Income Tax Appellate Tribunal - Mumbai
Markish Exim (I) P.Ltd, Mumbai vs Department Of Income Tax on 23 July, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "B", MUMBAI
BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND
DR. S.T.M. PAVALAN, JUDICIAL MEMBER
ITA No. 6958/Mum/2012
Assessment Year: 2009-10
DCIT-7(1) M/s. Markish Exim (I) Pvt.
R. No. 622, Aayakar Bhavan Ltd.
Vs.
M.K. Road, Churchgate Flat C, 2nd Floor, Arthur
Mumbai- 4-- 020 House, 87 -A, Dr. A.B. Road,
Worli, Mumbai 400 018
(Appellant) (Respondent)
Permanent Account No. :-AAACP 4076 G
Assessee by : Shri Hari S. Raheja
Revenue by : Shri Jivanlal Lavidiya
Date of hearing : 17.07.2014
Date of Pronouncement : 23.07.2014
ORDER
PER DR. S.T.M. PAVALAN, JM:
This appeal filed by the Revenue is directed against the order of the Ld.CIT(A)-13, Mumbai dated 25.09.2012 for the Assessment Year 2009-10.
2. In this appeal, the Revenue has raised the following grounds:-
" i) The Learned CIT(A) has erred in law and on facts in deciding that the provisions of section 2(22)(e) are not applicable, ignoring the second limb of the section 2(22)(e) which covers a case of a loan given to a concern having common shareholder.
ii) The Learned CIT(A) has erred in law and on facts in following the Special Bench decision in the case of ACIT vs. Bhaumik Colour (P) Ltd, and ignoring its own decision in the case of Unisol Infraservices Pvt. Ltd., in ITA No.2088/Mum/2008 dated 11.08.2009?"
3. Briefly stated, the assessee was engaged in the business of Export of General Products and during the scrutiny assessment proceedings, the AO noticed that M/s. IB Services Group LLC was a majority shareholder with a total shareholding of 99% in assessee's company and M/s. IB Services LLC was also having substantial interest in the companies namely M/s. Sparkling Stars Seafoods Pvt. Ltd., M/s. Pickwick ITA No. 6958/Mum/2012 2 M/s. Markish Exim (I) Pvt. Ltd Assessment Year: 2009-10 Hygienic Products P. Ltd. and M/s. Mentor holding shares of 99.98%, 99.98% and 34% in the said concerns respectively. The AO also noticed that M/s. IB Services Group LLC was holding more than 10% share in the assessee company. M/s. IB Services Group LLC was also holding more than 10% share in the said three companies. The AO further noticed that the assessee company had received loans from the said companies, the details of the loans filed by the assessee company is stated in pages 2 and 3 of the order of the Ld.CIT(A). The AO, held that M/s. IB Services Group LLC was a beneficiary owner of shares with shareholding of more than 10% in assessee company as well as in the other companies from whom the assessee had received huge advances. Accordingly, the AO held that these transactions satisfied all the conditions required for treating loans and advances as the deemed dividend u/s 2(22)(e) of the Act. On appeal, the Ld.CIT(A) held that the assessee had explained that it was not a shareholder in any of the companies from whom loans advances were received and by relying on the decision of the Special Bench of the Tribunal in the case of Bhaumik Colour Pvt. Ltd. 118 ITD 1 (Mum)(SB), and the decision of the Hon'ble High Court in the case of CIT Vs. M/s. Universal Medicare Pvt. Ltd. 324 ITR 263 wherein it was held that a deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of belonging concern in which such shareholder is a member/partner, deleted the addition made by the AO. Aggrieved by the impugned decision, the Revenue is in appeal before us.
4. Having heard both the sides and perused the material on record, it is pertinent to mention that the Tribunal in the assessee's own case for the A.Y. 2007- 08 in ITA No. 704/Mum/2011 has deleted the addition made/confirmed u/s 2(22)(e) of the Act, based on the finding that the assessee is not a shareholder in M/s. Sparkling Stars Seafood Pvt. Ltd. and thereby the Tribunal relied on the decision of the Special Bench in the case of Bhaumik Colour Pvt. Ltd. (supra) and the decision of the Hon'ble Bombay High Court in the case of CIT Vs. M/s. Universal Medicare Pvt. Ltd (supra). The present case in hand relates to three companies which includes M/s. Sparkling Stars Seafoods Pvt. Ltd. involved in the A.Y. 2007-08. The perusal of the relevant records reveals that the assessee, during the assessment as well as first appellate proceedings, has properly explained that it was not a shareholder in any of ITA No. 6958/Mum/2012 3 M/s. Markish Exim (I) Pvt. Ltd Assessment Year: 2009-10 the companies from whom loans or advance have been received. It is relevant to state that the said fact is not disputed by the Revenue. When the fact being so, we do not find any justifiable reason to interfere with the order of the Ld.CIT(A) applying the ratio of Special Bench of Bhaumik Colour Pvt. Ltd. (supra) and the decision of the Hon'ble Bombay High Court in the case of Universal Medicare Pvt. Ltd. (supra) to the facts of the assessee for deleting the impugned addition made by the AO. Therefore, the impugned addition of the Ld.CIT(A) deserves to be sustained and upheld.
5. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on this 23rd day of July 2014.
Sd/- Sd/-
(SANJAY ARORA) (Dr. S.T.M. PAVALAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 23.07.2014.
*Srivastava
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR "B" Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.