M/s Assetz Infrastructure Private Limited, Bangalore V. Deputy Commissioner of Income Tax Circle-1(1)(1), Bangalore

MA 55/BANG/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9452 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 23-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: B R SUDHEENDRA
• Keywords: Deemed dividend; Set aside
• Section: 2(22)(e)

Judgement Text

MP NO.55/BANG/2021 M/S. ASSETZ INFRASTRUCTURE PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER M.P. NO.55/BANG/2021 (ARISING OUT OF ITA NO.563/BANG/2019) ASSESSMENTYEAR: 2014-15 M/S. ASSETZ INFRASTRUCTURE PVT. LTD. 2/1, 2 ND FLOOR, EMBASSY ICON ANNEXE, INFANTRY ROAD BANGALORE 560 001 PAN NO : AAGCA7614K VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 1(1)(1) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI B.R. SUDHEENDRA, A.R. RESPONDENT BY : SMT. R. PREMI, D.R. DATE OF HEARING : 30.07.2021 DATE OF PRONOUNCEMENT : 30.07.2021 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON SUBMITTING THAT THERE IS MISTAKE APPARENT FROM RECO RD IN THE ORDER DATED 2.12.2020 PASSED BY THE TRIBUNAL IN ITA NO.56 3/BANG/2019. 2. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAD CON TESTED THE ADDITION OF DEEMED DIVIDEND MADE BY THE AO U/S 2(22 )(E) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] BEFORE LD CIT(A) AND GOT PARTIAL RELIEF. HENCE, THE ASSESSEE CONTESTED THE ADDITION PARTIALLY MP NO.55/BANG/2021 M/S. ASSETZ INFRASTRUCTURE PVT. LTD., BANGALORE PAGE 2 OF 4 SUSTAINED BY LD CIT(A) IN THE APPEAL FILED BEFORE T HE TRIBUNAL IN GROUNDS OF APPEAL NOS.3.1 TO 3.6. THE REVENUE HAS ALSO CHALLENGED THE DECISION OF LD. CIT(A) IN GRANTING PARTIAL RELI EF BY FILING APPEAL BEFORE THE TRIBUNAL BY RAISING SPECIFIC GROUND IN G ROUND NO.2 OF ITS APPEAL. 3. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAD TAK EN TWO ALTERNATIVE CONTENTIONS CHALLENGING THE ADDITION MA DE U/S 2(22)(E) OF THE ACT. THE FIRST CONTENTION WAS THAT THE AMOU NT RECEIVED FROM ITS SUBSIDIARY COMPANY M/S. ASSETZ PROPERTY MANAGEM ENT SERVICES PVT. LTD. (APMS) IS THROUGH RUNNING ACCOUNT TRANSAC TIONS AND HENCE THEY ARE TRADING TRANSACTIONS. THE ASSESSEE RELIED ON CERTAIN CASE LAWS TO CONTEND THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ITSELF IS NOT APPLICABLE TO RUNNING ACCOUNT TRA NSACTIONS. ALTERNATIVELY, THE ASSESSEE ALSO CONTENDED THAT THE RE IS NO ACCUMULATED PROFIT IN THE BOOKS OF THE SUBSIDIARY C OMPANY AND HENCE NO ADDITION COULD BE MADE U/S 2(22)(E) OF THE ACT. IT IS PERTINENT TO NOTE HERE THAT THE ADDITION OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT COULD BE MADE UPTO THE MAXIMUM OF ACCUMULATED PROFITS AVAILABLE WITH THE LENDER COMPA NY. 4. THE LD. A.R. SUBMITTED THAT THE TRIBUNAL HAS DULY NOTED BOTH THE CONTENTIONS IN PARAGRAPH NOS.6.2 & 6.3 OF ITS O RDER. HOWEVER, WHILE ADJUDICATING THE ISSUE, THE TRIBUNAL HAS CONS IDERED THE ALTERNATIVE CONTENTION ALONE WITH REGARD TO THE AVA ILABILITY OF ACCUMULATED PROFITS AND REJECTED ALL THE GROUNDS OF THE ASSESSEE. THUS, THE