Asian Business Conection Pvt. Ltd., Bhopal V. DCIT - 1(1) , Bhopal

SA 1/Ind/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0409 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 08-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Application of stay; Valuation report; Deemed dividend
• Section: 2(22)(e)

Judgement Text

ASIAN BUSINESS CONNECTIONS PVT. LTD SA NO.01/IND/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER S.A. NO. 01/IND/2019 ARISING OUT OF I.T.A. NO. 936/IND/2018 ASSESSMENT YEAR : 2015-16 M/S.ASIAN BUSINESS CONNECTIONS :: APPLICANT PVT.LTD., BHOPAL. VS. DCIT-1(1), BHOPAL :: RESPONDENT PAN: AAICA1206D APPLICANT BY : S/ SHRI SUMIT NEMA, SR. ADV WITH GAGAN TIWARI, ADV . RESPONDENT BY : SHRI K.G. GOYAL , SR.DR DATE OF HEARING 1 6 . 0 1 .201 9 DATE OF PRONO UNCEMENT : 1 7 . 01 .201 9 O R D E R PER MANISH BORAD, A.M. THIS STAY APPLICATION IS FILED AT THE INSTANCE OF T HE ASSESSEE SEEKING STAY OF THE OUTSTANDING DEMAND OF RS. 1,33,33,80,94 0/- PERTAINING TO THE ASSESSMENT YEAR 2015-16. ASIAN BUSINESS CONNECTIONS PVT. LTD SA NO.01/IND/2019 2 2. LD. SENIOR COUNSEL FOR THE ASSESSEE REFERRING TO THE STAY APPLICATION SUBMITTED THAT THE IMPUGNED DEMAND IS M ERELY ON ACCOUNT OF THE ADDITION MADE BY THE LEARNED ASSESSI NG OFFICER FOR DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT AT RS.2,97, 74,68,364/- BEING THE AMOUNT OF RESERVE AND SURPLUS OF M/S. ADV ANTAGE OVERSEAS PVT. LTD IN WHICH THE ASSESSEE COMPANY WAS HOLDING MORE THAN 10% OF VOTING POWER. HE SUBMITTED THAT LD. A. O MADE THIS ADDITION AFTER OBSERVING THAT THE ASSESSEE HAS REC EIVED UNSECURED LOAN OF RS.4,28,50,73,821/- FROM M/S. ADVANTAGE OVE RSEAS PVT. LTD. 3. LD. SENIOR COUNSEL FOR THE ASSESSEE ALSO SUBMITT ED THAT FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THAT THE I MPUGNED AMOUNT RECEIVED BY ASSESSEE FROM ITS SUBSIDIARY M/S. ADVAN TAGE OVERSEAS PVT. LTD WAS FOR A SPECIFIC COMMERCIAL PURPOSE AND WAS NOT IN LIEU OF DIVIDEND AND LD. CIT(A) HAS ALSO NOT LOOKED INTO THE FACT THAT THE ASSESSEES MAIN BUSINESS CONSISTS OF MAKING STRATEG ICAL INVESTMENT IN OTHER COMPANIES. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS A STRONG CASE ON MERITS DULY SUPPORTED BY VARIOUS JUD GMENTS IN FAVOUR OF THE ASSESSEE AND THEREFORE QUITE HOPEFUL TO SUCCEED IN THE APPEAL IN CASE EARLY HEARING OF THE APPEAL IS GRANT ED. ASIAN BUSINESS CONNECTIONS PVT. LTD SA NO.01/IND/2019 3 4. LD. SENIOR COUNSEL FOR THE ASSESSEE ALSO SUBMITT ED THAT THE ASSESSEE COMPANY IS FACING SEVERE FINANCIAL HARDSHI P AND IS SHORT OF LIQUID FUNDS WHICH ARE DULY SUPPORTED BY AUDIT REPO RT AND STATEMENT OF AFFAIRS MARKED AT ANNEXURE A/1 WHICH D EMONSTRATES THE DIRE FINANCIAL STATUS OF THE ASSESSEE. ON BEHA LF OF THE ASSESSEE HE ALSO SUBMITTED THAT THE ASSESSEE COMPANY IS PREP ARED TO OFFER ASSETS OF THE COMPANY AS SECURITY FOR THE SATISFACT ION OF THE INCOME TAX DEPARTMENT AND NECESSARY VALUATION REPORT OF TH E ASSETS ARE MARKED AT ANNEXURE A/2. REQUEST WAS ALSO MADE THAT THE INCOME TAX REFUND PENDING IN FAVOUR OF THE APPELLANT MAY B E ADJUSTED AGAINST THE DEMAND. 5. APART FROM THIS LD. SENIOR COUNSEL FOR THE ASSES SEE ALSO AGREED TO PAY A TOTAL SUM OF RS.20 CRORES IN INSTAL LMENTS UP TO 15.3.2019 IF STAY OF THE REMAINING DEMAND IS GRANTE D. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE STRONGLY OPPOSED TO STAY OF DEMAND AND SUBMITTED TH AT THE ASSESSEE HAS MERELY DEPOSITED A SUM OF RS.1 CRORES AGAINST THE TOTAL DEMAND FOR TAX AND INTEREST AT RS.134,33,80,9 40/-. HE ALSO ASIAN BUSINESS CONNECTIONS PVT. LTD SA NO.01/IND/2019 4 SUBMITTED THAT AT LEAST 20% OF THE OUTSTANDING DEMA ND SHOULD BE PAID. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THROUGH THIS STAY APPLICATION ASS ESSEE HAS REQUESTED FOR STAY OF OUTSTANDING DEMAND OF RS.133, .33,80,940/-. 8. WITHOUT REITERATING THE SUBMISSION MADE BY THE L D. COUNSEL FOR THE ASSESSEE, IN BRIEF IT TRANSCRIBES THAT THE IMPUGNED DEMAND HAS ARISED ON ACCOUNT OF ADDITION TOWARDS DEEMED DI VIDEND U/S 2(22)(E) OF THE ACT AND ON THE STRENGTH OF FACTS AN D JURISDICTIONAL PRONOUNCEMENT, ASSESSEE IS HOPEFUL TO SUCCEED IN TH E APPEAL. FINANCIAL HARDSHIP IS BEING FACED BY THE ASSESSEE A ND THEREFORE IS NOT IN A POSITION TO PAY THE OUTSTANDING DEMAND BUT HAS REQUESTED TO GRANT THE STAY ON THE CONDITION OF OFFERING THE ASSETS OF THE COMPANY AS SECURITY FOR THE SATISFACTION OF THE DEP ARTMENT AS WELL AS TO PAY SUM OF RS.20 CRORES IN INSTALLMENTS UP TO 15.3.2019. 9. WE HAVE CAREFULLY EXAMINED THE RECORDS AND FACTS REITERATED IN THE STAY APPLICATION AND ARE INCLINED TO STAY THE D EMAND FOR A ASIAN BUSINESS CONNECTIONS PVT. LTD SA NO.01/IND/2019 5 PERIOD A PERIOD OF 90 DAYS FROM THE DATE OF THE STA Y ORDER OR DISPOSAL OF THE APPEAL WHICHEVER EVENT OCCURS EARLI ER SUBJECT TO THE FULFILLMENT OF THE FOLLOWING CONDITIONS; (I) FOLLOWING AMOUNTS TO BE DEPOSITED BY THE ASSESSEE AGAINST THE OUTSTANDING DEMAND; INSTALLMENT AMOUNT TO BE DEPOSITED UP TO 1 ST RS.5 CRORES 31.1.2019 2 ND RS.5 CRORES 15.2.2019 3 RD RS.5 CRORES 28.2.2019 4 TH RS.5 CRORES 15.3.2019 (II) THE ASSETS MARKED IN ANNEXURE A/2 OF THE STAY APPLICATION SHALL STAND AS SECURITY WITH THE INCOME TAX DEPARTMENT AND THE ASSESSEE WILL NOT SALE ANY OF TH E ASSETS MENTIONED IN ANNEXURE A/2 WITHOUT THE PERMISSION OF INCOME TAX DEPARTMENT. 10. THE STAY GRANTED TO THE ASSESSEE WILL BE IN OPE RATION ONLY IF THE ASSESSEE FULFILLS THE ABOVE STATED CONDITIONS. REGI STRY IS DIRECTED TO FIX THE APPEAL OUT OF TURN FOR HEARING ON 21.3.2019 AND THE DATE OF HEARING TO BE COMMUNICATED TO THE PARTIES. ASSESSE E IS ALSO ASIAN BUSINESS CONNECTIONS PVT. LTD SA NO.01/IND/2019 6 DIRECTED TO FILE NECESSARY PAPER BOOK, IF ANY, AT A N EARLY DATE AND ADJOURNMENT SHOULD NOT BE SEEKED UNLESS FOR ANY UNA VOIDABLE CIRCUMSTANCES. 11. IN THE RESULT STAY APPLICATION OF THE ASSESSEE IS ALLOWED SUBJECT TO THE TERMS AND CONDITIONS STATED HEREINABOVE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17.01.20 19. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOU NTANT MEMBER INDORE: 17 TH JANUARY, 2019 /DEV COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSTT. REGISTRAR,ITAT, INDORE .