ACCUMULATED PROFITS CONSTITUTES DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 AND MADE THE ADDITION OF 70,13,284/ - TO THE INCOME OF THE ASSESSEE. 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) O BSERVED THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF IN ITA NO. 53/PNJ/2012 IN THE ASSESSMENT YEAR 2003 - 04 ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. UNIVERSAL MEDICATE (P) LTD. (2010) 190 TAXMAN 144 (BOM.) OBSERVING THAT DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS OF A PERSON , WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER AND ALSO THAT THE EXPRESS ION SHAREHOLDER REFERRED TO IN SECTION 2(22)(E) REFERS TO SHAREHOLDER, WHO IS BOTH A REGISTERED SHAREHOLDER AND A BENEFICIAL SHAREHOLDER. HE, THEREFORE, FOLLOWING THE SAME, DELETED THE ADDITION IN THE YEAR UNDER APPEAL ALSO. 5. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 6 . AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED BEFORE US A COPY OF THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY AT GOA IN ASSESSEES OWN CASE PASSED IN THE ASSESSMENT YEAR 2003 - 04 WHEREIN , THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL OBSERVING THAT THE ASSESSEE DOES NOT HO LD SHARES IN M/S. GOA GOLD CLUB PVT. LTD. AND THAT DR . WILLIAM BRITTO AND HIS WIFE MRS. MURIEL BRITTO ARE THE SHAREHOLDER S OF 3 IT(SS)A NO. 03/PAN/2016 M/S. GOA GOLD CLUB PVT. LTD. HA VING 75% & 25% SHARE HOLDING WHILE DR.WILLIAM BRITTO AND M/S. M/S. GOA GOLD CLUB PVT. LTD. ARE THE SHAREHOLDERS OF THE ASSESSEE COMPANY HAVING 26%, 26% & 48% SHAREHOLDING RESPECTIVELY . THUS, AS THE ASSESSEE COMPANY IS NOT A SHAREHOLDER OF M/S. GOA GOLD CLUB PVT. LTD., THEREFORE, THERE CANNOT BE ASSESSMEN T OF DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE UNDER SECTION 2(22)(E). THUS, WE FIND THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS INCONFORMITY WITH THE ORDER OF THE HONBLE BOMBAY HIGH COURT AT GOA, HENCE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMI SSED. 7 . IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF 6 CRORES MADE TOWARDS GAMBLING DEBTS TREATED AS UNDISCLOSED INCOME. 8 . THE ACIT (H.QRS.) FOR PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) , BENGALURU , SHRI C. DHARANI NATH HAS FILED A LETTER DATED 30/05/2016 BEARING F.NO. PR. CIT(C)/BAPL - ITAT/2016 - 17 WHI C H READS AS UNDER: - 2 . THE 2 ND AMOUNT OF RS.6.00 CRORE S WAS PAID IN 2 NSTA1MENTS OF RS.3.00 CRORES EACH ON 29.02.2003 & 25.03.2008 TO DR.WILLIAM BRITTO. IT IS IN RESPECT OF THE 2ND AMOUNT OF RS.6.00 CRORES THAT THE CIT(APPEALS) ADMITTED ADDITIONAL EVIDENCE, BEING THE CONSENT DECREE OF THE CIVIL COURT DATED 20 .09.2015, WHICH WAS IN CLEAR VIOLATION OF RULE 49A. THE CIT(APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE BASED ON SUCH ADDITIONAL EVIDENCE. THIS AMOUNT WAS ORIGINALLY ASSESSED AS INCOME OF THE A SSESSEE M/ S B RITTO AMUSEMENTS PVT. L TD. TREATING THE SAME AS GA MBLING DEBT. THIS STAND WAS SUPPOR T ED BY THE AFFIDAVI T SUB MITTED BY DR. WILLIAM BRITTO IN THE COURT PROCEEDING STATING THAT HE IS NOT LIABLE TO PAY THE AMOUNT OF RS 6.00 C R ORES AS THE SAME WAS ALREADY SPENT BY 4 IT(SS)A NO. 03/PAN/2016 HIM ON THE GAMBLING DEBTS OF SRI N.SURYANARAY ANA SINCE M/S.BRITTO AMUSEMENTS PVT. LTD. WAS RUNNING THE BUSINESS OF GAMBLING. VIDE ORDER U/S 263 DATED 28.03.2014, THE CIT(CENTRAL), BANGALORE, HAD DIRECTED THE A.O. TO CONSIDER THE SUM OF RS.6.00 CRORES DEPOSITED IN THE BANK ACCOUNT OF DR. WILLIAM BRIT TO, IN ACCORDANCE WITH LAW, IN THE HANDS OF DR. WILLIAM BRITTO. ON APPEAL TO THE ITAT AGAINST THE ORDER U/S 263 DATED 28.03.2014, THE ITAT, VIDE ITS ORDER DATED 23.01.2015 ALLOWED THE APPEAL OF THE ASSESSEE DR. WILLIAM BRITTO. IT IS ALSO OBSERVED THAT AN A PPEAL U/S 260A HAS BEEN PREFERRED BEFORE THE HIGH C OURT OF BOMBAY A T PANAJI, GOA, AGAINST THE ORDER OF THE ITAT DATED 23.01.2015 IN THE CASE OF DR. WILLIAM BRITTO. THE APPEAL OF THE DEPARTMENT U/S 260A IS PENDING BEFORE THE HIGH COURT OF BOMBAY, AT PANAJI, GOA. IN LIGHT OF THE PENDING APPEAL U/S 260A IN THE CASE OF DR. WILLIAM BRITTO, THE ISSUE OF TAXABILITY OF THIS AMOUNT OF RS.6.00 CRORES IN THE HANDS OF THE COMPANY M/S. BRITTO AMUSEMENTS PVT. LTD., MAY NOT BE REQUIRED TO BE PRESSED FOR, THOUGH TH E CIT(APPEALS) ADMITTED ADDITIONAL EVIDENCE IN VIOLATION OF RULE 49A. FURTHER, BASED ON THE ORDER OF THE CIVIL COURT DATED 20.09.2014, THE ASSESSMENT OF DR. WILLIAM BRITTO FOR AY 2015 - 1 6 HAS BEEN REOPENED TO BRING TO TAX THE AMOUNT OF RS.5.00 CRORES ON AC COUNT OF CESSATION OF LIABILITY. 9. IN VIEW OF THE ABOVE, WE DISMISS THIS GROUND OF APPEAL OF THE R E V E NUE AS NOT PRESSED . 10 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON THURSDAY , THE 28 TH DAY OF JU LY , 201 6 AT GOA. S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH JU LY , 201 6 . 5 IT(SS)A NO. 03/PAN/2016 VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI .