Income Tax Appellate Tribunal - Pune
Gadgil Holdings Pvt. Ltd.,, Pune vs Income-Tax Officer, Ward - 1(4),, Pune on 20 June, 2019
आयकर अपील य अ धकरण] पण
ु े यायपीठ "बी" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं
. / ITA No.1455/PUN/2017
नधा रण वष / Assessment year : 2014-15
Gadgil Holdings Pvt. Limited,
PNG House, 4th Floor, 694, .......... अपीलाथ /
Narayan Peth, Laxmi Road,
Appellant
Pune - 41130.
PAN : AALCS9660G.
बनाम v/s
.......... यथ /
The Income Tax Officer, Respondent
Ward 1(4), Pune.
Assessee by : Shri M.R. Bhagwat.
Revenue by : Shri M.K. Verma.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 11.06.2019 Date of Pronouncement: 20.06.2019
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
1. This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (Appeals) - Pune - 1 dated 29.03.2017 for the assessment year 2014-15.
2. The relevant facts as culled out from the material on record are as under :-
Assessee is a company stated to be an investment company and its business activities comprise of share investment, commodity derivatives, loans etc. Assessee electronically filed its return of income on 19.11.2014 for A.Y. 2014-15 declaring total income at Rs.6,52,690/-. The case was 2 ITA No.1455/PUN/2017 selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 29.11.2016 and the total income before set off of brought forward losses was determined at Rs.1,13,40,566/- and the total income after set off of brought forward loss was determined at Rs.66,34,187/- Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dated 29.03.2017 (in appeal No.CIT(A), Pune-1/10539/2016-17) granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds :
"1. The learned Commissioner of Income Tax (Appeals) erred in sustaining the addition of Rs.26,60,211/- as "deemed dividend" u/s 2(22)(e) of the Income Tax Act to assessee's total income even though on facts the provision of the said section were not applicable in company's case.
2. The addition of Rs.26,60,211/- be deleted and the total income of the Company be reduced to that extent"
3. All the grounds being inter-connected are considered together.
4. During the course of assessment proceedings and on perusing the Balance-Sheet of the assessee, AO noticed that assessee had taken unsecured loan from Four C Diamonds Pvt. Ltd (now known as Gadgil Diamonds Pvt. Ltd.). On perusing the shareholding pattern of Four C Diamonds Pvt. Ltd, AO noticed that assessee was its holding company holding 99% shares and also having substantial interest and assessee had taken loan aggregating to Rs.4,82,18,050/-. AO also noticed that Four C Diamonds Pvt. Ltd was having accumulated profits and as it had advanced amounts to assessee was of the view that provisions of Sec.2(22)(e) were applicable. Assessee was asked to show cause as to why the provisions of Sec.2(22)(e) of the Act should not be applied. The submissions of the assessee were not found acceptable to the AO. AO 3 ITA No.1455/PUN/2017 held that loans and advances to the extent of Rs.26,60,211/- given by Four C Diamonds Pvt. Ltd (now known as Gadgil Diamonds Pvt. Ltd.) to assessee to be deemed dividend u/s 2(22)(e) of the Act and he accordingly made its addition. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who upheld the order of AO by observing as under :
"10.I have carefully considered the facts of the case as well as reply of the appellant. In this case, it is seen that reply of the appellant that the account was in the nature of current account cannot be accepted. Loan account does not mean that the amount is required to be maintained at static level. Even in loan account fresh borrowings and repayments on time to time can take place and if that happens character of the loan account will not change to current account. In this case, from the perusal of ledger account of Gadgil Diamonds Pvt. Ltd. in appellant's books, it is seen that certain petty expenses have been routed through the account but overall the features of the account are in nature of loan only. Therefore, on totality of facts, the addition of Rs.26,60,211/- u/s 2(22)(e) of the I.T. Act, 1961 is upheld and the ground is dismissed."
Aggrieved by the order of Ld.CIT(A), assessee is now before us.
5. Before us, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and further submitted that the issue is covered in assessee's favour by the decision of Pune Tribunal in assessee's own case in A.Y. 2013-14 in ITA No.2367/PUN/2017 order dated 18.12.2018. He placed on record the copy of the aforesaid decision. He thereafter submitted that the parties involved in the present case are the same as that in earlier year and the facts are also similar. He therefore relying on the decision of Tribunal in assessee's own case for A.Y. 2013-14 submitted that the issue be decided as in earlier year. Ld. D.R. on the other hand did not controvert the submissions made by Ld.A.R. but however supported the order of lower authorities.
4ITA No.1455/PUN/2017
6. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to additions made u/s 2(22)(e) of the Act. We find that identical issue of deemed dividend of the transactions with the same parties arose in assessee's own case in A.Y. 2013-14. The issue was decided by the Tribunal (in ITA No.2367/PUN/2017 order dated 18.12.2018) in assessee's favour by observing as under :
"6. I have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to addition made u/s 2(22)(e) of the Act. It is an undisputed fact that assessee is a holding company of Four C Diamonds Pvt. Ltd., as it holds more than 99% of its shares. It is assessee's contention that it has running account with its subsidiary in the nature of current account with Four C Diamonds Pvt. Ltd., and the account is having transactions of receipts and payments of money. The copy of the ledger account of Four C Diamonds Pvt. Ltd., placed in Paper Book shows that as on 01.04.2012 assessee was to receive Rs.3.92 crores from Four C Diamonds Pvt. Ltd., and there are frequent transactions of receipts and payments till 27.10.2012 and as on that date the assessee was to receive Rs.1.89 lakhs. Thereafter, the net balance turned into as credit balance and at the year end, the total amount due to Four C Diamonds Pvt. Ltd. by the assessee was to the extent of Rs.4.82 crores. The ledger account thus shows transactions to be in the nature of a current account. I find that Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Suraj Dev Dada (supra) has held that when the assessee was having a running account with the shareholder company, the provisions of Sec.2(22)(e) of the Act are not applicable. I further find that the Co-ordinate Bench of the Tribunal of Kolkata in the case of ITO Vs. Gayatri Chakraborty (supra) has held that the loan account is different from a current account with a shareholder and when the transactions are in the nature of current account, the provisions of Sec.2(22)(e) of the Act are not applicable. I further find that the decision of Kolkata Tribunal in the case of ITO Vs. Gayatri Chakraborthy (supra) has been upheld by Hon'ble Kolkata High Court vide order dt.03.05.2018 in ITA No.160 of 2016 wherein it has held that when there are transactions between a shareholder and a company in which the public are not substantially interested and the former has substantial stake, create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. Before me, Revenue has not placed any contrary binding decision in its support. I therefore following the decision of Kolkata Tribunal in the case of CIT Vs. Gayatri Chakraborty (supra) which has been upheld by the Hon'ble Kolkata High Court and also the decision of Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Suraj Dev Dada (supra) hold that no addition u/s 2(22)(e) of the Act is called for in the present case. I therefore direct the deletion of addition made by the AO.
Thus, the ground of assessee is allowed".
7. Before us, no distinguishing feature in the facts of the present case or that of earlier year been pointed out by Revenue. Further Revenue has also not placed any material to demonstrate that the order of Tribunal in 5 ITA No.1455/PUN/2017 assessee's own case in earlier year has been set aside / stayed or overruled by Higher Judicial Forum. In view of the aforesaid facts, we following the order of the Co-ordinate Bench of the Tribunal in assessee's own case for earlier year i.e., A.Y. 2013-14 and for similar reasons hold that no addition u/s 2(22)(e) of the Act is called for in the present case. We therefore direct the deletion of addition made by the AO. Thus, the ground of assessee is allowed.
8. In the result, the appeal of assessee is allowed.
Order pronounced on 20th day of June, 2019.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद!य / JUDICIAL MEMBER लेखा सद!य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 20th June, 2019.
Yamini
आदे श क# $ त&ल'प अ(े'षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-1, Pune.
4. Pr. CIT - 1, Pune.
5 "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "बी" / DR, ITAT, "B" Pune;
6. गाड+ फाईल / Guard file.
आदे शानस ु ार/ BY ORDER // True Copy // व-र.ठ %नजी स&चव / Sr. Private Secretary आयकर अपील य अ&धकरण ,पुणे / ITAT, Pune.