TRIBUNAL HAS NOT ADJUDICATED THE MAIN CON TENTION OF THE ASSESSEE THAT THE TRANSACTIONS WITH SUBSIDIARY COMP ANY ARE TRADING TRANSACTIONS CARRIED THROUGH A RUNNING ACCOUNT AND HENCE, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT IS NOT AP PLICABLE. THE LD. A.R. SUBMITTED THAT THIS CONTENTION WOULD GO TO THE ROOT OF THE MATTER AND NON-ADJUDICATION OF THE SAME IS A MISTAK E APPARENT MP NO.55/BANG/2021 M/S. ASSETZ INFRASTRUCTURE PVT. LTD., BANGALORE PAGE 3 OF 4 FROM RECORD. IN THIS REGARD, THE LD. A.R. PLACED R ELIANCE ON THE DECISION RENDERED BY HONBLE ALLAHABAD HIGH COURT I N THE CASE OF CIT VS. K.M. SUGAR MILLS PVT. LTD. (2005) 275 ITR 2 47. ACCORDINGLY, THE LD. A.R. PRAYED FOR RECALL OF THE GROUNDS RELAT ING TO DEEMED DIVIDEND TAXES U/S 2(22)(E) OF THE ACT. 5. THE LD. D.R. SUBMITTED THAT THE REVENUE HAS ALSO CHALLENGED THE RELIEF GRANTED BY THE LD. CIT(A) IN RESPECT OF DEEMED DIVIDEND AND THE TRIBUNAL HAS ALREADY SET ASIDE THE DECISION GIVEN BY LD CIT(A). HENCE THE GROUND NO.2 OF REVENUE HAS BEEN DECIDED IN FAVOUR OF THE REVENUE. ACCORDINGLY, THE LD D.R SUB MITTED THAT THE DECISION RENDERED ON THE GROUND OF REVENUE DOES NOT REQUIRE ANY DISTURBANCE. 6. THE LD. A.R., ON THE CONTRARY, SUBMITTED THAT TH E DECISION THAT MAY BE RENDERED AFTER RECALLING OF THE UN-ADJU DICATED GROUND MAY HAVE AN IMPACT ON THE DECISION RENDERED ON THE GROUND URGED BY THE REVENUE. 7. HAVING HEARD THE RIVAL CONTENTIONS, WE FIND MERI T IN THE SUBMISSIONS MADE BY LD. A.R. EVEN THOUGH THE TRIBU NAL HAS NOTED DOWN THE ARGUMENT RELATING TO NON-APPLICABILITY OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT TO RUNNING ACCOUNT TRAN SACTIONS MADE IN FURTHERANCE OF BUSINESS OBJECTIVES IN PARA 6.2 OF I TS ORDER, YET THE TRIBUNAL DID NOT ADDRESS THE SAME IN ITS FINAL DECI SION. AS RIGHTLY POINTED OUT BY LD. A.R., THE ABOVE SAID CONTENTION WOULD GO TO THE ROOT OF THE MATTER AND NON-ADJUDICATION OF THE SAME RESULTS IN A MISTAKE APPARENT FROM RECORD. ACCORDINGLY, THE GRO UNDS RELATING TO SECTION 2(22)(E) OF THE ACT RAISED BY THE ASSESSEE IN PARAS 3.1 TO 3.6 DESERVES TO BE RECALLED. MP NO.55/BANG/2021 M/S. ASSETZ INFRASTRUCTURE PVT. LTD., BANGALORE PAGE 4 OF 4 8. WE NOTICE THAT THE GROUND NO.2 URGED BY THE R EVENUE RELATING TO DEEMED DIVIDEND HAS BEEN ADJUDICATED BY FOLLOWIN G THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF MI SS P SARADA (229 ITR 444)(SC). HENCE THE SAME DOES NOT REQUIRE TO BE RECALLED, AS THE PRINCIPLE LAID DOWN BY HONBLE SUPREME COURT HAS BEEN FOLLOWED TO DECIDE THE ISSUE IN FAVOUR OF THE REVEN UE. 9. ACCORDINGLY, WE RECALL THE ORDER DATED 2.12.2020 PASSED IN THE ASSESSEES APPEAL IN ITA NO.563/BANG/2019 FOR T HE LIMITED PURPOSE OF ADJUDICATING GROUND NOS.3.1 TO 3.6 OF TH E ASSESSEE. WE DIRECT THE REGISTRY TO POST THE APPEAL OF THE AS SESSEE IN THE NORMAL COURSE. 10. IN THE RESULT, THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUL, 2021. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 30 TH JUL, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT,