M/s Zygo Bonsai Pvt.Ltd., Bangalore V. Income Tax Officer, Ward-7(1)(4), Bangalore

MA 301/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6854 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 10-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR AJEET
• Assessee Lawyers: RAGHAVENDRA CHAKRABORTHY
• Keywords: Deemed dividend
• Section: 2(22)(e); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER M P NO.301/BANG/2018 (IN ITA. NO. 2231 /BANG/201 6) (ASSESSMENT YEAR: 20 12 - 13 ) M/S. ZYGO BONSAI P. LTD., SY.NO. 21, KOLLUR VILLAGE, ANTHARAHALLI POST, DODDABALLAPUR, BANGALORE - 561 203 .APPELLANT VS. INCOME TAX OFFICER, WARD 7(1)(4), BANGALORE. RESPONDENT. PETITIONER BY: SHRI RAGHAVENDRA CHAKRABORTHY, CA REVENUE BY: SHRI KUMAR AJEET, ADDL. CIT (D.R) DATE OF HEARING : 01.11 .20 19 DATE OF PRONOUNCEMENT : 27.01 .20 20 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED THIS MISC. PETITION SUBMITTING THAT THERE ARE MISTAKES APPARENT FROM RECORD IN THE ORDER DT.12.06.2018 PAS S ED IN ITA NO.2231/BANG/2016 FOR THE ASST. YEAR 2012 - 13. 2. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ISSUE THAT WAS CONSIDERED BY THE TRIBUNAL RELATED TO TAXABILITY OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSEE COMPANY H AD TAKEN A LOAN OF RS.1,83,70,000/ - FROM ANOTHER COMPANY NAMED M/S. 2 M P NO.301/BANG/2018 SHREE HANUMAN JUTE MILLS PRIVATE LIMITED. THE ASSESSEE HEREIN IS NOT A SHAREHOLDER IN THE COMPANY WHICH LENT LOAN TO THE ASSESSEE. HOWEVER, T HE ABOVE SAID LOAN OF RS.1,83,70,000 / - WAS ASSESSED IN THE HANDS OF THE ASSESSEE AS DEEMED DI VIDEND UNDER SECTION 2(22)(E) OF THE ACT. THE SHAREHOLDERS OF THE A SSESSEE COMPANY ARE SHRI HEMANT KUMAR JALAN HOLDING 98% OF THE SHARES AND SMT. ANUSHREE JALAN HOLDING 2% OF THE SHARES. 3 . HOWEVER IN PARA GRAPH 2 OF THE ORDER, THE TRIBUNAL HAS OBSERVED T HAT THE 2% OF THE SHARES IN THE ASSESSEE COMPANY ARE HELD BY M/S. SHREE HANUMAN JUTE MILLS PRIVATE LIMITED , I.E., THE COMPANY WHICH HAS LENT MONEY TO THE ASSESSEE. THIS OBSERVATION OF THE TRIBUNAL IS F ACTUALLY INCORRECT AND SAME REQUIRES RECTIFICATION. 4 . THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT SHRI HEMANTH KUMAR JALAN ALSO HOLD 19.89% OF THE SHARES IN M/S. SHREE HANUMAN JUTE MILLS PRIVATE LIMITED. HENCE SHRI HEMANTH KUMAR JALAN IS A COMMON SHARE HOLDER IN ASSESSEE COMPANY AND IN M/S. SHREE HANUMAN JUTE MILLS PRIVATE LIMITED. HENCE THE ASSESSING OFFICER HAD ASSESSED THE LOAN RECEIVED BY THE ASSESSEE COMPANY FROM M/S. SHREE HANUMAN JUTE MILLS PRIVATE LIMITED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY . THE HON'BLE ITA T ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY FOLLOWING THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF GOPAL & SONS (HUF) VS.CIT (2017) 77 TAXMAN.COM 71. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD PLACED RELIANCE BEFORE THE TRIBUNAL ON THE DECISION S RENDERED BY HON'BLE JURISDICTIONAL HIGH COURT OF KARNATAKA IN THE CASE OF CCIT VS. SARVA EQUITY PVT. LTD. 225 TAXMAN 172 AND CIT VS. KARNATAKA TURNED COMPONENTS PVT. LTD. 229 TAXMAN 465 (KAR). THE ITAT HOWEVER HAS NOT DEALT WITH THE ABOVE SAID DECISIONS IN ITS ORDER , EVEN THOUGH A MENTION WAS MADE ABOUT M/S S A RVA EQUITY P LTD (SUPRA) . HE SUBMITTED THAT NON - CONSIDERATION OF DECISIONS RENDERED BY JURISDICTIONAL HIGH COURT IS A MISTAKE APPARENT FROM RECORD. 3 M P NO.301/BANG/2018 6. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE TRIBUNAL HAS HOWEVER PLACED RELIANCE ON THE DECISION RENDERED IN THE C ASE OF GOPALAN & SONS (HUF) VS. CIT (SUPRA) , WHICH WAS RENDERED ON DIFFERENT SET OF FACTS AND HENCE THE SAME IS NOT APPLICABLE TO THE FACTS PREVAILING IN THE PRESENT CASE. H E SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MADHUR HOUSING A ND DEVELOPMENT CO. (2018) 401 ITR 152 (SC) HAS HELD IN CLEAR TERMS THAT THE ASSESSEE COMPANY , NOT BEING SHARE HOLDER OF THE COMPANY WHICH GAVE THE LOAN, THE LOAN , WAS NOT ASSESSABLE AS DEEMED DIVIDEND IN THE ASSESSEE COMPANY 'S HANDS. THE HON'BLE ITAT HAS NOT CONSIDERED THE ABOVE SAID DECISION RENDERED BY HON'BLE SUPREME COURT WHICH WAS AVAILABLE AS ON THE DAY WHEN T HE ORDER OF TRIBUNAL WAS PASSED, WHICH RESULTS IN A MISTAKE APPARENT FROM RECORD. 7. THE LEARNED AUTHORISED REPRESENTATIVE ACCORDINGLY SU BMITTE D THAT NON - CONSIDERATION OF BINDING DECISION S OF JURISDICTIONAL KARNATAKA HIGH COURT AND HON'BLE SUPREME COURT CONSTITUTE MISTAKE APPARENT ON RECORD AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227 (SC). ACCORDINGLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE IMPUGNED ORDER OF TRIBUNAL DT.12.06.2018 DESERVES TO BE RECALLED. 8. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE TRIBUNAL HAS PASSED A RE A SONED ORDER BY FOLLOWING THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF GOPALAN & SONS (HUF) VS. CIT (SUPRA) AND HENCE THERE IS NO MISTAKE APPARENT FROM THE RECORD. 9 . WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. AS SUBMITTED BY LEARNED AUTHORISED REPRESENTATIVE , THE TRIBUNAL HAS RENDERED ITS DECISION BY FOLLOWING THE ORDER PASSED BY HON'BLE SUPREME COURT IN THE CASE OF GOPALAN & SONS (HUF) VS. CIT (SUPRA). EVEN THOUGH THE TRIBUNAL HAS NOTED DOWN THE DECISION RENDERED BY HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF SARVA EQUITY PVT. LTD (SUPRA), YET T HE TRIBUNAL DID NOT DISCUSS AS TO HOW THE SAID DECISION IS NOT 4 M P NO.301/BANG/2018 APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT IS ALSO A FACT THAT THE DECISION RENDERED BY HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. MADHUR HOUSING AND DEVELOPMENT CO. (SUPRA) (DT.5.10.2017) WAS AVAILABLE ON THE DOMAIN WHEN THE IMPUGNED ORDER OF ITAT WAS PASSED. ADMITTEDLY, THE SAID DECISION OF HON'BLE SUPREME COURT WAS ALSO NOT CONSIDERED BY THE TRIBUNAL W HI LE PASSING THE ORDER. IT IS THE CASE OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE FACTS PREVAILING IN THE CASE OF GOPALAN & SONS VS. CIT (SUPRA) RELATE TO LOAN GIV EN TO A BENEFICIAL SHARE HOLDER, WHICH IS NOT THE CASE AVAILABLE IN THIS APPEAL. ACCOR DING TO LD A.R, THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF MADHUR HOUSING AND DEVELOPMENT CO. (SUPRA) IS APPLICABLE. THUS, WE NOTICE T HAT THE TRIBUNAL HAS NOT EXAMINED APPLICABILITY OF THE BINDING DECISION OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF SARVA EQUITY PVT. LTD (SUPRA) AND ALSO DID NOT CONSIDER DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF MADHUR HOUSING AND DEVELOPMENT CO. (SUPRA). HENCE NON - CONSIDERATION OF BOTH THE ABOVE DECISIONS WOULD RESULT IN A MISTAKE APPARENT FROM RECORD AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA). THE LEARNED AU THORISED REPRESENTATIVE HAS ALSO POINTED OUT THAT THE TRIBUNAL HAS MIS - QUOTED THE SHARE HOLDING PATTERN OF THE ASSESSEE COMPANY BY OBSERVING THAT 2% OF SHARES WERE HELD BY M/S. SHREE HANUMAN JUTE MILLS PRIVATE LIMITED WHICH IS ALSO A MISTAKE APPARENT FROM RECORD. 10. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THERE IS MERIT IN THE PETITION FILED BY THE ASSESSEE. SINCE THE MISTAKES GOES TO THE ROOT OF THE MATTER, WE ARE OF THE VIEW THAT IMPUGNED ORDER PASSED BY THE TRIBUNAL DESERVES TO BE RECALL ED. ACCORDINGLY, WE RECALL THE ORDER DT.12.06.2018 PASSED IN ITA NO.2231/BANG/2016 AND DIRECT THE REGISTRY TO POST THE APPEAL IN REGULAR COURSE. 5 M P NO.301/BANG/2018 11 . IN THE RESULT, THE MISC. PETITION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JAN ., 20 20 . S D / - S D / - ( B.R. B ASKARAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27.01 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE