M/S. LINDE INDIA LTD(FORMERLY BOC INDIA LTD) ,KOLKATA V. PCIT, KOL, KOLKATA

ITA 510/KOL/2023

AI Insights

The case involves an appeal by M/s. Linde India Ltd. against the revision order of the Ld. Pr. Commissioner of Income Tax, Kolkata-2, which deemed a loan of Rs. 100 Crore received from M/s. Linde Engineering India Private Limited as a deemed dividend under section 2(22)(e) of the Income Tax Act, 1961. The assessee contested this interpretation, citing the Special Bench decision in ACIT Vs. Bhaumik Colour (P) Ltd., which held that deemed dividend provisions apply only when the lendee is a shareholder of the lender company. The tribunal agreed with the assessee, noting that it was not a shareholder in M/s. LEIPL, and thus the loan could not be considered a deemed dividend.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33087 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Other Referred Cases: ACIT Vs. Bhaumik Colour (P) Ltd. 118 ITD 1 (Mum. SB), Apeejay Pvt. Ltd. in GA No. 1/2024 dated 01.05.2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN KISHORE
• Assessee Lawyers: KETAN VED; ALPESH GUPTA
• Keywords: Deemed dividend
• Section: 143(3); 263; 2(22)(e)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No. 510/KOL/2023 Assessment Year: 2016-17 M/s. Linde India Ltd. (formerly BOC India Ltd.) Oxygen House; P-43, Taratala Road, Kolkata-700 088. (PAN: AAACB 2528H) Vs. ASSESSING OFFICER, National e-assessment Centre Delhi. (Appellant) (Respondent) Present for: Appellant by : Shri Ketan Ved, AR & Shri Alpesh Gupta, AR Respondent by : Shri Praveen Kishore, CIT, DR Date of Hearing : 26.02.2025 Date of Pronouncement : 26.02.2025 O R D E R Per Bench : This is an appeal filed by the assessee against the revision order of the Ld. Pr. Commissioner of Income Tax , Kolkata-2 [hereinafter referred to as “the Ld. Pr. CIT”] vide order no. ITBA/REV/F/REV5/2022- 23/1051751459(1) dated 31.03.2023 passed u/s. 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2016-17. 2. Shri Ketan Ved, AR & Shri Alpesh Gupta, AR appeared on behalf of the assessee and Shri Praveen Kishore, CIT, DR appeared on behalf of the revenue. 3. It was submitted by the Ld. AR that the assessee company had received a loan of Rs.100 Crore from M/s. Linde Engineering India Private 2 ITA No. 510/Kol/2023 M/s. Linde India Ltd. AY: 2016-17 Limited (M/s. LEIPL). It was the submission that the original assessment in the case of the assessee came to be completed u/s. 143(3) of the Act on 30.03.2021. The Ld. Pr. CIT invoked his powers u/s. 263 of the Act and issued a show cause notice on 16.03.2023 wherein the Ld. Pr. CIT has raised the issue that the loan received by the assessee from M/s. LEIPL and M/s. Linde India Ltd. (M/s. LIL) being fellow subsidiary of the holding company M/s. Linde AG (Germany) was deemed dividend. It was submitted by the Ld. AR that as per the decision of the Special Bench of the ITAT in the case of ACIT Vs. Bhaumik Colour (P) Ltd. 118 ITD 1 (Mum. SB), deemed dividend was liable to be taxed only when the lendee is the shareholder of the lender company. It was a submission that in the present case the assessee is not a shareholder of M/s. LEIPL. It was thus submitted that in view of the decision of the Hon’ble Special Bench of the ITAT in the case of Bhaumik Colour (P) Ltd. (supra), the loan received by the assessee of Rs. 100 Crore is not hit by the provisions of deemed dividend u/s. 2(22)(e) of the Act. It was a further submission that the principles laid down by the Hon’ble Special Bench of the ITAT in the case of Bhaumik Colour (P) Ltd. (supra) have been approved by the Hon’ble jurisdictional Calcutta High Court in the case of Apeejay Pvt. Ltd. in GA No. 1/2024 dated 01.05.2024. It was the prayer that the order passed u/s. 263 of the Act was in itself erroneous and is liable to be quashed. 4. In reply, the Ld. CIT, DR vehemently supported the order of the Ld. Pr. CIT. It was the submission that loans have been given between shareholding by jugglery of the accounts and, therefore, sec. 2(22)(e) of the Act should be made applicable. 5. We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the assessee is not a shareholder of M/s. LEIPL, who has given the loan of Rs. 100 Crore to the assessee. As this fact remains uncontroverted and as the principles laid down by the Hon’ble Special Bench of the ITAT in the case of Bhaumik Colour (P) Ltd. 3 ITA No. 510/Kol/2023 M/s. Linde India Ltd. AY: 2016-17 (supra) is squarely applicable and the same have also been upheld by the Hon’ble jurisdictional Calcutta High Court in the case of Apeejay Pvt. Ltd. (supra), therefore, the loan of Rs. 100 Crore cannot be treated as deemed dividend. It is found that the order passed u/s. 263 of the Act by the Ld. Pr. CIT, Kolkata-2 is unsustainable and the same is hereby quashed. 6. In the result, the appeal of assessee is allowed. Order pronounced in the open court. Sd/- Sd/- (Rakesh Mishra) (George Mathan) Accountant Member Judicial Member Dated: 26th February, 2025 JD, Sr. P.S. Copy to: 1. The Appellant: M/s. Linde India Ltd. (formerly BOC India Ltd.) 1. The Respondent. ASSESSING OFFICER, National e-assessment Centre Delhi. 2. Pr. CIT(A), Kolkata-2. 3. DR, ITAT, Kolkata Bench, Kolkata 4. Guard file. True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "