Income Tax Appellate Tribunal - Chandigarh
Sushma Bansal, Mohali vs Dcit, C-6(1), Mohali on 19 November, 2020
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ '"बी" च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, 'B' CHANDIGARH BEFORE SHRI N.K.SAINI, VICE PRESIDENT & SHRI RAJPAL YADAV, VICE PRESIDENT आयकर अपील सं./ITA No. 1494/ C H D / 2 0 1 9 नधा रण वष / Assessment Year :2 0 1 2 - 1 3 Smt. Sushma Bansal, Vs. The DCIT, H.No. 1708, Phase-3B2, बनाम Circle 6(1), Mohali. Mohali..
थायीलेखासं./PAN NO: AGWPB7593B अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Akshun Gupta, CA राज व क ओर से/ Revenue by : Shri Ashok Kumar Khanna, Addl. CIT सन ु वाई क तार$ख/Date of Hearing : 19.11.2020 उदघोषणा क तार$ख/Date of Pronouncement : 19 .11.2020 आदे श/Order PER RAJPAL YADAV, VP Th e a s s e s se e i s i n a p pe a l b e f or e t h e Tr i b u n a l a g a i n s t t h e o r d e r o f t h e l d . C I T( A ) d a t e d 0 4 . 1 0 . 2 0 1 9 p a ss e d f o r a s se s s me n t y e a r 2 0 1 2- 1 3 .
2. Th e s o l i t a r y g r ie v a n ce o f t h e a s se s se e i s t h a t l d . C I T( A ) h a s e r re d i n c o n f i r m i n g t h e a d d i ti o n o f R s . 3 0 7 2 3 0 / - o u t o f t o t a l a d d i t i o n o f R s . 3 1 , 9 8 , 9 4 8 / - w h i ch w a s a d d e d b y t h e A O w i t h t h e a i d o f S e c t i o n 2 ( 2 2 ) ( e ) of t h e I n c om e Ta x A c t .
3. Th e b r i e f f a c t s o f t h e c a se a r e t h a t a s se s se e h a s f i l e d h e r r e t u r n of i nc o m e o n 1 9 . 0 7 . 2 01 2 d e c l a r i n g a t a xa b l e i n c o m e o f Rs. 23,20,000/-. Th i s r e t u r n w a s p r o ce s se d u /s 1 4 3 ( 1 ) o f th e ITA No. 1494/CHD/2019 A.Y. 2012-13 Page 2 of 6 I n c o m e Ta x A c t . Th e r e a f te r , l d . A O h a s i s s u e d a n o t i c e u / s 1 4 8 o f t h e I n co m e Ta x A c t t o r e o p e n t h e a s se s s m e n t. Th e c a s e o f t h e AO is that a ss e ss e e has s ha r e h o l d i n g of 15.46% of M/s S a r a s w a t i A g r o C h e m i c a l s (I n d i a ) P v t . L t d . S he h a d r e c e i ve d a n a d v a n ce o f R s . 3 1 , 9 8 , 9 4 8 / - f r o m M / s S a r a s w a t i A g r o C h e m i c a l s ( I n d i a ) P v t . Lt d . S i n ce t h e s h a r e h o l d i n g o f t h e a sse s se e w a s m o r e t h a n 1 0 %, t h e r e f o r e , i n t h e o p i n i o n o f t h e A O , t h i s a d v a n c e d e se r ve s t o b e tr e a te d a s d e e m e d d i v i de n d i n t h e h a n d s o f th e a s se s se e w i t h i n t h e m e a n i n g o f S e ct i o n 2 ( 2 2 ) ( e ) o f t h e A c t. Th e l d . A O , a c c o r d i ng l y , m a d e a n a d di t i o n o f R s . 3 1 , 98 , 9 4 8 / - .
4. D i s - s a t i s f ie d w i th t h e a dd i t i o n , t h e a s se s se e ca r r i e d t h e ma t t e r i n a p p e a l b e f o r e t h e C I T( A ) . Th e a s s e s se e r a i s e d t h re e f o l d s u b m i s s i o n s, n a m e l y ;
i) Th e A O h a s i na d ve r te n tl y c o ns i d e r e d the op e n in g balance in the advances
ii) Th e a c t u a l a d va n c e taken within six year is Rs.
3 , 0 7 , 2 3 0 / - o n l y.
iii) Th e A O h a s a p p l ie d Se c t i o n 3 6 ( 1 ) ( i i i ) i n t he ha n d s o f t h e c o m p a n y f o r t h i s a d v a n ce .
I n o t he r w o r d s , t he A O s o u g h t t o d i s a l l o w i n te r e s t e x p e n se s o n t h i s a d v a n ce i n t h e h a n d s o f t h e company.
iv) Th e A O h a s o ve r l o o k e d t he fa c t t h a t a c t u a l a m o u n t o f a d v a n ce r e c e i ve d d u r i n g t h e y e a r w a s a d j u s t e d i n t h e f o l l o w i ng y e a r a g a i n s t d i vi de n d a n d t h u s c o ve r e d b y E x ce p t i o n t o Se c t i o n 2 ( 2 2 )( e ) a n d h a d o u g h t t o b e n o t c o n s i d e r e d a s de e m e d d i v i d e n d .
5. A p a r t f r o m t h e a b o v e p r o p o s i t i on , t h e a s se s se e h a s f i l e d w r i t te n s u b m i s s io n s w h i c h h a s b e e n e x tr a c t e d b y t h e l d . F i r s t ITA No. 1494/CHD/2019 A.Y. 2012-13 Page 3 of 6 A p pe l l a te A u t h o r i t y i n p a r a g r a p h N o . 6 . 2 o f th e i m p u g n e d o r de r . Th e a s s e s se e ha s t a b u l a te d the a d v a n ce o u t st a n d i n g as on 31.03.2012 and d e m o n s t r a te d that only Rs. 3,07,230/- was a c t u a l l y t a k e n du r i n g t h i s y e a r .
6. Th e l d . F i r s t A p p e ll a te A u th o r i t y t h o u g h g o n e t h r o u g h th e r e co r d c a r e f u l l y a n d p r o p o u nd e d t h e f u n d a m e n t a l a s p e c t s o f th e c o n d i t i o ns r e q u ir e d t o b e f u l f i l l e d f o r t r e a t i n g a n y a d v a n c e s a s d e e me d d iv i d e n d u / s 2 ( 2 2 ) ( e ) o f t h e A c t b u t f a i l e d t o c o n s i d e r t h e t h i r d f o l d o f t h e c on te n t i o n s r a i se d b y t he a p p e l l a n t . Th e l d . C I T( A ) h a s h e l d t h a t l o a n a nd a d v a n c e s p e r t a i n i n g t o e a r l i e r y e a r s c a n n ot b e a d d e d t o t h e l oa n s a n d a d v a n ce s r e ce i ve d d u r i n g this ye a r for working out the a l l e ge d deemed dividend and a c c o r d i n gl y , ld. First A p p e l l a te Authority has confirmed th e addition of Rs. 3,07,230/-.
7. S h r i A k s hu n G u p t a , l d . c o u n se l f o r th e a s s e s s e e w hi l e i m p u g n i n g t h e o r d e r s o f Re ve n u e A u t h o r i ti e s c o n t e n d e d th a t though AO has w o r ke d out t he deemed d i v i de n d of Rs. 3 1 , 9 8 , 9 4 8 / - b u t t h i s w a s a n a m o u n t w h i c h c o n t a i n s o p e n in g b a l a n c e o f e a r l ie r ye a r s . Th e l d . C I T( A ) h a s s c a l e d d o w n t h i s a mo u n t t o R s . 3 , 0 7 , 2 3 0 /- w h i ch i s t he a d v a n ce t a k e n d u r i n g t h i s ye a r . Th e a m o u n t e x c lu d e d b y t h e C I T( A ) h a s n o t b e e n c h a l l e n g e d b y t h e Re ve n ue i n f u r t h e r a p p e a l , t h e r e f o r e , th e subject matter of this a p pe a l is, whether the sum of Rs. 3 , 0 7 , 2 3 0 / - c a n b e t r e a te d a s a d e e me d d i v i de nd i n t h e h a n d s o f ITA No. 1494/CHD/2019 A.Y. 2012-13 Page 4 of 6 t h e a s s e ss e e o r n o t .
8. Th e l d . c o u n se l , t h e r e a f te r , to o k u s t h r o u g h p ar a 2 . 6 . 1 o f t h e C I T( A ) ' s o r d e r a n d c o n te n de d t h a t a s se s se e h e r se l f h a s n ot d e ni e d t h e a p p li c a b i l i ty o f S e c ti o n 2 ( 2 2 ) ( e ) o f t h e A ct . Th e c o n d i t i o ns w h i c h a r e r e q u i r e d t o b e f u l f il l e d f o r a t t r a c t i n g t h i s S e c t i o n a r e p a rt ly a v a i l a b l e . Th e r e f o r e , h e d i d n ot w i s h t o a r g u e o n t h o s e i s s ue s . H e s tr a i g h t a wa y t o o k u s t h r o u g h s u b - c l a u se ( 3) o f Se c t i o n 2 ( 2 2 ) ( e ) a n d co n te n d e d t h a t i f a n y d iv i d e n d i s be i n g p a i d b y t he c o m p a n y i s s e t o f f b y t h e c o mp a n y a g a i n s t w h o l e or any part of any sum previously paid by it and treated as a d i v i d e n d w i t h i n t h e m e a n i n g o f s u b - c l a u s e ( e ) to t he e x t e n t t o w h i c h i t i s se t o ff , t he n i t w i l l n ot i n c l u de i n t h e a l l e ge d de e m e d dividend. H e , th e r e a f te r , t o o k u s t h r o u g h p a ra g r a p h n u m b e r 6 . 2 . 5 o n p a g e 5 o f t he C I T( A ) ' s o r d e r a n d s u b mi t t e d t h a t t h i s a d v a n ce requires to be exempted u n de r s u b -c l a u s e (iii) of S e c t i o n 2 ( 22 ) . H e r e a d o ve r t hi s s u b - p a r a o f th e s u b m i s s i o n s ma d e b e f or e t he l d . F i r s t A p p e l la t e A u t h or i t y . O n t he st r e n g t h o f t he a b o v e , he s u b mi t t e d t h a t a d d i t i o n c o n f i r me d b y t h e C I T( A ) b e d e l e te d .
9. O n t h e o t h e r h a n d , l d . D R r e l ie d u p o n t h e or d e r s o f th e R e ve n u e A u t h o r it ie s .
10. W e h a v e d u l y co n s i d e r e d t he r iv a l c o n te n ti o n s a n d g o n e t h r o u g h t he re co r d c a r e f u l l y . S u b - c l a u se ( i i i ) o f Se c t i on 2 ( 2 2) h a s a d i r e c t b e a r i n g , t he r e f o r e , i t i s i m p e r a t i ve u p o n u s t o t a k e n o te o f t h i s s ub -c l a u s e w h i c h r e a d a s u n d e r : ITA No. 1494/CHD/2019
A.Y. 2012-13 Page 5 of 6 "2.22 ..........................
But 'dividend' does not include -
i) x x x
ii) x x x
iii) Any dividend paid by a company which is set off by the company against the
whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is set off. "
11. I n o r d e r t o e x a m i n e t h e c l a i m o f t h e a s se s se e , we t a k e n o te of the s ub m i s s i o n s made by her be f o r e the ld. First A p pe l l a te A u t h o ri t y w h i ch r e a d a s u n d e r :
(5) M/s Sarasivati Agro Chemicals India Pvt. Ltd. has declared dividend ~@\ Rs.4 per share and have deposited dividend distribution tax. The ledger accounts of the following years alongwith copies of challan of Dividend Tax and ITR are enclosed to evident facts about dividend and dividend distribution, tax. The advance of Rs.307230/- stands adjusted by the dividend amount of Rs. 1853320/-. Thus, here again treating this amount as deemed dividend shall be unlawful. Once again, double taxation cannot be there. Shareholder shall be paying tax on deemed dividend and company had paid Dividend Distribution Tax. In fact, exception (Hi) to section 2(22) is very clear in this regard. It states dividend does not include any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as dividend within the sub-clause (e), to the extent to which it is so set off.
(6) In view of the above submission, it is prayed the impugned addition of Rs.3198948/-
may please be deleted."
12. O n d u e c o ns i d e r a t i o n o f t h e a b o ve f a c t s t h a t a s s e sse e t h o u g h he r s e l f d id n o t d i s p u t e a b o u t h e r s h a r e h o l d i n g m o r e t h a n 1 0 % i n M / s S a r a s w a t i A gr o C he m i c a l s ( I n d i a ) P v t . L t d . , s h e h a s a l s o n o t d i s p u te d t h a t s h e t o o k a l o a n o f R s . 3 , 07 , 2 3 0 / - d u r i n g t h i s ye a r a n d t he C I T( A ) h a s a l s o c o n f i r m e d t h e a d d i t i o n t o t h i s e x te n t o n l y . He r c a s e i s t h a t t he c o m p a n y h a s d i s t r i b u te d t h e dividend @ Rs. 4/- per share and has d e p os i te d d i v i de n d d i s t r i b u ti o n t a x. Th i s amount of Rs . 3 , 0 7 , 2 30 / - has been a d j u s te d w i t h t he d i v i de n d a m o un t d i s t ri b u te d b y t h e c o m p a n y , ITA No. 1494/CHD/2019 A.Y. 2012-13 Page 6 of 6 t h e re f o r e , w i t h in t h e me a n i n g o f s u b - c l a u se ( 3 ) o f S e c t i o n 2 ( 2 2) this a d j u ste d amount is to be e x c l u de d f r om the de e me d d i v i d e n d u n d e r s u b - c l a u se ( e ) o f S e c t i o n 2 (2 2 ) . A p e r u s a l o f th e i m p u g n e d o r d e r o f l d . F i r s t A p p e l l a t e A u t h or i t y w o u l d i n d i c a te t h a t t h i s a s p e c t h a s n o t b e e n c o n s i d e r e d b y t h e l d . C I T( A ) . W e f i n d f o r ce i n t h e c o n te n t i o n o f l d . c o u n se l f o r t h e a s s e s s e e a n d a l l o w t he a p pe a l o f t h e a s se s se e . Th e a d d it i o n co n f i r m e d b y th e C I T( A ) i s d e l e t e d .
13. I n t h e r e s u l t , t h e a p p e a l o f t he a ss e ss e e i s a l l ow e d .
Order pronounced on 19 t h November,2020.
Sd/- Sd/-
( N.K. SAINI) ( RAJPAL YADAV)
उपा य / VICE PRESIDENT उपा य / VICE PRESIDENT
Dated : 19th November,2020.
"Poonam"
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/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायक पंजीकार/ Assistant Registrar