M/s. Radheshyam Fibres, Ahmedabad V. The Income tax Officer,Ward-6(1), Ahmedabad

MA 47/AHD/2014

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4176 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA R SHAH
• Assessee Lawyers: CHIRAJ R SHAH
• Keywords: Deemed dividend

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER MISC. APPLICATION NO.47/AHD/2014 IN ./ ITA NO.1901/AHD/2012 / ASSTT.YEAR: 2009-2010] RADHESHYAM FIBERS C/O.SHRI VALLABH LAXMI COTTON P.LTD. KHEDA-BAVLA ROAD DHOLKA, AHMEDABAD. VS ITO, WARD - 6(1) AHMEDABAD. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI CHIRAJ R. SHAH, AR REVENUE BY : SHRI NARENDRA R. SHAH / DATE OF HEARING : 01/04/2016 / DATE OF PRONOUNCEMENT: 07/04/2016 *+/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT MISC. APPLICATION IS DIRECTED AT THE IN STANCE OF THE ASSESSEE POINTING OUT AN APPARENT ERROR IN THE ORDE R OF THE TRIBUNAL DATED 14.2.2014. 2. IT IS PLEADED IN THE APPLICATION THAT THE TRIBUN AL HAS DISPOSED OF CROSS-APPEALS BEARING ITA NO.1901 AND 1914/AHD/2012 . THE ASSESSEE IN ITS APPEAL HAS CHALLENGED THE ADDITION OF RS.60. 70 LAKHS MADE WITH THE AID OF SECTION 2(22)(E) OF THE INCOME TAX ACT. IT IS PLEADED IN THE APPLICATION THAT THE ASSESSEE IS A PARTNERSHIP FIRM . IT HAD RECEIVED A SUM OF RS.60.70 LAKHS FROM SHREE VALLABH LAXMI COTT ON PVT.LTD. PARTNERS OF THE FIRM ARE BENEFICIARY SHAREHOLDER OF MORE THAN 10% OF MA NO.47/AHD/2014 2 THE CAPITAL SHREE VALLABH LAXMI COTTON PVT.LTD. TH EREFORE, THE AO HAS TREATED THE LOANS TAKEN FROM THE COMPANY BY THE FIR M AS DEEMED DIVIDEND IN ITS HAND. ON THE STRENGTH OF HONBLE G UJARAT HIGH COURT DECISION IN THE CASE OF CIT VS. DAISY PACKERS P.LTD ., THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE LOANS TAKEN BY AN E NTITY CAN BE TREATED AS DEEMED DIVIDEND IN ITS HANDS, IF THE ENTITY IS R EGISTERED SHAREHOLDER OF THE LOANER AND HAVING MORE THAN 10% OF THE VOTING RIGHTS OF SHAREHOLDING. THE ASSESSEE WAS NOT REGISTERED SHAR EHOLDER, THEREFORE, THE LOANS TAKEN BY IT CANNOT BE TREATED AS DEEMED D IVIDEND. THE HONBLE GUJARAT HIGH COURT HAS EMPHASISED THAT FULF ILLMENT OF BOTH THESE CONDITIONS I.E. LOANEE SHOULD BE A REGISTERED SHARE HOLDER HAVING MORE THAN 10% OF THE VOTING RIGHTS. THIS DECISION WAS BROUGHT TO THE NOTICE OF THE TRIBUNAL. THE TRIBUNAL WITHOUT CONSI DERING THE DECISION IN ITS ENTIRETY OBSERVED THAT THIS DECISION IS DISTING UISHABLE ON FACTS. 3. ON DUE CONSIDERATIONS OF THE FACTS OF THE CASE, WE FIND THAT THE TRIBUNAL HAS COMMITTED AN APPARENT ERROR BY IGNORIN G A DIRECT DECISION OF THE JURISDICTIONAL HIGH COURT WITHOUT MAKING AN ELABORATE DECISION AS TO HOW THE FACTS ARE DISTINGUISHABLE. APART FROM T HIS, THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS.BHOMIK COLO UR LTD., REPORTED IN 118 ITD 1 IS IN LINE WITH THE DECISION OF THE HONB LE GUJARAT HIGH COURT. THEREFORE, WE RECALL THE ORDER OF THE TRIBUNAL ON T HIS ISSUE, AND RESTORE THE GROUND NO.2 IN THE APPEAL OF THE ASSESSEE FOR R E-ADJUDICATION. THE REGISTRY IS DIRECTED TO LIST THE APPEAL IN ORDINARY COURSE, AFTER SERVICE OF NOTICE UPON BOTH THE PARTIES. 4. IN THE RESULT, MA OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH APRIL, 2016 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 07/04/2016