Income Tax Appellate Tribunal - Mumbai
Konjal Machines P.Ltd, Mumbai vs Department Of Income Tax on 9 July, 2012
आयकर अपील य अ धकरण "ए" यायपीठ मंुबई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI ी डी. म मोहन, उपा य एवं ी संजय अरोड़ा, लेखा सद य के सम ।
BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM आयकर अपील सं./I.T.A. No. 6080/Mum/2012 ( नधारण वष / Assessment Year: 2009-10) Income Tax Officer Ward 8(2)(2), Konjal Machines Pvt. Ltd.
2nd Floor, Room No.216-A, A/6, MIDC, 5th Floor,
बनाम/
Aayakar Bhavan, M. K. Road, Andheri (E), Mumbai - 400 093
Mumbai-400 020 Vs.
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACK2484P (अपीलाथ /Appellant) : ( यथ / Respondent) अपीलाथ ओर से / Appellant by : Shri M.L. Perumal यथ क ओर से/Respondent by : None ु वाई क तार ख / सन : 04.12.2013 Date of Hearing घोषणा क तार ख / : 13.12.2013 Date of Pronouncement आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-17, Mumbai ('CIT(A)' for short) dated 09.07.2012, partly allowing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2009-10 vide order dated 09.12.2011.2 ITA No. 6080/Mum/2012 (A.Y. 2009-10)
ITO vs. Konjal Machines Pvt. Ltd.
2. The only issue arising in this appeal is the applicability or otherwise of the provision of section 2(22)(e) of the Act in the facts and circumstances of the case. The assessee, a company in which public is not substantially interested, was observed by the Assessing Officer (AO) during the course of its assessment proceedings to have received unsecured loan/s of Rs.301.16 lakhs from M/s. Shetron Enterprises P. Ltd. (SEPL), a group company, during the relevant previous year. Examining the shareholding pattern of the loner and loanee companies, it was found by him that three individual shareholders, holding a minimum of 20% each of the voting power in SEPL, had an equal share in the assesse-company, i.e., at 20% each. The provision of section 2(22)(e) of the Act was in his view attracted; the word 'concern' occurring in the provision having been defined (vide Explanation 3 thereof) to mean inter alia a 'company'. The payer company (SEPL) having an accumulated profit of Rs.15,81,783/- (as on 31.03.2009), the loan to the assessee was to that extent liable to be deemed as dividend in the hands of the assessee company. Reliance was placed by him on a number of cases laws. The learned CIT(A) allowed relief to the assessee by following the decision by the Special Bench of the Tribunal in the case of CIT vs. Bhaumik Color P. Ltd. [2009] 118 ITD 1 (Mum) (SB), so that the Revenue is in appeal.
3. We have heard the parties, and perused the material on record.
The special bench of the tribunal in the case of Bhaumik Color P. Ltd (supra) has clarified that the provision of section 2(22)(e) would apply only to a person who is both the registered as well as the beneficial shareholder in the lending company. Further, the deemed dividend could not be brought to tax in the hands of any person other than such a shareholder. In the facts of the instant case, the assesse-company is not a shareholder of the payer or the lending company. It has also not been established that the loan under reference was for and behalf of or for the benefit of the three shareholders, in which case, again, the impugned amount could be taxed in their hands inasmuch as its stands clarified that deemed dividend u/s. 2(22)(e) could only be taxed in the hands of a shareholder. This 3 ITA No. 6080/Mum/2012 (A.Y. 2009-10) ITO vs. Konjal Machines Pvt. Ltd.
proposition has in fact been subsequently endorsed by the hon'ble jurisdictional High Court in the case of CIT vs. Universal Medicare Pvt. Ltd. [2010] 324 ITR 263 (Bom).
Continuing further, we observe that the AO had also made a protective assessment for Rs. 1,16,168/- on the basis that this amount has been received by the assessee on current account, so that addition to this extent, though included in the sum of Rs. 15.82 lacs for which substantive addition stands made by him, would in any case survive. Though this matter has not been specifically agitated by the assessee before the first appellate authority, we find that the said amount forms part of the aggregate amount of Rs. 301.16 lacs advanced by SEPL to the assessee during the year. Further, the basis of the deletion by the ld. CIT(A) is the decision by the special bench in the case of Bhaumik Color P. Ltd. (supra), which would, for the reasons afore-stated, apply equally to the sum of Rs. 1.16 lacs, so that no separate cause qua this amount obtains.
Accordingly, respectfully following the decision by the special bench in the case of Bhaumik Color P. Ltd. (supra), we confirm the impugned order, so that no interference at our end is called for. We decide accordingly.
4. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on December 13, 2013 Sd/- Sd/-
(D. MANMOHAN) (SANJAY ARORA)
उपा य / VICE PRESIDENT लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक Dated : 13.12.2013
न.स./A.K. Patel, PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंुबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard File 4 ITA No. 6080/Mum/2012 (A.Y. 2009-10) ITO vs. Konjal Machines Pvt. Ltd.
आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai